Wall Street Unplugged
Episode: 1116February 21, 2024

AI… bubble or disruptor?

A couple of weeks ago I mentioned my daughter’s passion for art and that one of her pieces recently won a Gold Key Award and a Vision Award… Today I share our recent experience at the Florida Theater where she received the award, and explain how I try to encourage my daughters to follow their passion and celebrate achievements as they make their path forward.

After the market closes today, the mighty NVIDIA (NVDA) will report earnings. I breakdown my expectations for the leader in AI (artificial intelligence)… give my take on the valuation… why it’s pulling back before earnings… and if I would be a buyer on any pullback following the report.

Speaking of AI, some analysts think the hype is too much and demand is slowing. I highlight some strong statistics on businesses who are integrating AI – both now and in the future – and let you decide if this bull market is being overhyped. 

Tomorrow on WSU Premium, I’ll dive into detail on why we’re in the very early stages of AI, why it will be disruptive to just about every industry and even threaten a lot of jobs. I can’t stress enough how huge this market can be and why all investors should learn about this amazing trend in all things AI.

As earnings season winds down, we’re seeing some wild volatility in stocks even if they post solid earnings results. I breakdown Palo Alto Networks (PANW), Teladoc Health (TDOC), and SolarEdge Technologies (SEDG) and what it says about the current market. Bottom line, this market is one of the most dangerous I’ve ever seen.

Inside this episode:
  • A major accomplishment for my daughter [1:14]
  • NVDA reports [8:08]
  • Is there an AI bubble? [16:03]
  • Earnings season proves this is a very dangerous market [32:13]
Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.
Transcript

Wall Street Unplugged | 1116

AI… bubble or disruptor?

This transcript was automatically generated.

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.

Frank Curzio: How’s it going out there? It’s February 21st.

I’m Frank Curzio.

This is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets.

For today’s show Talk about NVIDIA reports after the close and the numbers turn out to be bad, will this spell doom for the entire market? We also saw horrible earnings over the past 24 hours, including SolarEdge, Palo Alto, Teladoc down 15, 20% each.

Why you should be paying close attention to this trend.

And then finally, AI, AI, the big talk out there.

Rumors have it.

That demand is starting to slow the data I’m about to share with you.

I’m gonna let you decide if that’s the case.

Let’s get to today’s show with something personal.

On a Wall Street Unplugged Premium podcast a few weeks ago, that’s a paid podcast that Daniel and I host, I took a live call for my 16-year-old daughter from school and she said, Dad, you gotta pick it up.

I got really good news, really good news, and it was in middle of taping and, you know, had my phone right in front of me.

I just picked it up.

I said, you know what, dad, lemme just pick this up as we were taping.

And we kept it on there.

But she was really excited.

A teacher also got on the phone with me, told me that her art piece, a sculpture she made, received a gold key award, which is a big honor.

And I didn’t know what a gold key was, to be honest with you.

Uh, if you’re a writer, if you’re an artist, you may know.

And it’s this really big award that’s given to students, I believe seventh grade to 12th grade that just has like exceptional projects.

And, and I think it’s, they give it out to a few hundred people in each state at out of, I’m pretty sure for Flower was like 30,000 submissions.

But her sculpture also won a vision award and we celebrated that this week.

It was at the Florida Theater.

It was really cool.

It was a lot of kids there at their parents and stuff.

And when I researched the Gold Key, I was like, wow, this is pretty cool.

This like, Andy Warhol got one, Stephen King got one.

Lots of amazing writers artists.

Again, this is a, a old procedure thing, but the Vision award, I didn’t realize how important that was.

And that wasn’t even a bigger a deal.

And after giving out the awards and she got a gold key award and stuff like that, again, they gave this out to, to a few hundred students.

There were only five, which my daughter received one of ’em for the Vision award.

And this is where’s gonna be judged in New York City.

And if selected, meaning that if selected would be the best in the state, she’s gonna go to Carnegie Hall where it’ll be nominated for the National Award.

But at the end of the ceremony is really cool ’cause you have all these kids getting up and getting the awards.

They have silver awards in national, I think it’s, honorary mentions and stuff like that and, you know, the gold key awards.

But at the very end they were like, these five pieces of work represent, you know, something that’s more than just the artwork.

They’re saying something.

And, and they brought on stage with four other people, four other kids, and you know, took a picture.

And it was just really, really a cool moment.

You know, really proud of my daughter.

I just wanted to give that, give her a shout on the podcast.

And, and she’s really passionate about art.

She’s great at it.

I don’t know where she gets it from.

I can barely draw a, a stick figure.

But it’s always great as a parent, I think.

And a lot of you have kids out there listening to this, and we have young people and, and older people, whatever.

But it’s always see good to see when your kids are really passionate about something.

Really love doing it.

