Elon Musk vs. Delta over Starlink, Micron’s blowout quarter and the 10-year yield | Sozzi Unleashed

[music] [music] [music] [music] What better day than the morning after Micron earnings to pull out my new glacier colored pants from Vori? What do you think they're going to be from Nike [music] just because it was Nike earnings day? No, they're not. Uh, but one story that caught my attention so far uh this morning is like this dust up between Delta CEO Ed Bastion. Guy's been CEO since 2016. He's getting it done. and Elon Musk on Starlink on Starlink. Look at Elon. Elon essentially saying uh Ed Bash will lose his job because Delta doesn't have Starlink. Ed went with Amazon Leo on the satellite front. Reportedly doesn't like Elon Musk. I take Delta. I've racked up a lot of miles. You got to get Starlink on these planes. I don't know anything about Amazon Leo, but what I know is this. Starlink kind of rocks now. Like, I get where Elon's coming from. This dust up goes back maybe like a year and a half, two years between Ed and Elon. I get where he's Ed's not losing his job over Starlink. It's not happening. I believe what, guys? 47 airlines do in fact use Starlink. So, the number's pretty big. A lot of airlines using it, but Ed's not losing his gig. It's just not going to happen. Always something to markets. All right, I know you want me to stand up here and gush over the micron quarter and tell you uh what it all means to SanDisk and Apple, and I will do that in a minute. But first, you're going to be forced to listen to me riff on the latest wild move in the 10-year Treasury yield. To quote one of my Twitter followers, "What we are seeing here is insane." Also insane is that the bulls still have control of the narrative on stocks instead of the bond market with these insane moves and yields. 10-year Treasury yield is now hovering around a new 24-year high at 5.3% 24-year high. Just six years ago in March 2020, yields remember the yields were about.3%. If you want to get really nuts on the calculations and do all the world sal word salad stuff, cost of borrowing money has surged 1500% since then. You know, I love me a good word salad, so that's why I put that stat in there. Now, JP Morgan strategist Pria Misra calls this quote, "A vicious loop." She's on the mark, like right on the mark with this. And allow me to let you into another secret here, cuz I'm that guy. If today's jobs, if tomorrow's jobs report, I should say, comes in better than expected, it will probably only fuel another rise in yields. Why? Expectations on more rate hikes this year will in fact crystallize. Like, that's probably what's going to happen. And then you're gonna hit this alarm bell on markets. [music] The 10-year Treasury yield is more than just a number you can find at the top of the YFI's homepage in our app. It's up there. You can find it. It's a key piece of bedrock in the financial system. And I assure you, it leaving the 5% level, which was just like this end of the world level just a couple weeks ago. Just the fact that has left that number in the dust is about to be more of a headwind for stocks than you are currently being led to believe. But not from this guy because I'm telling you this now. Like this is you have to watch the move in yields. This is a real problem even though markets want to ignore it. Now one thing I am not ignoring and you can't ignore it and I know you're not ignoring it either. It's Micron. I pulled up this Instagram post uh that the fabulous gamechanging amazing social media team here at Yah put up. These guys are killing. Look at the engagement on this post. You all are. 7,200 likes, 130 comments. This will probably hit over 10,000 likes by the end of the day. Y'all are obsessed with Micron. I see it in our data. I see it in Instagram post. You love Micron in large part because the stock has went up in a straight line and you all have riches or just this thought that they get rich off of Micron. And I can't blame you for having these riches. This quarter killed it. Here are a couple of my takeaways. Massive sales increase. Sometimes analysis is in fact that simple. Go pull up the financial results out of Micron. It's on their investor relations page. It's free. There's no payw wall. Go there and check it out. Tens of billions of dollars were added to Micron's top line. That's abnormal stuff. But maybe it should be normal because we're right in the middle of an AI boom none of us have even seen before. Massive sales increases. You go down the income statement. You got massive earnings increases. And oh yeah, this is happening year-over-year and quarter over quarter. Like I've never even seen growth like this before. I wasn't even in this business when the internet uh bubble was happening. These are massive numbers. Massive margin gains. Every single segment that this company operates in crushed it. Massive margin gains. And I will leave it with this. Stop it. Wall Street. So many notes that I have seen this morning are calling out, oh, some concerns about peaking operating margins for Micron. Give me a break. I encourage all of Wall Street to go back on that earnings call from Micron and reread it. This is a company talking about tight capacity, higher prices, and all these things continuing not next year until 2028. This is a big moment for Micron and they're killing it. I think