Adam Johnson: AI Boom, Not Bubble. Why This Bull Market Still Has Room to Run
Summary
Market Outlook: Bullish stance on US equities into year-end, citing strong GDP, robust corporate earnings, and seasonality-driven tailwinds with buy-the-dip working repeatedly.
AI Sector: Argues AI is not in a bubble at current Nasdaq valuations; highlights selective stock-picking with NVDA favored for growth-to-valuation versus avoiding PLTR on extreme multiples.
Key AI Beneficiaries: NVDA (semiconductors) seen as attractively valued given 75% earnings growth; CRM leveraging AI add-ons to drive higher client spend and earnings.
Use-Case Leaders: SYM automating Walmart logistics with warehouse robotics; GXO expanding logistics automation, underpinning the warehouse automation theme.
Urban Air Mobility: JOBY profiled with near-term air taxi operations, safety redundancies, and strategic partners; BLDE highlighted for time-saving airport transfer services.
Consumer Examples: AMZN productivity gains via robotics could lower costs and boost margins; TGT and COST using data/AI to optimize merchandising and in-store engagement.
Energy Angle: GEV positioned to power data centers with on-site gas turbines using natural gas, linking energy infrastructure to AI growth.
Risks: Main risks include inflation re-acceleration and tariff/legal outcomes that could pressure rates and equity valuations.
Transcript
There is far more to like than to fear. Think about it. We've just gotten through the uh recent quarterly earnings report and it's one of the best that we've seen in the past several years. Corporate America is doing great. Uh look at the economy GDP. The economy itself growing almost 4%. That's a lot stronger than than people thought. So I have been buying on dips and there have been plenty of them because it's been very choppy. But yes, I am very comfortable being fully invested and I think that markets go up from here. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Hello and welcome to Wealthon. I'm Maggie Lake and today I'm joined by Adam Johnson, portfolio manager of the Bullseye American Ingenuity Fund, who's going to share his thoughts on the best way to make some money into year end. Hey Adam, it's great to have you back with us. >> Oh, great to see you. And this is the perfect time of the year to actually make money because uh it's the seasonally strongest uh period of the year, not to mention all the things that I think are going right both for corporate America and uh America itself. >> I I always love your your sort of positive outlook, Adam. Uh and you're right, it is, you know, we we talk whether we talk about sort of year end or Santa Claus rally. There's all sorts of, you know, terms for it, but it is typically a really seasonally strong time of year, but it seems like, uh, equity markets and investors have kind of run into a wall of worry lately. Um, we didn't get that sort of downturn people were thinking about earlier in the fall, which is seasonally a little bit weaker time. We blew right past that and we have a lot of people talking about an AI bubble. They're worried about the economy. There just seems to be a lot of like sort of angst out there. Why are you so positive? >> Well, in short, because there is far more to like than to fear. Think about it. We've just gotten through the uh recent quarterly earnings report, and it's one of the best that we've seen in the past several years. It was a fourth consecutive quarter of double-digit growth and it was accompanied by near record profit margins in spite of tariffs and everything else. So, corporate America is doing great. Uh, look at the economy, GDP, the economy itself growing almost 4%. That's a lot stronger than than people thought. Meanwhile, unemployment, I know that there's been a lot of talk about weakening um jobs trends, but we're still creating 50,000 jobs on average per month. So unemployment's down at 4.2. That is very near the historical lows. Um add to that the fact that you have uh two massive stimulus programs in the form of number one artificial intelligence total hyperscaler expenditures going from 350 billion this year to 420 billion next year. That's a stimulus program for technology. And then secondly, the stimulus program that's in the form of foreign direct investment into this country. $17 trillion, that's equivalent to half of GDP in announced deals since uh uh inauguration day. So, um you add those two stimulus programs to the fact that corporate America is already doing quite well. Uh that makes me very bullish on the future. And then we think about this seasonal trade that happens. It's the seasonally strongest time. And so you add all that together. Oh yeah. And then there's this thing of businessfriendly Washington, right? lower tax rates, uh, accelerated depreciation, fewer regulations, drill, baby drill. Add all of that up and I think that is a very positive backdrop. So, I have been buying on dips and there have been plenty of them because it's been very choppy. But yes, I am very comfortable