And for me, I always wanna push them into that direction, and not push ’em.

If they don’t want to do it, it’s fine.

You know, I want them to do something that they’re going to love.

And it’s very important.

’cause I love to do what I love podcasts.

I I love researching.

I mean, this isn’t a job to me.

And, you know, doing it for 7, 8, 9 hours, 10 hours, sometimes even longer a day.

And just, you know, trying to find inefficiencies and stuff.

I love this, right? And people, I don’t think anybody loves it more than what I, than I love.

And that’s why it’s easy for me to talk about it.

It’s easy for me to get excited about this stuff.

And you see the passion and, and when you have a job, because your job is really a, a big part of your life, you’re there for so much that imagine if you hate your job and there’s a lot of you out there that maybe hate your job.

It’s tough.

So, you know, my my 13-year-old, daughter loves basketball, gymnastics.

But, you know, always telling me, you know, if you find something passionate, you love, you know, go all in.

Work hard than everybody else.

Be confident, but also be humble.

And it’s hard to say that, right? Because confidence is a good thing.

There’s a big difference between being confident and being arrogant.

There’s a huge difference between that.

And being confident is not, not a terrible thing.

But I think sometimes that confidence could also lead to you not being humble and not realizing that there’s people out there that you could learn from.

And and you learn that.

I learned that probably in my early forties and going forward where you’re like, you know, I’m interviewing a lot of people.

I’m like, holy s**t, there’s a lot of smart people.

I’m not, you know, I’m an idiot compared to some of these people that, that you interview.

Uh, and, and you know, you wanna learn for them and, and ask a lot of questions, you know, but you always leave the door open to get smarter to learn more.

And then when you get to that point in your life, maybe you wanna pass that stuff down, you know, to the next generation or, or whatever you do.

But, you know, I tell ’em always be open, be humble.

Be open to change.

’cause things that I’ve seen in my career and even my late dad was kind like a perma bear.

You see perma bulls per, you know, people, no matter what the facts are, it’s what they believe and it’s a cult.

And it’s hard to rewire your brain to look at things, you know, but, and say, wait and, and call b******t, right? And, and I learned that from traveling all over the world and researching different topics like fracking and, and, and, you know, COVID and things like that.

You guys know, you were hearing a different stories here than you were hearing every place else.

And you know, I got a little heat from it, but, you know, I don’t give a s**t if people don’t wanna listen to me because I’m telling ’em the truth and I’m telling ’em where I’m investing.

Uh, if you know you don’t like it, there’s a lot of other podcasts.

There’s, there’s actually hundreds of millions of podcasts now, right? In this 15 years when, when I feel like I was an island with, Andrew Horowitz by ourselves doing it for, for that long ago, 16 years ago now.

But you just being open to change, learning as much as you can.

Uh, and, and also, you know, own your mistakes because they’re gonna be the greatest lessons in life.

And when you have those mistakes, you have to go through them personally.

You can read as many books as you want about the stock market, what you should do, whatever.

But when you are an investor during the credit crisis and you are 70 years old and you have, you know, a million dollars in your portfolio because you worked your ass off and at your 401k and you have your home, which is paid for, and next thing you know, your home goes down 30, 40%, your portfolio is down 40, 50% depending on what you’re in, it could be down even more.

Uh, you’re like, holy s**t, am I gonna have to work again? And then when the market comes back, you could see why they have cash on the sidelines where they’re like, holy s**t.

You know, I, I just lived through that.

I, I didn’t know if I was gonna have to go back to work.

And you can’t read that in books.

I mean, that emotional feeling is what builds your character going through all those past experiences leading up to that.

So, so own them.

Like you make mistakes.

Don’t beat yourself up.

Just keep moving forward.

You know, it sounds like it’s easy.

I know it’s not, you know, especially things that you’re passionate about, you get punched in your face, like, holy s**t.

But, but believe me, I mean, you just keep moving forward and you’re gonna get those wins.

And see my daughter get that win is, is so special.

And, and when you get that win, I’m gonna tell you enjoy it.

’cause life’s short.

I, I see that so much where people, you know, they’ll achieve a goal and they’re like, you know, celebrate it.

Be happy.

You know, things are not always gonna be great.

Things are not always gonna be bad, but, but celebrate that, you know, because you worked your ass off to get there.

And when you do celebrate it, you know, and then you move on to the next chapter, try to get better and stuff.

But, you know, I try to instill that in my daughters.

It’s not that easy.

It’s not that easy to do.

They’re young.

I know I’m not giving ’em this whole life lesson stuff.

I, you know, I want them to make their own mistakes and learn by themselves.

But it was just really cool.

I didn’t realize how big that award was and I’m really proud of her.

So the vision award, I think in a couple months I’ll let you guys know how that works out.

