SpaceX wants 80,000 cell towers, and Amex raised its full-year outlook | Sozzi Unleashed

It's been a week. It's been some Thursday. And my fry is gonna kick off with an ice cold Guinness because frankly, number one, I've earned it. Number two, I think you've earned me watching me drink this drink. And the number three, it's been a wild morning, wild afternoon yesterday for tech stocks. And this one caught my attention because I think you still have tech, the tech industry so disconnected from what we're seeing in the markets. And that that's normally the case, but here we have the Cloudflare annual developers conference at Oracle Park. We got the Chain Smokers there. DJ Tiestto I had the opportunity to talk to at uh Ken, which is very exciting. But they're out there partying and your portfolio is getting blown up. I can't say that I'm so surprised to see tech doing this. Hit me with the other chart, guys. Uh team fired up here because this fits nicely. While everyone's out there parting, this is what's happening with tech stocks. Look at the major reset in the S&P 500 tech sector forward PE multiple. It was here. It was here. It was here. And now it's down about here. So go out there and party on. Right. who uh everybody's making money except the people not making money. All right, like I said, I gotta take a sip of this beer because it's been it's been a a long night for me. Call what you are seeing in markets right now a perfect storm. That beer is that's bitter. Uh that is a host of big waves meeting at one moment in time to sink a ship or in this case your portfolio chuck full of tech stocks. Here is the vibe in the markets after Thursday's preh Halloween tech bloodbath. The vibe sucks. Every main story in markets is being viewed as a negative, only fueling the bare raids I'm seeing out there. Tesla's $5 billion capex cut this week is being viewed as an indictment on AI demand. No matter if Tesla isn't a hyperscaler with cloud services to sell. Like what? The market thinks it's a hyperscaler with cloud services to sell. And a capex cut isn't a great thing. Somehow the capex cut by Tesla signals capex cuts next week from Microsoft, Google, and Amazon when they report earnings. I am hearing that will not be the case, but the market is what the market is. Meta's new common stock sales being seen as only a drop in the bucket of what Meta will need to raise to support its AI buildout. The rest of the cash is likely coming from nervous debt markets at higher interest rates. Same goes for other big tech players. I'm looking at you, Oracle. Oil prices have exploded to over $114 a barrel. That's a headline I saw when I woke up this morning. I'm like, oh my god, are you kidding me? Making it costly to build data centers. Oh, and making it more challenging to keep the economy humming along while also putting one more year-end rate hike from the Federal Reserve in play. Last but not least, marketleaning stocks and Nvidia, SanDisk, and Micron have really broken down over the past few trading sessions. All of this, all this is doing is fueling more fear in the markets. It's been a week and the one that needs to end and I need it to end right now because it's been a lot. Now, I'm gonna keep this going. I want to see if I can finish this beer by the end of the show. Uh, I want to start a little bit on take itself force myself to take a breather on on tech and lock in on SpaceX because I just mentioned my day started with seeing oil prices at $114 a barrel. That wasn't exactly great, but it also started with seeing news, reported news. I think it was Bloomberg saying SpaceX is eyeing a deal for 80,000 cell towers. I was just here two weeks ago breaking down Tesla. I mean, SpaceX buying broadband or service spectrum to potentially make a major play against the telecom companies. I'm back here telling you that they might be buying 80,000 cell towers. I mean, this would be a major major play by SpaceX and I think a bigger play than them going out there and buying Spectrum. This is the second phase in that. Now, my hot take is this. The Starlink black cloud hanging over telecom stocks won't be vanishing anytime soon. And for my analysis on this, I got to go pull up Alphas. Thank you to the uh Yao's team in the back for getting this up for me. Two things I want to call out because there is now a black flag uh flying or hanging or a cloud hanging over these telecom stops like a Verizon, like AT&T, like T-Mobile. And I'm not signaling anyone out particular, but I just wanted to focus on AT&T. Two things I want to call your attention to from Alphaspace right here. The dividend yield on AT&T that says about 4.5%. Last time I checked, it gets updated in real time about 4.6%. As these stocks have come down, the telecom plays like in AT&T, the dividend yield has gone up, making them more attractive potential investments, but not necessarily if you have uh Elon Musk potentially going out there and creating a cell network. Number two, with that cloud hanging over telecom stocks, look at the PE multiple on a company like AT&T, 8.8 times forward earnings. the broader stock market, the S&P 500 is trading about 20 21 times. I just showed you a chart on that board over there, the