we have a we should have a a a comment from the company's CFO on the earnings call. Take a listen. And we've said that for some time that eventually price um increases would moderate and then and then at that point um in addition to just price increases at a at a lower rate um we would take you know we would we have a a a better mix of products and we would we would um work our mix uh based on our technology and and product leadership. Um and um you know and the market conditions as we said we would expect to remain tight and that would be supportive through 28. Totally looney to see Micron trading at eight times forward earnings on a PE basis. Ridiculous companies adding tens of billions dollars of sales. Earnings crushed it. Outlook crushed it. Checked all the boxes for me. Now I want to keep it moving here because there was a big news and it came out in a bit of a rolling thunder yesterday. started my show. Actually, I came out here on set talking about Mattelsio Naan Cries stepping down from Mattel and I worked my network, worked my sources. I've known Mattel for a while. I've known Nan for a while. Unclear where he was going. Then it happened late afternoon. Nod Cry is going to the merged Paramount and Warner Bros. to be the co-CEO of this company. And I think I've probably known Anan and talked to him for about a decade or so. I followed his whole career at Mattel. And here's why he got this job. He's got a resume in media way back when. He used to work with the guy that created the Power Rangers. I believe was his name was Haim Sabin. He has grown up in media. This is all he's done the past 15 25 years of his life is media. And there's an on right there. I believe that's probably the Sun Valley Conference looking very media mogulish. But the other thing I have learned about Anan at Mattel and covering his entire career, he's emotionless in terms of what needs the in terms of just pulling the trigger on what needs to get done and what needs to get done at the combined Paramount Warner Bros. massive epic huge cost cutting. Mattel has caught a lot of costs. The company has come out and said it may need to cut over $6 billion in costs. Anan will get that done. He will restructure this business and he won't think twice about it and it's going to be tough. You got big egos. You got big payrolls. And look, you're going to need somebody with thick skin to make those calls. And Anan Cry is in fact that guy. So, uh, to my knowledge, Anan was still in his office yesterday, uh, at Mattel HQ. What is that? Elsagundo. So, he's still wrapping up some few things at Mattel, but once he gets in there at Paramount Warner Bros., it is slash and burn. It is slash and burn. I can only imagine the waste inside of this company. And Nan's the guy to do it. There he is right there. And I I'll leave you on this. You know, I was thinking back to when I talked to Nan and can it was raining. I held the umbrella for this guy. It was just an interesting moment for me. He's got his work cut out from here, but if anybody's going to figure it out, it's going to be him. Uh, speaking of having to figure it out, I'm calling this bit of segment here. Icons under pressure. It's It's pretty brutal. Like, it's getting really really, really bad. This is like alarm moment. And then we have Oh, we got the horn moment on both of these companies. Now, Nike is going to come out. I'll start there with earnings after the close. Their stock price is the lowest in 12 years, down 80% in the past five years. The company is yielding, the dividend yield 4.63% according to Ya Fines Alphas data and they're going to come out today and you can see one of the biggest problems at Nike right now. The revenue is falling off the map. like the business is disintegrating and there remains I think you know I was talking to a good source that knows Nike well last night a major disconnect between what's happening at Nike HQ way out in Oregon and in New York City in like the realities of the financial statements companies losing massive market share where is the innovation I think we got some like things I want to show like speaking of innovation in Nike we have uh I'm looking at the Nike Hyper Ice boot. Now, this technology is from Hyper Ice. Nike just made the boot. And then you have the Nike slide, another Hyper Ice product. The company needs to get more innovative. There you can see the boot right there. I've got those boots. They heat my feet and they're really, really awesome. I wish they had a little bit of a charge. That's Hyperis technology, not Nikes. Can we show the slide? We have the slide. The slide just hit. It's kind of like a supercharged sandal. The slide you put your feet in and it gets little heat, gets a little vibration. Point being, Nike needs to pick up its innovation. These products should be coming from Nike, not a Hyper. Even though I love Hyper. Expect a bad quarter out of Nike today. Then we have McDonald's, another company I've been railing against since day one of this show about two weeks ago. Stocks down 30% from its highs, down 25% year-to- date. PE below its long-term average of about 24 times. lowest valuation in 10 years, yielding 3.3% and the market really doesn't give a crap at all. It's saying McDonald's keep your dividend yield. Look at this. And I just thought this was an interesting chart. That's why I had