But, yeah, outta the five pieces they selected, I’m, I’m confident that, you know, she has a really good shot.

Really, really good shot.

So it should be interesting, and I’ll update you guys.

So anyway, just wanna share that a little personal thing.

Give my daughter a shout out.

But I wanna get to Nvidia now publish this podcast.

You could probably listen to it earlier than NVIDIA’s gonna call The time you get this, NVIDIA’s gonna have a report.

I like telling you, you know, what I believe is going to happen and then we’ll cover it.

I’m gonna cover it more in depth tomorrow in Wall Street.

Unplug with Daniel.

But NVIDIA’s expecting $4 and 59 cents when they report for the quarter on sales of 20.

4 billion.

That’s for the quarter.

I think they easily beat those numbers.

But the guidance analysts are forecasting for, I have to tell you, are are pretty conservative.

So when I look at the street, I mean earnings, this current quarter are for $4 and 59 cents and their guidance for next quarter is $4 and 85 cents.

Shouldn’t be too hard to beat that.

Sales are expected to come at 20.

4 and the street is expecting the guidance for the next quarter be 21.

5 billion.

I think we could see 23 to 24 billion in sales guidance and over $5 a share in earnings.

That’s gonna be their guidance.

And you’re looking at what’s gonna happen if they report.

That doesn’t necessarily mean it’s gonna go up.

We’re down about the past couple days, we’re down about six, But when you look at it and you take a, you know, you know, a bird’s eye view of everything that’s been going on, the stock has had unbelievable monster run.

It’s up 12% still even after the six, 7% decline of the past two days, it’s still up 12% in the past 30 days up over F Nvidia f put, they would have to actually fall by 30%, The stock was trading on January 1st.

That’s how much it’s moved.

So people compare it into thedot-com bubble.

Oh my god, this is crazy.

It’s not crazy when you look at the numbers.

I mean they’re putting up the actual numbers and even with a strong beating, strong guidance, which I give a very high probability for, given that.

And, and this is, you know, wall Street stuff from my experience.

Yeah, Goldman Sachs, Morgan Stanley, Piper, UBSI think also a few others.

But those are the four I put.

I know that since February 12th, I believe, again, this is not too long ago, they all raise their estimates and their target price analysts will not do that unless they’re very, very confident that they’re gonna report great numbers and great guidance.

How do they know that? ’cause they all talk to the company and it’s not like the CEO NVIDIA’s going, Hey guys, you know, these are the numbers we’re gonna report, but they’re all calls that are made and saying, Hey, you know, I’m just looking at at, at, you know, channel checks and seeing what’s going on.

And they, you know, there might be a little hint in there and they say, you know what? Look, we’re not seeing any slowdown in demand.

That’s what happens behind closed doors.

And it makes sense ’cause Goldman Sachs is getting paid for their research.

They’re going to use, you know, NVIDIA’s gonna use Goldman Sachs and all these companies have buy ratings if they wanna raise money, do bond offerings or whatever, right? So investment services, you know, so it’s all like, you know, we’ll hold hands in this, this whole entire, but you don’t see analysts upgrade those numbers into the quarter, especially a couple weeks unless they know something because you’re risking your job.

If you upgrade the numbers and your target price and all that stuff, and the target price were like from 600 to 8 58 8, whatever it was.

If you do that and you’re wrong, you’re risking your job, you look like an idiot.

And say, if, if Nvidia comes out today and their guidance is absolutely horrible, absolutely horrible, like really, really horrible, you’re gonna look like you don’t know s**t in the stock.

No one’s gonna have listen to you again.

So the fact that those reports came out a couple weeks usually means that you’re gonna see a nice runup and it has run up other than the last two days.

So there we are now I think they’re gonna report strong numbers, they’re gonna report strong guidance and the stock could probably sell off a little bit, kind of like what we saw last quarter because it’s, you know, sell the news event again.

People are gonna say, well, it’s up a lot, it’s up a lot.

But this is the thing I had with Disney compared to Nvidia with Disney.

They’re reporting subscriber guidance.

Subscriber guidance going up.

Holy cow, they had 20 millions, 30 million, they were giving away the service f*****g free, right? So if you’re giving away the service, f*****g free it, it, it’s, that’s okay, all right.

’cause that’s the metric everybody was looking at.

But eventually the numbers matter.

And this is what I think people wanna hear on TV that NVIDIA’s run up so fast.

NVIDIA’s not like one of these chip companies that have run up tremendously.

I forgot S-M-S-I-I think it is, it’s run up, whatever.

I saw some stats on it like, you know, whatever, This is, it’s not AMD you know who, who actually lowered their guidance.

This is a comp.

The numbers, the actual numbers that they’re reporting are absolutely insane.

And if you’re looking at the stock today with the numbers that they’re reporting is trading just 31 times forward earnings, which is cheap.