S&P 500 tech sector trading at 19 times. You have AT&T trading point times. You have a T-Mobile. You have a Verizon trading below their historical value valuation multiples. Not because they're not doing good. It's because a company like a uh SpaceX potentially buying cell phone towers from American Tower and other potential names. Now, this may not happen. I do think it will happen. I think Elon wants to control his own destiny and broadband. He doesn't want to worry about an AT&T, a T-Mobile, Verizon throttling back power to his various operations. So, I think he wants to own his own network and this is becoming very real and I think telecom companies need to take it a lot more seriously than they're taking it at this particular moment. Uh, story number two, Apple, and you heard the morning team talking a little bit about this uh this morning. I got to get off this beer. We got to get back into the energy. Uh, all this beer does is put me to sleep. Apple could overtake Nvidia's market cap. Wow. I think it was over two years ago. I remember sitting at my desk here at Yahoo Finance HQ and I remember when Nvidia became the world's most valuable company supplanting an Apple. Now they have changed positions. I believe once or twice since then. But by and large it has become very comfortable to say Nvidia is the world's most law valuable company. They are powering the AI boom. They are the AI chip darling. Well, guess what? Over the past month, Nvidia's stock has sucked wind. It just hasn't done well. Down about seven and a half percent, Apple stock up about 3%. And there are a couple reasons why this is happening. I gave you three. One, the AI trade has gone ice cold and Nvidia is the AI king. We've seen this week the AI trade getting questioned. Whether it's companies like Coreweave, Nebas, it's they're all getting questioned. Even Nvidia, even Jensen Wong has been out there talking to folks saying bullish things and the stock has still been under pressure. Number two, Apple is not really seen as an AI play. Uh, you know, a year ago that wouldn't have been great, but now Apple just selling hardware devices like the Duo that folds in two and looks like a sandwich. Uh, that is being seen as a good thing. Being a hardware player is a good thing, even though I really want to see more from Siri. I need Siri to do more things with AI. Should be my personal life assistant. We'll take that offline. Number three, Apple has this holiday season's must have gifts. You've seen some of the lines. Go out there and X. In fact, go to Yahoo Finance. We've been covering this Duo launch, doing a great job. Shout out to our tech editor, Dan Halley, for doing some great work on this one. The lines for the Duo have been very strong all around the world. Now, the reviews have been, I would argue, super abysmal, but these people are still out there buying a $2,000 plus handset from Apple, and that is good for their sales. That is good for their profits. And once they get more stock, more shipments of this, best believe people are going to try to go back into the Apple store and get a deal this holiday season. So that is why you're seeing that start to shift Apple between Nvidia in terms of market cap. I told you I told you it was a busy day. I told you it was a busy day. And then against all the backdrop of all this stuff guys, we might have the anthropic uh perspectus drop today. Uh you based on a you know a source familiar with the matter telling me uh that the company is in fact in their quiet period. Uh so you're not going to be hearing much from anthropic in terms from an executive standpoint for right now. I do think this S1 could come later today. This is just my hunch, just my gut. Uh but even if it doesn't, it's likely to come within the next weeks and then the company will probably go public mid November, uh perhaps uh late November around that time frame. But it is coming and there's going to be a lot of investors that are going to make a ton of money off of investing anthropic early on. One of them is someone that I know quite well, no stranger to this program, that is Mark Beni off, somewhat of an early investor. uh he of course is the co-founder and CEO of Salesforce. Early investor and anthropic could rake in tens and billions of dollars uh from this IPO. You look at uh even Ashton Kutcher his VC firm early investor anthropic there's a lot of big names in this and my takeaway here is this. I am very curious to see how a lot of these uh how a lot of these gains on these anthropic investments how this plays out in early next year. how these investments, how these gains theoretically depending on how the IPO comes out could be the early story of next year. Do early anthropic investors hold these stakes in anthropic on a belief in the long term? We've seen that by and large with the SpaceX. We haven't seen, I would argue, rampid selling in SpaceX. The believers are the believers. They believe in Elon. They believe in SpaceX. I want to see if that same type of confidence is afforded Dario Amade and even his sister Danielle Amade. Uh if not, I mean that could be really bad in the first half of next year. You're seeing all these early investors dump their stock, maybe