the T put it up here. You know, as the dividend yield as the I would say the 10-year yield on McDonald's has gone up, it's I would say on the on the Treasury yield, it's stock price has gone down. Not exactly sure the tie in there. I just thought it was really interesting. Now, McDonald's came out and is reportedly testing dynamic pricing. And I hate this. I [laughter] hate I think it's a terrible idea. It failed at Wendy's. Leave the algorithms off the McDonald's menu board. There's no reason if I drive up to McDonald's menu board and pay $6.50 for a Big Mac and then I go down the road to pick up a Happy Meal for Little Jenny because I forgot it in that first run, I see my Big Mac priced for $5.50. The low-income consumer is not the consumer to be nickel and dime in McDonald's. And here's another news flash. Just because you apply your algorithms to the menu boards at your locations doesn't mean suddenly you're going to see a major reaceleration in your sales and profits. There are structural issues with your business. First of all, you're just too darn big. Number two, you have a whole world starting to take GLP1s and that's impressing the business. So there's McDonald's. You saw what I said about Nike. two icons that are under major pressure and you're having the market completely ignore them and they can care less about each company's salivating dividend. So there you go. Now I want to get back on to tech because there's a lot of things going on uh in tech as you can imagine. You had Google coming out with its new model. You got Muse still dominating feeds. I saw Muse this morning when I was getting to our train. There was an ad going on. Can't escape Muse. Mike Shrefer is Gigascale Capital founding partner and former Meta CTO. Mike, good to see you. I'm not used to the jacket look. >> Come on, man. >> Well, you know, I figured for you, you haven't held an umbrella for me yet so I can [laughter] wear it down for you next time. >> And I just want the record to show, Mike, I I would hold an umbrella to you for you. I I would, you know, I'm I'm full full service host. Um, so we haven't talked since Muse came out. Like, how big is this going to be for for Meta? I mean, while I was waiting for you, I was interacting with my muse. It's adorable and useful. What What else do you want in life? >> What? How are you using it? >> I mean, all the time. I'm planning a trip right now, asking it to help me uh with some timing on that for iterary. I took some stuff, had it turned into a calendar. I had it help me uh find a car I was looking for. I'm calling around a bunch of dealers. It it just like on a daily basis being useful. >> What impact do you think it's going to have on the enterprise space? I mean, as soon as you use Muse, you're like, I want this for my enterprise because it is always on 24/7, proactive. Um, it is just a better way to interact with these AI systems. So, I I think as useful it is for consumers, you're going to see massive enterprise adoption of of things like this. >> Where what is next, you think, on on the Muse front, like where where can they take something like this? Well, the amazing thing about it is it's it's not integrated with anything yet. Like it's it's just browsing the web um and doing it for you. And if you saw Connect, they announced connectors for a whole variety of different applications. So, you know, direct connections, if you can imagine, into your Slack, into your payment system, into your calendar, into your ERP, like once it has a good API connection into everything, it's going to be so much more useful. And it's incredible how useful it is now just like popping up a web browser and connecting to these things. So, um, I think once you see things like Muse Connected and everything, it's it's going to become even more useful than it is today. >> What's more important to to Meta's future in your estimation? Is it some of the the hardware that we saw Mark drop about a week and a half ago or is in something like Muse? >> I think you should think about it a little bit differently. I mean, I I said this before, you know, when I saw you blast that Mark's in founder mode and he's investing in the long run. All the all the hardware he dropped, it's not like you can start that stuff 6 months ago. they've been working on hardware for, you know, 15 plus years. Um, they've been working on AI since, you know, 2013 when I first hired the the AI team. So, um, I think it's more just if it's technology, particularly, uh, AI, and if it's hardware, Mark is going to keep investing, uh, you know, he's not responding to the the winds of the quarters. He's just investing in the right technology. That's the way I'd look at it. >> I'm sure you saw the the MongoDB guy is now headed over to Meta. How do these hires happen? Like Mark just reaches out to him and say, "Hey, we have an amazing opportunity." I mean, the MongoDB guy was he was leading his whole company. [laughter] >> I mean, this is why like yeah, this is Mark Mark has is got the memo, man. He he he will personally go out and reach with you. He'll deliver soup to you. He'll do whatever it takes to get the right people because he knows the talent is what drives a business like his. And you see he's continually refreshing the key leads in the company, you know, um, bringing a board member on to lead the compute side, you