being fully invested and I think that markets go up from here. Megan, >> so that's super interesting. Le let's take a couple of those components. So for the FDI, uh you're right, and this is sort of like Trump the great negotiator theory, right, in order to in some of these trade talks and tariff talks, um he's been able to get these some some countries to sort of agree to invest or they're front running it, thinking this is the best way to avoid being in the crosshairs of the Trump administration. But you'll have skeptics out there who will say like, listen, they're announced, but that doesn't necessarily mean that all of that money will make its way here or that we won't see a reversal. Uh, you know, there are a lot of people who say they're going to nominate him for the peace prize, too. And I don't know if everybody believes that, you know. So, um, you know, in in the art of the deal, there's a lot of people who think there's a lot of noise and what's real. Why why should we actually think that that is going to trans that that's we're going to see that happen? Well, we've already seen not only have we seen the um heard the commitments of 17 trillion, but we're actually starting to see evidence of that where factories are moving over, jobs are being created. And yeah, you're right. U that 17 trillion isn't just money that's coming in this quarter or next quarter. Uh it's over time. In some cases, some of that money will come in over the next 3 to 5 years. Uh, but you you know when when you go to the altar and you say, "Let's get married." You don't say, "Well, you know, we might get divorced, too." I mean, I know some people do prenups. I recently got married. No prenup here. I'm all in. Uh, that's my personality. But, you know, I think you have to take um I think you have to take things uh at face value in many cases. When you talk about countries um saying they are bringing uh capital over when you see companies that actually are um bringing capital over I think you have to take that for for what they say and what they present and yes over time we'll we'll get the evidence of that but so far I like what I see and I think it's playing through in the fact that GDP is coming in a lot stronger than people thought I mean remember it was only six seven eight weeks ago that we were still sort of debating recession recession probabilities. Hm. Is it a 20% 30%? What do you think? Oh, Goldman thinks it's going to be 30%. You know, and now here we are with 4% GDP. U the highest earnings we've ever seen, consistent double digit earnings growth, record profit margins, you know, proofs in the pudding. >> Yeah. Um and there have been people calling for this recession. I think we're at four years now um waiting for it to happen. And it's it's been a tricky one. Uh AI stimulus plan. I like I like the way you phrase that. That's a really interesting way to think of it. There are a lot and I think this is where the the wall of worry is most pronounced that there are a lot of fears that we are in an AI bubble and that all of this uh spending that you're seeing cap capital spending that you're seeing investment in this space is a is a little bit of an arms race but not clear it's going to actually result in revenue and not clear it's sustainable. a lot of concerns about circular financing, you know, clients um subsidizing uh their uh their own um you know, suppliers and vice versa. H what are do you worry that we are in the later stages of this? How are you thinking about that? >> Well, I think there are two components to the question that you're getting at. Number one is valuation and number two is structure. So, let me address each. In terms of valuation, we are nowhere near an AI bubble. Here's why. The NASDAQ, which is, you know, effectively a proxy for uh technology, especially the triple Q's, the largest 100 non-financial companies on the NASDAQ. Again, a proxy for tech and things AI. Uh trading at 35 times earnings. For comparison sake, the S&P is trading at 23. So, yeah, it's more expensive than the S&P 500, but at 35 times earnings, that is a fraction of what we have seen during previous bubbles. If you look at NASDAQ valuation in both 2000, the dotcom bubble and then 20089 right before the great financial crisis um the NASDAQ traded as high as um 85 to 90 times earnings and again we're 35. All right. So we are onethird the valuation that we saw way back in those previous tops. Now yes I agree there are some stocks that are expensive. I will not touch Palunteer. Palanteer trades at 300 times earnings, 100 times sales. You'd have to have uh an entire century worth of revenue, not [snorts] even earnings, revenue, just to get to the valuation, the market cap of Palanteer. So, no, I will not touch Palunteer. That to me is its own unique special bubble. Um Nvidia, by contrast, sort of the other poster child for AI. I think it's quite cheap. earnings are going to grow 75% and you're paying 32 times earnings uh for that growth at 32 times that's cheaper than the NASDAQ as a whole 35 times. And um you say, "Yeah, but it's more expensive than the S&P." Yeah, of course it is because you're getting 75% growth versus 12 to 13% growth for the S&P 500. So I think Nvidia is quite cheap. Palanteer I won't touch. And I think you have to I think that's a lesson those two stocks, Palanteer versus Infid um In Nvidia. Uh you can't paint AI with the same brush. You have to uh do what I do, which is pick stocks and look at each company individually. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hard Assets Alliance, at hardassallalliance.com. That's hardassallalliance.com. Yeah, I think that is really important and we do tend to group them under this sort of gi you know gigantic uh placard saying AI uh that you know a lot of the these are operating in different businesses there are different points of the cycle so you're right to point that out uh you t you mentioned the volatility before we we'll come we'll dig a little bit into a little further into tech in a minute but you can't you know when we're talking about the broader market you mentioned that volatility um how do you know when to lighten up when you see this and then decide to come in and buy like how are you making that decision what to buy and where to sell? >> Well, I'll just make it easy for um for for viewers and listeners and and note that over the past several months, call it since August 1st, the NASDAQ went from a low of um call it one to uh 17% higher, right? So, um, 17% growth over 3 months and yet along the way there have been seven pullbacks of, um, 3 to 4%. Right? So, we're in an uptrend, but every few weeks we pull back 3 to 4%. And I I think we'll probably see more of the same. I mean, that's what's been happening over the past week. It was one of those 3 to 4% pullbacks. And um and then you say, well, if it's happened seven times before where the market pulled back and then continued on and pulled back and continue. If it's done seven times, it's probably going to do it an eighth and a ninth and a tenth. So let that be your template. Uh as I said, there's much more to like than to fear. We are in an uptrend. We are in a bull market. So uh pullbacks remain viable. >> So you feel pretty confident that buy the dip is is working. >> Yeah. By definition, >> it's happened the past seven times. Why wouldn't it continue to happen when you have double-digit earnings growth and 4% GDP growth uh and an accommodative Fed and uh effectively an accommodative White House and Washington DC in the form of businessfriendly uh policy. So there is again a lot to like. So just don't fight the trend. Don't try to be too cute. Don't try to be too smart and outsmart the market. Bears always sound smarter than bulls. You know, they see something we don't. But actually, no. Sometimes it just pays to be a bull and go with the trend. So, that's point number one that I think um >> and we're kind of programmed to worry. I think that's where it gets hard, you know, like what what what is real and what is just our sense that this has come too far. >> Uh you the the economy growing really strongly. It's interesting that we're having this conversation today because we've been without economic data for a few weeks here in the US. Um there's sort of green shoots of hope that we may be coming to some sort of you know resolution to that and getting things back open, but clearly there's a disruption. It's going to take some weeks to clear. Is there a risk that the US economy is weaker than we think since we haven't really had any clarity on that? >> No. And you know what? I I'm I'm thrilled that quite frankly uh we continue to grow and have wonderful earnings in spite of Washington. Um yeah, I mean I I think I and many of us have become so skeptical uh and tired of um Congress and the shenanigans and the infighting and um what's wonderful about this country is that we move forward in spite of ourselves, right? Um uh Winston Churchill um the the thing about America is they they eventually get it right after trying everything else. And um so yes, leave it up to corporate America, leave it up to private citizens to uh and entrepreneurs and hardworking people to just get stuff done again in spite of Washington. And so um yeah, I I I really discount Washington. I quite frankly don't really ever put much um credence into what's happening in Washington, nor do I necessarily let it impact my investment decisions. I mean, I'm long a bunch of AI names, and yes, they've been down for any number of reasons over the past week. Um, but certainly I I don't look at what Washington is doing or saying and say, maybe I should trim an AI position because of Washington. To me, it's completely relevant. Uh, what happens in Washington a lot of times is not a market story. It can affect markets in the short term. Um, but generally speaking, uh, corporate America, thank goodness, operates outside of the, uh, the many, uh, screw-ups and, uh, inabilities, uh, of Washington and politicians in general, >> at least up till now. And I the government