raise money ahead of an open AI IPO, whatever it is. Uh theoretically, you would like to see those early investors stick with anthropic uh months if not years uh after the IPO. So here are a couple of the early names that are going to win. You have uh Iconic, you have GIC, Sequoia, longtime venture capitalists, Menllo Venture, same deal as Sequoa, Spark Capital, invested 75 million. These folks probably cannot wait to get this anthropic IPO. So again, I think you're going to get the S1 very soon, if not later today. These things tend to typically drop always after the market closes on on a on a Friday. Hey, oh, what was that team? Apple. I can't make this stuff up. Apple just passed Nvidia for the world's largest uh most valuable company. There you go. Apple coming out of the gate and investors taking a bite out of that one. Uh I'm kind of sad. I mean, my I appreciate my team shouting this. I'm kind of sad. I've gotten used to Nvidia holding that crown, but uh All right. Well, Apple, you've you've earned it. You brought me a foldable phone with a little hinge in the middle of it, and it doesn't look like it has a hinge, so I'm I'm cool with it. Well earned there, Apple. Uh RIP for now, Nvidia. All right. I want to stay on all things anthropic because uh this is a very uh like I was just talking about, interesting time, a very important time for tech, if not the markets, with everyone watching this. What might happen with anthropic? I want to bring in Jared Carmel, Manhattan Ventures Partners, co-founder and managing partner. Jared, good to see you. This is uh when are we getting this S1? >> I got to tell you, what a crazy week. I mean, nailed it. I should be drinking beers with you instead of drinking water. >> You got one. Come on, join me. Let's go. >> It's uh way too early and I got to jump on a plane in a little bit. Um look, I just think right now we're probably living in the wildest time ever, right? I mean, you know, you have you had SpaceX go out after, you know, 24 years. Uh, next year is going to be really a receipt, right? You have you have for a decade early investors in SpaceX, Anthropic, XAI, you know, they've been sitting on some of the biggest paper games in venture history. Now, the markets are getting crushed. Now, you have the SpaceX lockup running off at some point, you know, in February. Anthropic is going to be coming public and those games turn into real cash. Um, and I think this DPI is going to, you know, hit accounts in a way that we haven't seen uh before. Now, I don't think Anthropic is going to slow down or stop their process. I think they're they're way too deep, and I don't think that the um AI market as we're seeing it today is really going to affect where uh excuse me, whether or not they drop an S1, whether that's today after the market or sometime next week, I do think it's imminent. >> Let me get into your brain a little bit, Jared. That's so when that S1 eventually comes out, whether it's today, next week, whenever it is, what are some of the biggest things you will be looking for uh from this company? What do you want to see? Because look, we've gotten a lot of leaks the past month, which I look, I've never seen that before, but what are you going to be looking for? >> So, look, I think that first off, I think this needs to be valued appropriately, right? I think the biggest problem that we've seen in the IPO markets over the last few years are sort of valuations that have been off sides and this needs to be valued to sell. The IPO buyer, whether that's institutional, retail, they seem to hop around, especially when they're not getting the pop that they need. And I can fully understand why a company like Anthropic wouldn't would want to value themselves fairly as opposed to let's say undervalued. But the reality is you need to have shareholders for the long term. What I think we're going to need to see is that the enterprise part of their business continues to be sticky, right? Because you know enterprises sort of are hard to roll off once you get in there. It's super important. So look, I think that right now um the company has leaked information in a way that we've never seen before. Well, I shouldn't say the company. somebody is out there leaking information in a way that we haven't seen before. So, a lot of that is now in the public domain. Um, if right, I think that this company is uh poised to take off, no pun intended. >> Is is that $2 trillion valuation for anthropic about where you think the company should be valued? >> Where do I think it should be valued or where should it be valued at the IPO? I think those are two separate questions in my mind, right? So, it's hard to put a number on it. Um, but I don't think two trillion is crazy. A year ago, this company was doing a few billion in revenue and today it's doing tens of billions. Right? The market isn't pricing a chatbot. It's pricing an infrastructure layer for how every business is going to run. Right? If the S1 shows margins um after compute moving in the right way, 2 trillion starts to look like the opening bid, not the ceiling. But again, I'd like to see this priced price to sell. So, our goals internally is to see it priced somewhere between 