I know what you’re thinking, Frank.

What do you outta your mind? NVIDIA’s cheap.

Nobody’s saying NVIDIA’s cheap.

You cannot look at a PE ratio without looking at the growth in earnings and sales and what’s projected.

Okay? Because a stock could be trading at 60 times total earnings and be cheap based on the potential growth, which we saw with every major company that you look at that’s on top of the NASDAQ 100 right now Microsoft Apple all traded above a hundred times total earnings filled in those valuations because they saw enormous growth.

Netflix was there, I mean Celgene was there.

I mean the, the so many of these companies, every single world who traded at, they didn’t trade at like 15 times, That’s when Buffett bought Apple and it was you know, dirt cheap.

Even Apple right now trades for 27 times forward earnings I believe.

But when you’re looking at 31 times forward earnings, which is a 50% premium to the market, but when we throw in the growth, this is a company’s projected to grow sales at this level.

by 45% annually over the next two years and projected to grow earnings close to 60% annually over the next two years.

And you could say, well those numbers are gonna come down even if they came down and they’re only growing 30%, they’re still growing almost three x the rest of the market, right? And, and eight x when it comes to sales, that’s how much faster they’re growing.

So would you rather buy Microsoft trading at 36 times forward earnings? You have Apple a little bit cheaper, but both of those names are barely projected to grow earnings year over year.

Bailey, and you can take Microsoft get at Microsoft is trading at a high valuation and growing Bailey gonna grow earnings year over year.

Bailey growing sales year over year.

That’s not the case with Nvidia.

The demand is real.

I mean you look at that free cash flow in 2023 was 3.

6 billion.

It’s cash left after everything paying the bill free cash flow this year it’s going to be 26 billion, $26 billion.

Okay? It was 3.

6 billion in 2025 is gonna be close to $50 billion in free cash flow even after these numbers.

I can’t see Nvidia not increasing their buyback.

They announced a $25 billion buyback last quarter.

They’re probably going to increase it this quarter.

What else are they gonna do with the cash? But if you’re looking at the buybacks that are in place, which just announced last quarter and you’re looking at the valuation at 31 times forward earnings, if we decline and say if they report, if they don’t bomb the numbers right? If they don’t say, okay we’re doing 15 billion in sales instead of 20 billion in sales, that’s different.

But if they report decent numbers, which are wildly expect that I’d be surprised if they don’t report good numbers and good guys.

Considering the analysts out there, the analysts that know the most and talk have the direct line to the CEO raise their target price and raise their estimates tremendously into this quarter.

But if they report those numbers and we see the stock pull back like we did last time at 10 ’cause the valuation’s gonna be so low based on their growth.

And then you throw in the buybacks, it’s gonna be an incredible buying opportunity.

Incredible buying opportunity.

If you believe AI is still in its very early stages of growth, which is the next topic we’re gonna talk about.

’cause this is what happens.

Leaned a little bit of a sell off in Nvidia at tonight’s earnings.

And last week, you know, a report came out that the lead times for video chips are decreasing.

So meaning it used to take 10, 11 months to ship its H 100 chips, which is its prime chips.

They’re already like two generations ahead of that.

They’re gonna sell the H 200, they have another chip that they’re gonna sell probably, starting in in about six months.

This is how far everyone’s behind.

They’re raising the prices for the H 100 chips, right? That’s why you’re seeing those lead times go down because they’re going down to three to four months.

So those lead times they used to take a lot longer.

So right away people are like, okay, well that means demand is slowing.

Maybe they’re not buying as many chips, you’re getting em out a lot quicker.

You know, forget about that.

NVIDIA’s doing well in the supply chain that they raise prices of the H 100 chips ’cause their next chips are coming out and people are probably waiting a little bit.

That’s fine.

Nobody wants to talk about that.

It’s a great headline.

And a lot of saying this is due to weak demand, right? Weak demand for NVIDIA’s chips, which therefore means demand for AI starting to slow.

And that’s been going on in the rounds.

Listen to CNBC listening to Bloomberg.

Yo know, there weren’t this bubble bubble bubble bubbles don’t include you, you, you’re generating, you know, your cashflow going free.

Your cashflow going from 3.

6 billion to to 50 billion in two years.

That doesn’t sound like a double to me.

That sounds like you’re putting up the numbers.

So your stock should be a lot higher ’cause you got a great product that you’re selling.

Now.

First I wanna go back to this report because I don’t know most people when you, you’re not gonna have access to this reports institutional reports from UBS.

This is where everyone’s like quoting from UBS and UBS is say, hey, the lead times are coming down now, I guess, and it makes sense in today’s world in the media that people didn’t feel like reading the whole report or more likely read the report and just wanted to provide a great headline this way.

I got lots of page views, which makes sense.