shutdown is probably evidence of that, right? Because it really really hasn't been a market mover. But that that, you know, the longer it went on potentially, um, that that may have changed. Um, but but hopefully they they're able to move past that. Um, if you're not worried about recession, do you see risks out there? What's on your radar? >> Well, if inflation reacelerated, we'd have a problem. That is a market story. Um, you know, what happens in the halls of Congress kind of a market story, but no, if if if inflation were to suddenly reacelerate, uh, that would be a problem uh, for everybody. Uh, because we're assuming I'm certainly assuming that it has uh, stabilized somewhere around three and probably kind of trends a little bit lower. Uh, so that'd be a problem. Um, in part because the Fed would have to reverse course on rates and higher interest rates are a problem for stocks because higher interest rates mean that you have uh to discount future earnings at a higher price, meaning stocks today are worth less if rates are going to be higher tomorrow. That's just the inflationary impact of higher rates. So, um, that would be my biggest concern. And um are there other concerns? >> I mean, the tariff thing that's trying to be sorted out at the Supreme Court, are they legal? Are they not legal? Uh that's probably a gray area. Um that would cause if if the tariffs were clawed back, if the Supreme Court said, you know what, they were illegal and President Trump had no right to do that. uh all of a sudden that revenue that in theory offsets the budget deficit uh means that the government would have to go out and issue more bonds to fund that larger than we thought deficit and that would force rates higher and uh higher rates again for the same reason that inflation is a bad thing would be bad for stocks. So those two issues are are on my radar. We don't really know. Fortunately, corporate America is growing. Uh, and all the other things that I mentioned are are happening in the background. But yeah, those two issues um, you know, they're they're real. >> Yeah. Yeah. It's interesting. We we we aren't seeing it show up in the data. We haven't had any data. Uh, but clearly there are parts of the economy that do feel like inflation's an issue. We had the an election that just happened and, you know, a lot of constituents affordability. It was all about affordability. So, it's the it's the murkiness of that K-shaped economy, right? Obviously, financial assets doing well. Those who hold assets are are benefiting, but the but the rest of the economy is feeling the pinch and they do feel like there's higher prices everywhere if it's not captured in traditional CPI data. Uh, does that worry you or if you're thinking about tech, is that sort of not really relevant to that that narrative? Well, the nice thing about technology is that um tech companies create new products and they set the prices for them as opposed to say an oil company which drills for oil and just has to take the price that the market gives it. So I invest in companies that are price makers um as opposed to um oil companies or um cosmetics companies or staples you know food etc uh that are price taking companies. So there's a difference there. Um in terms of the pressures on people, yeah, there's no escaping the fact that everything costs more. Part of that was a function of COVID and um and we're still dealing right with inefficiencies. Um and part of that is population growth. I think um one of the promises of AI is increased productivity, meaning we could do more with less. that might actually um provide a a push back to um inflation doesn't happen overnight but that's actually a positive narrative to the story. Um for example, if you are Amazon and you no longer need to um pay whatever it is um I don't know is it 50,000 65,000 pickers right people who work in the warehouses to go pick stuff and then put it in bags. If you can instead have um robots doing that well that's cheaper. it's more efficient. So, Amazon in theory could uh pass some of those savings on to consumers in the form of lower prices. Um it'll certainly get passed on to investors of Amazon stock in the form of greater productivity, meaning higher earnings. Um so, who knows how much of that will translate and go to just regular mom and pops um shopping at Amazon. But I I do think that uh that AI holds the promise or at least the possibility of productivity gains and therefore a push back against higher prices. >> Yeah, it's it's it this is I think this is you know with a longer view this is where it's hard though, right? Because then you also have layoffs and so like where you know how do you how do you square that. Um it that that's tricky and the same with pricing. I mean do do tech companies have pricing power and AI? Right now it's all for free. Uh so I think that's what concerns people. I mean, do we think they're eventually going to be able to monetize that? >> Yeah. Well, Chat GBT, um, wonderful interview in the Wall Street Journal last