1.3 and 1.5. Is it a strategic misstep by the OpenAI team not to come public this year? >> Well, I think the answer is yes. I think now you have a public comp. So, if this doesn't go well, I think that what you're going to end up seeing is Open AI is going to have a much tougher time raising money going forward, especially at the valuation that they're at. And then, you know, the gamification adventure is very real. All of a sudden, it's going to be one of those moments where it's like, you name your valuation, we name our structure. Um, and once that happens, um, you know, who knows what it's going to look like, but I agree. I think tailwinds are super important. I think instead of doing a private raise, they should have went public, um, around the same time. Big Uber lift. >> How, how much leeway does Anthropic have to produce years of losses? You know, I think back to those early days of Amazon, the market gave it >> somewhat of benefit of the doubt. Will Anthropic be afforded that same benefit of the doubt? Look, you know, we're looking at a moment right now where I think it's still early days for AI disruption, right? It's just they have high valuations. That's the only difference. And maybe that's because of the total addressable market. Maybe it's because of the weakness of the dollar. We could argue that you over beers in real life if you'd like. But the reality of the situation, what's that? >> Sold. >> Done. So, um, the reality of our situation today is probably a an an overly simple one is that, you know, what we're going to need to see from this company is we're going to need to see, you know, continued um growth in their business. I think the worstkept secret out in the market right now is what's happening with the openweight models. Um I think you know the token spend sort of flipped um you know a few weeks ago where I think 80% of all the dollars that were being spent on tokens were on the foundational models and now it flipped to the open weights. So the question is what do you do using that same Amazon example at some point if you're anthropic do you say hey I'm going to get rid of you know physical books and go to digital right so um which is obviously what Amazon did. So, I think it's one of those moments where it's I I definitely I don't think it's an issue that we're going to have to deal with today, but in the next 24 months or so, I think we have to be totally aware about where this market's going versus where it currently is. >> You could speak to this better than I could. I believe you were an early investor in SpaceX or have invested in in SpaceX. If you know I I still get the sense people are are just really big believers in all things SpaceX, big believers in Elon Musk. And if there are a couple not so great quarters, it's okay. You know, would you put Dario on the same level as an Elon Musk? Will he get that same love that Elon gets? >> You know, Elon is a one of one. Um, I think Daario has built an amazing business. There's no question about that. But, you know, Elon's a rockstar in comparison as far as his persona goes. And so, he gets a lot of leeway because of that. Um, I think that this IPO at two trillion is sort of, you know, priced or potentially at two trillion will be sort of priced for perfection. Um, and now they have to make sure that they run a good business. Look, I think that two things. Um, at this point, I think companies are pretty well trained to make sure that they have good news going forward post IPO. So I do think the next few quarters should be um should be decent tailwinds for their business. >> What are you expecting from the hyperscalers when they report next week? Uh this I think the market uh seem to forgot that Tesla is not a hyperscaler and it's gotten all spooked by their capex cut. Do you think more capex cuts are coming and how would the market interpret that? >> You know, it's a good question. I I'm not an investor in the hyperscalers haven't been. we sort of passed on most of them and I kept kicking myself because valuations kept going higher both privately and then for a while publicly um if you know I do think um today you know if you're talking about SpaceX Tesla etc I mean it sort of operates as one I think compute is a huge part of their business right they brought brought Colossus with it when they folded it into SpaceX and now potentially if this 1 plus 1 equals 11 with Tesla it becomes a much bigger part of the story as far as the other hyperscalers go it's hard to comment because I really don't cover >> are you excited about a SpaceX potential SpaceX Tesla merger. >> Look, I mean Elon has already won two legs of what we're calling the triple crown. X into XAI, then XAI into SpaceX. And I think Tesla's a third. And the way I see it, these are one company that just hasn't filed the paperwork yet, right? They're a natural sort of classic 1 plus 1= 11. Um, and I think the easy sort of take here is that it's a brain and body situation, but again, I think the real story is compute and power. As I was suggesting, when XAI folded it to SpaceX, it brought Colossus with it. And SpaceX is now, you know, renting the compute to the biggest AI labs in the world. Grock runs on it. Optimus is