Hey, yard’s in a bubble and it’s dead this and out, right? I’m gonna tell you from someone who has access to this report, and this is just from last week.

So UBS did say that, but also in that report UBS raised their target price on Nvidia from five 80 to eight 50.

It raised its 2025 earnings on Nvidia by 15% at its 2026.

I dunno if you remember, we’re in 2024 in case you forgot.

And in 2026 they raise their earnings estimates by 32%.

Doesn’t sound like someone who believes demand for AI is slowing.

But again, we live in a media world where everything’s taken out context and people want headlines and that’s fine.

AI’s slow and it’s a bubble here.

So buy my newsletter, I’ll show you everything’s in a crash.

Whatever.

I love the people who cite with AI when, when they wanna sell something that it’s gonna end the world.

If it’s gonna end the world, why the f**k am I gonna buy you a newsletter for I’m gonna die? Like come up with a different marketing strategy.

It just, it’s so funny when I say this, hell like, AI’s gonna kill everybody.

Uh, you know, and again, yeah, maybe be a little worried about it.

Do your research on it.

It’s totally different from generative AI.

We’re not close to that.

And I noticed, ’cause I’ve been doing a lot of, a lot, a lot of research in this sector.

But for those who still think AI is in a bubble and I’ve covered bubbles all my life, and when you look at bubbles, they, they tend to go higher and higher without the numbers.

That’s what a bubble is.

They go higher and higher, but they’re not really backed by the actual numbers.

They’re backed by the expectations of something happening in the future.

And there’s lots of expectations built in AI.

But the numbers are there.

The numbers are there.

And when I look at the growth going forward, I wanna share just a few stats for you and let you guys decide.

We have a whopping 83% of companies four and five over four and five claim that using AI in their business strategies is a top priority.

Meaning that this demand is not even in the marketplace right now.

It’s not.

Are you currently using it? Very few.

Some of you emailed me, very few are starting to use in marketplace.

It’s very, very early.

It’s kinda like Bitcoin Not a lot of people we own Bitcoin.

Now you’re seeing all ETFs and everything like that.

Now you’re seeing that price move higher.

We’re even close to to being in that very early stages.

Only 14% of workers report that they had had extensive discussions about AI at their workplace.

Only 14% of workers, I mean, makes sense I guess because a lot of those workers, I’m sure the CEOs don’t want to talk about, they’ll talk about AI.

What, what maybe the department heads and what we have to do to implement them.

But what I’ve seen within this industry, I’ll cover that in a second after I go a couple more stats.

The amount of jobs it’s gonna take is insane.

It’s insane and you’re seeing it already.

That’s why so many companies are laying off while their stocks at all time highs.

Especially the big technology companies.

Getting that.

More into that in a minute, according to Grand view, annual growth rates for AI projected to be 37.

3% over the next six years.

Holy s**t.

And you might be saying Grandview, who’s Grandview? I took Grandview.

’cause that’s the slowest percentage out of everyone out there that’s really talking about, you know, through 2030 of where this market’s gonna go.

So remarkable growth.

Growth that you have to kind of be in if you really believe that.

How about PricewaterhouseCoopers? Pretty important company says AI tech can increase revenue by over 15 trillion in the next decade.

Not a long time boosting A GDP of local economies by additional 26%.

I look at this trend, it’s very real.

It’s still very early in its growth stage in a few years.

Almost everything you read, almost every movie you watch, every video you see on social media is gonna be AI driven.

And this is from, you know, you look at Google, Genesis, OpenAI, ChatGPT, these are leading the charge.

But I dunno if you saw Open-Eyes, Open Eyes did their video service called SOA and you should look it up.

They talked about it a little bit on CNBC.

Look it up.

You could type in anything.

You can type in a gorilla dancing in the ocean, a and have any background planes going on, going past in the background with beautiful trees.

Anything you want, anything with a bus driving by, all you have to do is type it in and it creates a 62nd short for you exactly like that.

You could add music, you could add anything you want.

And this is just the beginning.

It just, it’s not, it’s a beta version, but they’re releasing videos or release some videos of people on a beach and a shark comes up and like talking to, I mean you could do whatever you want with this by typing it in.

I mean the level of creativity and all these people that had so much creativity, it’s gonna level a playing field.

Plainly said, there’s a lot of stupid people that are gonna be able to use this and being the same level of somebody that’s very creative.

That’s what this does.

Do I have to pay that guy a million dollars then to run this whole head for a major company? Or do we start using AI? Yeah, talk about a lot of these topics, especially on Twitter guys @FrankCurzio.

If you wanna follow me in case you don’t get enough of me on, on this podcast and at Wall Street Unplugged Premium, with Daniel.

But, it’s a way to follow me daily.