know, bringing on the MongoDB CEO, bringing on Alex, bringing on Nat and Daniel. Like, this is this is what he does. >> You miss Mark there? >> Oh, I talk to Mark all the time. And yeah, of course, of course. It's an amazing place. So, I get to I get to play in two worlds. I get to still hang out at Meta and I get to sort of build the clean energy revolution. So, I'm I'm having a great time. We saw Mark at the White House with a lot of other uh tech leaders, Mike, and you know, on the sidelines, a lot of them may have, you know, the reports are that they approached Dario uh over at Anthropic and kind of asked him like, why are you sounding alarm bells on AI? If you saw Dario, what would you tell him? >> Yeah, I mean, I think we just have to be specific and consistent. you know, what are the risks and what are the right ways to deal with them. When we talk in sort of big absolutes and generics, it's hard for anyone to engage. So, if we're talking about cyber security, we should talk about what are the things we need to do to to protect against that. We're talking about, you know, bio threats, then we need to talk about that. So, I think we're starting to get there, but I think we need to make the conversation a lot more specific. Just like anything, what are the risks? What are the rewards? Is it worth it? Like that's the actual conversation. >> What what is the biggest risk? You know, we saw, you know, Reuters still putting out bits and pieces of the perspectus for anthropic that I got. I mean, kind of shout out to Reuters. Like, I mean, they whatever they're doing, they they got it. But really inside there, the risk factor was there was an existential risk to humanity. Like, what does that even mean? It's like AI can wipe out the world. How does that even happen? I mean, who, you know, I grew up in the 1980s sci-fi, so you you can plenty of movies and books have been written about this, but but you know, I I think there's some real near-term risks that we should talk about. The most obvious of which is is cyber security. You know, we've already had systems hack. Um, they're really good at it, and having run large scale systems, it's way harder to defend than it is to attack. I got to lock every single door. This agent can spend 3 days trying every single, you know, door and window until they find the one that's unlocked. Um, and so we got to do a lot of work to harden our systems and I think it's exposing that. That's like a right now day zero risk. I think, you know, I don't spend a lot of time worrying about the existential risk stuff. I, you know, I think that the best explanation of it is, you know, AI gets out, self-replicates, and starts sort of consuming resources, you know, for for its own use and competing with humanity for it. Um, but that's not it's not the thing I I spend a lot of time on because I think we should actually be focusing on more of these near-term issues. um and the benefits that can get that can happen with these systems. >> What were your thoughts regarding the the safety declaration the group the group signed? I >> think it's a good good step. >> Does it make any will it drive any change? >> I mean again I think getting the right people talking you know is is is a good step and I like I said I think we just need to get concrete about you know h how are we going to protect against these things. I think that the the other thing is, you know, we we started the segment talking about Muse. I bet you most people watching this are are and have been using some sort of AI this morning, maybe while they're watching me talk. And so, you know, there's a lot of benefit happening right now on a daily basis. I'm seeing it in all the companies I back who are accelerating their ability to deploy, you know, better, faster, cleaner technology thanks to AI. So, we need to have all those benefits and, you know, have a conversation about how we mitigate risks. I love the post you put out on X. Like you you you see you must see so many slide decks, so many pitches and you can't invest in every every one. Where where are you putting what what are you saying yes to besides that cool stuff in the water you and I talked about like data centers because that's I I do think that's really cool. >> Yeah. Data centers in the open ocean. Why why compete in people's backyards when I can use the southern ocean, you know, use terowatts of energy that nobody's touching right now and use it to power data centers? Like I think that we are very myopic in, you know, thinking about the last 10 or 20 years as how the next 10 or 20 years have to be. And there's so many great solutions out there. I was just literally yesterday in Idaho at the Idaho National Labs looking at a facility that hadn't had a new nuclear reactor in it in 30 years. And there's a startup Radiant Nuclear that's building a, you know, container size reactor. So, so you give me three parking spaces and I'll power your building for the next 5 years. um you know, no grid hookup needed, no sun, no wind. Uh it's just a magic box that makes power and this is something that they're going to turn on shortly. Uh and it is a sort of revolution in what we're doing. So, so I think things like that, things like data centers in the ocean, you know, we just invested in a company that's built robots that deploy solar farms twice as dense, twice