going to need it. And Star Mind is the bet to sort of put it into orbit. Now, if you take it one step further, Grock can be the uh total operating system for everything that Musk builds, right? The cars that drive themselves, the robots on the factory floor, the spacecraft headed to Mars. X is probably the nervous system feeding real-time data in a way that nobody else can and Starlick beams it around the world in milliseconds. And the way I see it, then there's power, right? And that's the piece that people sort of forget. And so to what I'm seeing is that, you know, this is the quintessential example of why two companies belong together under a conglomerate. And the data center part, right, that that you're suggesting, look, we're talking about potentially bringing data centers to space at some point, right? So I think that right now the market for the next several years especially as we build I think three things are going to happen simultaneously. We are going to see a giant push into energy which is pretty clear. The second one is I think semiconductors are going to have to get more efficient in order to manage and third is you know sort of this science experiment of trying to send everything into space. So I think long term I think the hyperscalers I think short-term the hyperscalers will be just fine. I think long term we're going to see some issues. Are you comfortable with SpaceX, you know, blank, considering what you just laid out, raising tens of billions of dollars? Is that just already baked into your plan because they have to do it to fuel their growth? >> You have to do it to fuel the growth. I mean, you just nailed it. There's not much more to say about it than that. I think that right now SpaceX is a much bigger business than people actually recognize in everything that they're doing. Um, you know, they're creating a brand new economy that never existed before. So I think, you know, today maybe it's one of the biggest science experiments ever, but right now I think that the Elon premium and what's necessary in order to get there is of the utmost importance. So the capital I think is super important. >> Jar, let's stay in touch. I'm jealous of your Delorean and I hope you get that that beer this weekend. >> All right, man. Good catching up. Thanks so >> All right, switching gears. American Express hit a lot of the right notes in its earnings report today. Billings were strong. Customer acquisition was strong. Earnings beat estimates. and the company raised its fullear outlook. What I continue to see from AMX is a business benefiting from a higher income, a higher income customer base. A base of people with gains in their stock portfolio and who are working hard to ensure they get their year-end bonus. But what's happening with the AMX customer isn't indicative of every American h household. Actually, far from it, as many battle with the higher cost of living. Here's what I heard on this front this week in my various seuite chats. >> Those that are relatively well off um they feel great. Um, they continue to buy in club and online bigger pack sizes to look for value. They love innovation. They love to treat themselves in the beauty space and the wellness space or healthcare. And so a $30 bottle of shampoo is is accessible to them and they like to treat themselves. On the other hand, you have the consumer that is more cash constrainted and we need to serve that consumer with the right cash outlays so the right price points so they can afford the products they want to buy. 62% of people are living paycheck to paycheck. And I do not think it's because of income. It's just because of the lack of strategy and information that that unfortunately they didn't get when they were younger. 39% of people in America believe that if they could just get to paycheck to paycheck, that is a better financial situation for them. >> As you can see from my amazing hairline, I splurge a lot on premium shampoo, usually from PNG. All right. The AI capex cut hurt around the world of markets. Or was it an AI capex cut to begin with? Tesla said this week it's cutting its 2026 capex guidance by $5 billion to $20 billion. Still a lot. Just three months ago, the company lifted it by $5 billion to $25 billion. Also a lot. The quick retrench sparked worries in already nervous market for tech stocks. The Tesla's cap X cut signal a slowdown in AI demand. Thing is Tesla isn't a hyperscaler. Tesla has no cloud services to sell and no contracted capacity to walk away from. Come on. And the cut ties more closely to challenges making optimist humanoid robots than a less optimistic view on AI from CEO Elon Musk. If you are looking for a sign of how nervous the market has gotten, this is it right here, friends. I think when Microsoft, Amazon, and Google report earnings next week, they will do what Meta did this week, tighten up their capex spending plans, which is way different than cutting them. They will also probably signal the need to raise billions of dollars in more uh capital to support their AI buildouts. The positive here, the market knows this news is coming thanks to Meta, not Tesla. Stay unleashed. Hey, hey, hey. Heat. Heat. Hey, hey, hey. Down. Down. Down. Heat.