And look, if you’re listening to my tone, it’s a lot different right? Than it was four months ago where I was like, oh, this AI and people going crazy over AI and, and this is, you’re gonna see me do this a lot because I change when the facts change with me.

I wanna see all this hype.

What’s going on? I wanna dig in this way.

I get to tell my subscribers this way.

I could talk to my contact, say, Hey, what’s really going on with this story? ’cause when you really know what’s going on with this story, eventually that’s going to happen.

And that’s how you can make money on if it go, if something’s positive or negative, you just get out of it.

You could short it if something’s real or not.

By knowing the actual numbers in the story.

That’s always gonna come to fruition.

Eventually, eventually the numbers matter.

They come to fruition.

So you could just like Disney, you could say, oh a hundred million, 200 million, we’re getting bigger Netflix in terms of subscribers.

They’re not subscribe to your content because you don’t have any great new content on your site and all your new content, your best content always goes into movies first.

So why you even have a streaming platform for? And that’s people the reason, that’s why the stock went from I mean 1 30, 1 40, 1 50, 1 60, that same story.

But eventually the numbers matter.

They fill in.

Now my tone changed around four months ago and then, you know, started research like wow, this is really cool.

Getting emails from you and stuff like that.

Frank ’cause of research.com got great, goes out to a hundred countries getting, you know, a lot of brilliant people in the software industry.

And then I took that executive AI tour at the Consumer Electronics Show and really learned a lot about companies and who’s full of s**t and who’s not.

And seeing this technology upfront and what companies are able to do this is world changing technology.

We haven’t even scratched the surface yet.

And if you look at Twitter in 2006, it took nearly two years to reach 1 million users.

Instagram in 2010, two and a half months to reach 1 million users.

Chat chippy t reached a hundred million users in five days.

It generated 1.

6 billion visits in December alone making it the fastest adoption of any technology in history.

And I’m gonna tell you, it’s gonna impact every single industry.

I know you’re out there and you say, well Frank, I heard this about nanotechnology, I heard this about 3D printing.

I heard the, believe me, I covered these trends all my life.

This is different.

This is different.

You’re finding a way to increase productivity while lowering your costs dramatically.

That’s the holy grail for every business in the world.

How do I spend less and generate more money? ’cause that increases profits.

And this is a very easy way to do that.

I mean there’s tons of companies, you see a lot of jobs at risk.

Gonna cover lot of this more in detail with Daniel tomorrow and Wall Street Unplugged Premium, if you’re not familiar with that, it’s its premium service.

Uh, you could, you know, find more information out on, on Curzioresearch.com as we dig more into the details.

We provide, lots of new ideas, investment ideas for you guys, a little bit more aggressive and stuff.

Really speak our minds on that, which is really cool.

Uh, and also gives you access to the Dollar Stock Club portfolio.

Many of you are, are subscribing and, and a lot of people got amazing reviews on it.

But there is a ton of money to be made in this industry, which has a total addressable market, depending who you’re listening to or who who, who you know you’re reading it from.

But almost everyone will tell you it’s in the trillions.

It’s in the trillions.

So how do you get a piece of that? How do I get involved in that? That’s what you should be thinking right now.

It’s not just an NVIDIA or chip story.

It’s not just Microsoft Google, Amazon software cloud story.

These guys are gonna benefit.

I mean it’s anyone who has control of data for over five years.

If you have 10 years, this is where AI is going to make game changing differences.

There’s lots of under the radar names that weren’t available.

Now they are small mid-caps just beginning to use implement this technology.

But this is something that has a potential to change the world.

Especially when you look at industries like healthcare.

I think you’re going to see AI have the biggest impact in healthcare than any other industry.

I’m familiar with this industry.

It takes 10 years to be, to bring a drug, from clinical to FDA approval eight to 10 years.

It costs almost $2 billion to do that.

You have all these drug companies that are seeing their patents, right? Their best drug billing, selling drugs come off patent.

And then you have all these smaller companies at clinical trials.

They’re sitting with hundreds of thousands of compounds with great technology figuring out ways that they could bring some of these things to market to cure diseases or whatever.

But they have to go through a massive process to do it.

Imagine if you could accelerate, accelerate that process by a factor of 20.

I mean now we know that most of these guys wanna launch treatments and not cures, but we’re gonna be at the point where we’re going to see cures for a lot of different diseases.

This is gonna speed up that process tremendously and lower the costs tremendously.

And that’s what you want.

I don’t care about how much money they make or whatever.

I know there’s a lot of b******t behind a big pharma and all this stuff.

’cause whatever we know Pfizer’s the worst.

You know, again, go back and look at not just COVID, but they’ve been bribing the FDA for years and they say, you know what, instead of bribing, let’s just get the main guy on COVID and put him on our board.

Gotlieb put him on our board.

