☕ Google, Microsoft and Meta – “Adopt, adopt or die”

Good morning! 👋

It was an early start around here today for two reasons:

1. I was due on camera for a conversation with the one and only Maria Bartiromo at 0310; and,
2. I wanted to get a quick workout before tackling another round of blockbuster earnings later today.

Done and dusted!

People tell me they have trouble with exercising, and I get it – doing so is hard - but like investing and trading, the hardest part is the one they don’t think about.

Starting.

One step, one rep and one great company at a time.

Profits are always the currency of success!

Here’s my playbook.

1 – Google’s blowout, Meta and Microsoft

More than a few people laughed in my face a while back when I said that AI would be a big deal – possibly even the biggest investable opportunity in recorded human history.

They’re not laughing now.

In fact, many are wishing they’d listened.

Google blew the doors off earnings yesterday citing AI as a primary contributor while also laying out an incredible map forward.

That sets the tone for both Microsoft and Meta later today, imho. (Watch)

We also talked about what I make of upcoming economic data and rising rates as they impact the markets and the investing process.

2 – Of course, China disagrees

China ‘does not agree or accept’ the EU’s additional EV tariffs placed on Chinese-made EVs entering the European Union. The tariffs are varied between 7.8% for Tesla but are up to 35.3% on Chinese EVs (Read)

China has apparently filed a complaint with the World Trade Organization, saying that the tariffs are “protectionist”.

All for naught.

Tariffs will not keep Chinese EVs at bay.

Not in Europe and not in the US.

The Dragon is coming to dinner and the only decision you’ve got to make as an investor is whether to be at the table or on the menu.

Think about it.

Many Chinese EVs are now higher quality, better engineered and faster from paper to the sales floor at ½ or less of Detroit’s production cost. If you’re not investing in the best, you are gonna get left with the rest.

Ford CEO Jim Farley’s recent take on the SU7 (which I mentioned yesterday, See #5) is a good example. And, having seen Chinese EVs first hand, I can tell you he’s not kidding.

Tesla is the only Western maker capable of mounting a sustainable defense, imho.

3 – Google is fighting for its life

Chances are good that you’ve seen the earnings by now just like I have. (Read)

What you may not realize is that Google is fighting for its life.

Newly seated CFO Anat Ashkenazi – in her first call as CFO – said bluntly that the company will continue to cut costs to invest more heavily in AI.

Good.

The company has a lot of catching up to do.

Alphabet has returned 172% in 5 years compared to 217% from Microsoft and 300% from Apple.

MyPOV: At the risk of sounding like a broken record, every business on the planet will adopt, adapt or die when it comes to AI. Invest accordingly.

4 – AMD down because analysts aren’t “impressed”

That’s what CNBC is reporting. (Read)

Let’s review.

These are the same analysts who largely missed the run, who failed to grasp AI when it emerged, who still don’t understand the impact and who don’t work for the company.

The headline should read “analysts get it wrong again.”

CEO Lisa Su knows exactly what she’s doing.

We’re talking about a company that just did $6.82B in 90 days in a market that will be worth $500B in less than 36 months. Gross margin expanded to 54%.

If that’s unimpressive, I’d hate to see what truly impressive numbers look like. 🤷

You?

5 – Thanks for nothing, fellas

Wall Street’s sell side is constantly late to the party and often in firm command of the obvious.

Case in point, Bernstein is making headlines today for having downgraded Boeing because… wait for it… the strike may negatively impact its outlook. (Read)

Wow, ya think? 🤦

On the other hand, I suggested that investors should short or avoid it in early 2019 when it was trading at nearly $400 a share. And subsequently several times since that it would break $150 a share as was the case last month.

I am NOT telling you this to brag – I could have easily been wrong.

The point I want to make is that if you’re an investor who spends hours perusing Wall Street’s analyst reports, odds are you and your money will miss a lot.

Palantir, anyone!?!?!

RBC still has a $9 target if I’m not mistaken… up from $5 in early May.

It’s at nearly $45 today.

Wall Street will always follow the path of least resistance and the sooner you understand that, the sooner your portfolio can thank you.

Bottom Line

Take the risk or lose the chance.

As always, MAKE it a great day.

YOU got this - I promise.

Keith 😊