week, and the, um, uh, chief financial officer of Chat GBT said, "Yeah, I get a lot of questions about break even. When will you be break even?" And she said, um, I thought very um, succinctly and insightfully, she said, "Yeah, I don't worry about break even. If I had to make it break even, I could just slow capex spending and we'd be break even this quarter. But quite frankly, we're happy to continue to invest in the business and grow it. I remember a few years ago when um Meta or Facebook if you prefer uh traded down to 80 bucks. I know cuz I bought some at 82. Uh having started buying it at 150. Uh people said, "Why are you doing this?" I said, "Well, because if Mark Zuckerberg just stops spending all this money on the metaverse, it earnings will double." He was at the time spending um uh oh gosh it was some crazy number like eight or 10 billion uh which now sounds small relative to what we're spending but you know back then eight or 10 billion was real money. Um and he's and so he got them basically got the memo. I mean the analyst community, Wall Street, um shareholders, people like me said you got to stop spending on this metaverse thing because we can't see the payout. It's just these cute little figures jumping around the screen that young kids seem to like to play with. how will that actually accomplish anything or increase sales or drive growth or what? Anyway, he stopped spending on the metaverse and instantaneously in one quarter uh the earnings doubled. So, the stock went from >> uh uh trading at what appeared to be like 15 times um to suddenly only seven and a half times because earnings were higher. Um, and it's the same kind of thing. If you slow cap, same kind of thing for chat GBT. If you slow the amount of money that you're spending on capital expenditures, that money is left over to go down to the bottom line or earnings. And so, um, I think right now we are in a significant investment, um, cycle and like all cycles that will inflect. And then all of a sudden as you see that capex uh start to go down, companies will reap the war the rewards of having spent all that money. It's like drilling for an oil company. There are times where you just have to go spend the money, suck it up, and drill for new oil because your existing wells are getting depleted. Fine. So you go spend money, you find new wells. Oh great, all of a sudden we've got some cheap oil that we found. Wonderful. Earnings can continue. And I think you have to be sensitive to the eb and flow of spending cycles. Right now we're in a we're in a high spend cycle. When that comes down, earnings are going to accelerate for a lot of these companies. I believe >> that's so interesting. Do you think that these companies will have a moat? Do you think they will have pricing power? Or is that one of the questions out there that as we get a little further in is going to be the thing that um differentiates the winners from the losers? Well, knowledge is power. And if you have the knowledge gleaned from having run uh artificial intelligence programs across all of your data sets and then you can figure out how to sell more stuff because of that insight or to just operate your business more efficiently. Um then yes, you will reap the benefits. Uh though they'll probably be some companies that can't, but there's some that are going to do things that will will blow all of our minds. I'll give you an example. Um Target. So Target was one of the first companies, their chief marketing officer uh was one of the first executives to really embrace AI way before everyone was talking about it. Back then they just called it deep data analysis. Now we call it AI. But as an example, they would note in a particular store um how many I'll make this up just to illustrate the point. how many um bright yellow dresses they would sell if they put the mannequin uh at the escalator on a Tuesday versus if they put it by um the the ladies fashion section on a Thursday versus um what if it um uh was green rather than yellow or if they changed the season yellow for spring and maybe green for right I mean it's incredible to think about all the variations of what I just said I mean we probably just identify 10, 11, maybe 12 different data sets just on that one example that again I made up to illustrate the point, but they would track the sales results of that particular item based upon all those decisions. And they actually came out with concrete um recommendations to marketing managers in the stores about which dress to put on which mannequin and where and on which day to drive sales. Um, another example, um, you go into Costco and they have, uh, an app that, uh, has GPS which is so accurate that it can track exactly where you are within the store on the aisle to the point of which products you stopped to look at. I mean, that's incredible. Talk about American ingenuity. And um, they can tell if you pull something off the shelf, look at it, and then you put it back but didn't put it in your cart. And before you leave the store, you'll