as fast, um can really like accelerate your ability to get get power to power your factory, data center, home, city, whatever it may be. These things are, I think, coming faster than people realize. >> Is energy the big play here? >> I I mean, if you think about it, the debate right now is which is the bottleneck, chips or energy? Um, and I think it's energy, other people think it's chips, but we're investing in both. U, but those are the two gateways and bottlenecks to to the AI progress. >> Mike, good to see you. Uh, as always, uh, I still got to figure out how to use Muse. I have not done it yet, but maybe you can help me. We'll take that we'll take it offline. >> Wait, wait, wait. Time out. You can't let me go now. What do you mean you don't have music? >> I didn't download it yet. I didn't download it yet. I got to do it. >> Can you download it now today? I'm not coming back on the show unless >> I will download it. I will send you an image. I'm on it because I'm going I I need help like managing my life. It's It's getting tough. Mike, >> this is what it's there for. Find me on I will give you tech support on this. Go download it and then come come find me if you need help. >> This is This is why I do this job. So I can like talk to cool people like this. Mike, good to see you, man. I appreciate it. >> And then umbrella next time you see [laughter] me. >> I appreciate it, bud. Thanks so much. All right, we're going to stay uh on tech here. And yeah, I am going to download Muse, guys. Like, I need to do it. I I keep writing enough about Muse. Uh why not download it? I want to get on to another interesting note in my uh freestyle section of the show today. Good note from uh my man VC Ario at BFA. Makes a lot of good calls on Nvidia and other semiconductor plays. Noting this, and I think this is year end. We got a couple months left in the year, and this is always when Wall Street comes out with its big calls, its predictions for the year ahead. And big calls catch my attention because it could lead to higher valuations, higher earnings estimates on companies and get a lot of people talking and get stocks moving. And what Vet came out here and said was really quite interesting. Raised his total addressable market or TAM outlook for 2030 for AI to about $2.2 trillion. I mean this is a massive increase from Reve also calling out potential plays on this. I should say previously he was about at $1.8 trillion. So he is looking for a more aggressive buildout of AI infrastructure in this country. More data centers more not most notably Nvidia, Intel, Marll, Micron, I'm back to Micron and Lamb Research are some of his top picks on this play. Nvidia certainly makes sense. Intel has had really a comeback year this year. Finally, all those fabs, all those chipmaking plants that former CEO Pat Gellzinger, shout out Pat, put in the ground many years ago that was were making a lot of losses, those are now seen as a key strategic advantage of Intel, not surprised to see on this list. Marll doing good things on the chip front. Micron, like I just mentioned at the top of the show, prices are higher, capacity is tight. That's a magic elixir for the company's top and bottom lines. And Lamb Research, all these companies in the same boat. Just keep an eye out on this because you're going to see a lot more big predictions over the next few weeks from Wall Street. And I I think you're going to see a lot of them specifically come on tech because everybody wants to be a hero, especially on tech. Now, I want to wrap up the first show on this one. Uh how the stock market works has a lot in common with how overachievers view themselves. I should know. The stock market is always in a race with itself to find the next big thing. predict the next big thing and the trading portfolio could look a lot more green. Overachievers are in the same boat, always looking to execute on the next big thing in a bid to keep their overachiever status intact. But for both, it's a vicious cycle that often leads to one outcome, failing to appreciate the here and now. I think this logic could be applied to Micron's financials. Micron blew it out of the water on its earnings day. The main headline here is that the memory chip maker beat sales and profit forecast for the quarter on explosive demand from the AI boom. Guidance was strong. Also strong except for margin comments on the earnings call which may be causing a muted market reaction. They're always looking for negative things. That's the market does. But keep Micron's quarter in the proper context. Consider this. Micron added about $43 billion in sales in the most recent quarter compared to the year ago quarter and added more than $13 billion in sales from the quarter reported just three months ago. All this is really really massive. Operating market exploded in every single business segment year-over-year and quarter over quarter. The stock market is forwardlooking. So the race is on to predict Micron's next 12 months of results. Don't lose sight of what this company is doing right now is all I'm saying. The same goes for your overachiever self. Stay unleashed. >> [music] [music] [music] [music] [music] [music] [music] [music] [music] [music] >> Heat. Heat. [music] Down. [music] [music] [music] Nat. >> [music] [music] >> Down. 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