Is that not the biggest conflict of interest you’ll ever see in your freaking life? I don’t know what is.

Forget about that.

Leave the politics aside.

Leave everything aside.

Leave the emotions aside.

But these big pharma companies have massive balance sheets.

That’s why you’ve seen them buy a lot of these small biotech clinical companies right now.

You’ve seen m and a pickup tremendously in that field after these things have gotten annihilated.

But imagine being able to bring all these things to discovery a lot, lot quicker and a lot cheaper.

That’s why they’re sitting on the shelves.

It’s just too expensive.

They want the guarantee.

But you’re looking at education.

Holy cow, it’s going to game changer in education, retail defense.

Then you go, the obvious is the obvious disruptions are within marketing.

If you’re looking at at you know, customer service, e-commerce, but I’m testing so many of these platforms, I suggest you do the same.

They’re like whatever, $10 a month, $20 a month.

And seeing what these platforms could do.

’cause over the past four months, especially over the past month and a half, just really digging in and seeing this stuff, I’m, I’m blown away to what it could do just for our business alone and what it could do for any single business out there.

Which is the really hard s**t to do.

Especially if you have e-commerce sites, which everybody has web access and writing funnels.

Who the hell writes right funnels.

Try hiring people to write funnels.

It’s so difficult.

Try hiring someone to market your company.

It’s so difficult that doesn’t really know your company or you’re getting someone with less experience and not really tied emotionally to you.

It’s you need big money because you’re gonna have so many failures during the marketing stage.

You’re finally gonna find something that works and it could be a blockbuster but a lot of people don’t have money that they could lose before something works.

This is a game changer.

Writing all these sales emails for you, doing all this stuff.

Stuff that takes a lot of time and you have to spend a lot of money to hire, you know, really smart people to do.

So researching this topic to death, you could see my tone has definitely changed over the past few months and bring a lot of new ideas to Curzio Research subscribers in the month years ahead.

But please, please, I’m gonna urge you to get educated on this market.

It’s difficult.

Everybody knows and heard of ai, they know chat GPT and type a couple things in.

Go deeper.

Go deeper, start using some of these programs, use Jasper, use some of these programs and see what they’re capable of doing.

’cause once you do, you’re gonna be like, holy s**t.

Especially if you have your business, you’re gonna be like, oh my god, this is amazing.

I can cut costs dramatically.

And when you see what I’ve seen in this business and I’m gonna start bringing on people and experts and interviews and stuff like that, it really, really is fascinating.

You need to get a piece of the multi-trillion dollar pie that you’re gonna see this total address of the market over the next few years.

You want to be in this trend.

And I’m not talking about Nvidia, I’m not talking about AMD, those are the chip hardware.

They’re the first in line and the second in line are gonna be, you know, Microsoft.

But there’s layers being built on their cloud services to offer all kinds of capabilities.

And now it’s the next layer of companies that are gonna come in where you’re gonna see incredible results.

You’re gonna see their earning surge, you’re gonna provide a way for to provide more efficiencies for for their clients.

Their company’s gonna result in higher earnings.

Much, much higher earnings for these companies going forward.

But it really is fascinating and just be prepared to not do anything for a few days once you start researching.

’cause you’re gonna go into a rabbit hole and be like, holy s**t, this is really cool.

This is really cool.

So one last thing here before I go.

When I saw last night a couple companies report everybody’s waiting for Nvidia after the bail is fine, but a couple of companies reported and holy s**t were they bad? Palo Alto cut its sales guidance from 16, from 18 to 16% stocks down 23% Teladoc actually reported better than expected earnings.

And when I say better expected earnings, it was better than expected.

Expected when it came to earnings loss.

They lost less money than expected but they lowered their sales guidance by just 4%, just 4%, 673 million to 640 million.

And the stock fell 20% down 20%.

They had solar edge report also down down about 15%.

They actually reported horrible guidance.

I think it was, you know, That’s different.

I’m talking about these other two companies ’cause Palo Alto and Teladoc didn’t miss buy a lot.

Palo Alto cutting their sales guidance from 18% to 16% and there’s a little bit more going on the on under the hood, you know, just, you know, a couple comments and stuff like that.

But should the stock be down 25% right now by reporting a slight decline in sales guidance should tell Doc be down 22% after guidance was light by 4%.

And I’m bringing this up because this is the market that we’re in.

Super expensive valuations for many stocks where we’re heading into a slowdown in growth based on GDP where we’re supposed to see rates come down and they’re not.

I mean the cost to do business, especially for Teladoc, which is losing money increases dramatically.

I mean this lower interest rate environment, are we gonna have it? I remember, hey we’ll go back down to 2% where we go down to 3% below 3%, below three point half percent for, we haven’t even started going down.

It’s going back up again.

Inflation numbers, C-P-I-P-P-I came out, mortgage rates shot back up over 7% and you could see mortgage demand crashed down You see this impact where we’re in a market with much higher interest rates that should not be trading anywhere near these levels that they’re f*****g trading at.

And that’s what happens when you miss by this much when you have an expensive stock.

’cause some of these names are priced to perfection.

Palo Alto trading over 50 times forward earnings, slight miss, goodbye.

Teladoc doesn’t even have a PE ’cause they’re losing money.

Small miss goodbye.

So if you own one of these companies, just be prepared.

They’re price per perfection, they can go up more.

But man, if one little thing goes wrong, you’re gonna get nailed for a 20% plus decline.

But if you own these names, you better hope they beat and raise.

I know what kind of the end of earnings season.

We still have some retailers set to report small caps set to report.

Most of the big guys that probably have had a guess 85% of S&P 500 reported.

But even if the company’s coming up, you better hope they beat and raise and I don’t think it’s gonna be an easy thing to do given that most companies have already announced the majority of their cost cuts.

We’ve seen ’em in the past 18 months cutting employees, cutting costs and and it’s been reflected in their earnings.

You only cut costs so much and now these companies, are they gonna be able to grow sales? I’m talking about even Apple and Microsoft, the biggest companies in the world.

Are they gonna be able to grow sales in a market where GDP is expected to slow a ton this year? Not an easy task.

I’m not seeing the same case when it comes to small caps, different small caps still well off their highs.

A lot of these names, I’m not telling you to buy the rust 2000 ’cause 40% don’t generate earnings.

They’re gonna continue to get nailed and really hurt if interest rates stay high, the cost of doing business just is raised dramatically.

But there’s a lot of names within there within healthcare, within just consumer services and stuff like that that are trading at levels that are very cheap.

They’re growing.

Might actually find some that pay a little bit of a dividend.

They generate free cash flow, they’re buying back their stock.

There’s still opportunities there that I’m seeing and in some areas I’m seeing.

But just be careful ’cause what are driving this market higher? All the Palo Altos, all the teladocs are these companies that are trading sky high valuations that already cut costs tremendously.

It’s gonna be very difficult for them to continue on that pace because just a little bit of miss with the valuations you can get annihilated.

So I’ve been saying it some of the most dangerous markets I’ve seen in my career because it’s forcing you to be in it.

And if you’re not in it, you miss out forcing you, forcing you, forcing you, forcing you to be in it.

It’s not like, you know, credit crisis, holy s**t, I dunno what’s going on.

I’m outta here, COVID, oh my God, they just closed the world.

I’m outta here.

Lemme sell everything.

It’s not like that.

There’s a market where you’re getting punished for not being in it, but it’s forcing you to buy expensive companies at crazy, crazy.

These are crazy high valuations in a market that we’re going to see a slow down in growth.

And it’s not a slow down on growth for everybody.

But overall, when you see GDP coming down, which is projected to come down a ton over the next 12 months, it’s gonna be very difficult with these valuations to support these valuations.

Especially since the thesis and a narrative has changed from, hey, we’re gonna get low interest rates this year to, we might not even have low interest rates this year.

It’s a big difference.

That was the bullish thesis for all 2023 into 2024.

Fed’s gonna lower, it’s gonna be booming market.

Well you got the booming market, the Fed hasn’t lowered yet and they’re not planning on lowering maybe till June.

So should we have to rerate this market? I don’t know, you throw another factors, hey it’s a election year or, or you know, government spending, right? You, you’re not seeing the government cutback spending just the chip back, all this stuff, you know, just starting to hit.

But how much longer is this gonna go where we can see stock prices continue to go up, the valuations are skyrocketing with a slower economy? I mean, what, what’s gonna happen? You have the government that has to continue to spending, continue to spend, which our deficits are, are insanely with the over a trillion interest expense that we’re paying.

But if we have any intentions on paying down this debt, you would see the market absolutely crash.

That means GDP is gonna come down tremendously ’cause it’s being held up by government spending crazy spot to be in.

But if you want the soft landing, like I said, it’s impossible to have a soft landing right now.

You might think that’s possible.

It’s impossible.

It’s gonna come back to bias in the ass.

We might see this through election year, but you’re probably gonna have to reposition your portfolios, especially if we see Donald Trump or Republican win because when they do the first thing they’re gonna, they’re gonna be running on, we’re gonna cut expenses.

When they do that, they’re gonna spend less and it’s gonna result in the market coming down.

It’s not gonna support these high valuations.

We’re not there yet.

Enjoy this run.

But be prepared, especially if you own expensive stocks, going into these earnings seasons is very, very dangerous.

So guys, that’s it for me.

Questions, comments, email at frank@Curzioresearch.com and I’ll see Wall Street Unplugged Premium listeners tomorrow.

Take care.

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