get a little notification on your phone that says, "Hey, go back to aisle 14 to that item because we're going to run a spot sale. If you go back and buy it, put it in your cart in the next 10 minutes, we'll give you 10% off." What are you kidding me? I mean, that's brilliant. And that's the kind of increased um if not productivity um increased sales um that I think u is is a great example for how companies can actually use AI. Right now we're all talking about AI as this amazing thing. Wow, it helped my kid write a research report faster. I hope she didn't plagiarize. Um but actually, you know, it really can uh drive uh sales. There are use cases that go beyond just neat stuff, you know, creating a a new emoji, uh, chat GBT, right? Oh, look at my face. Uh, you know, but whatever. Um, I mean, there are real use cases for real companies out there. >> So, it it brings up an interesting question. Are you um looking outside is are part of your AI plays or is your part of your plan to look at um outside of technology sort of away from the pick and axes to companies that are best utilizing it? Is that part of your investment thesis moving forward? >> Yeah. And it's [clears throat] harder to do that. It's easier to just buy Google or Meta um uh or Microsoft which owns 51% of Open AI that created ChatGpt. But you know, I mean, that's like a fraction of what Microsoft does. So, pure plays are hard. Uh, but there are starting to appear some use cases. I'll give you an example of one. It's a company I've owned for a long time. It's very volatile. Symbotic, S YM. Um, I bought that down in the teens, a couple of years ago. It's now in the 70s. And this company is converting all 47 of Walmart's distribution facilities into robotic uh distrib distribution facilities. And that's very exciting. And now they're actually starting to convert even some of the warehouses for Walmart. Uh and there are hundreds of those. And I mean it's really amazing to see uh these robots just I mean it's incredible. It's like ballet. It's robotic ballet. Uh, another company, GXO Logistics, which was a spin-off from XPO Logistics, one of Brad Jacobs companies. Brad Jacobs is the man. The guy just keeps creating these billion-dollar companies from United Rentals to XBO. He's got a new building product supply company he just started. Um, so stay tuned on that. I don't own that one, but I've owned the other two. So, there are all these um use cases, especially in logistics that are starting to crop up. Um, I would argue even Salesforce.com, uh, which I guess renamed itself to Salesforce Inc., CRM is that ticker, um, using AI very aggressively to, uh, help clients drive greater sales, um, for any number of different businesses. You know, CRM, Salesforce is the largest customer relationship management company in the world. They created that whole business. They do it bigger and better than anyone. And in the past two earnings reports, they have specifically cited AI as uh the reason why their earnings were up. And their earnings were up because more of their clients are using their special AI packages and they charge more for that um to drive their own sales. So, we're starting to see use cases um come into um just the businesses we already know, but that'll take time. And I quite frankly hope it does take time because the longer it takes, the better it is for all these companies. >> Yeah. And you another reason why you've got to be doing the due diligence and listening really carefully in on those calls. They're not going to ring a bell and tell you they're doing it. You're really going to need to sort of understand what's going on under the hood of the companies that you invest in to get a to get a jump on that. Anyway, um is there any are you are you is there any opportunity you see outside of the world of technology that interests you that fits into your American ingenuity theme? >> Well, the funny thing about um what I do is that every company is effectively a technology company in one way or another. Um even if it's not a tech company like Symbotic, the one I mentioned, the company that's converting all these warehouses uh for Walmart. I mean, that's not a tech company, but they're loaded with tech. Um, Joy Aviation, exciting little company. Again, we bought that one around three bucks and it's in the high teens. It's been as high as the 20s. I think it's going a lot higher. J OY. They are building and soon will be operating uh air taxi drones. Um, an operator plus five passengers plus luggage, six rotors. So, they're very safe. If you lose a rotor, you can you could lose two, even three rotors. are still going to fly 150 m an hour. They can go 200 miles on a single charge. They can recharge in 7 minutes. And the goal will be to get people from city centers to airports. They're going to be operating in Dubai starting the first quarter of next year. And the FAA test pilots are already testing them. The Air Force has a few of theirs. They're about to go in production. I mean, that's an aviation company, but boy oh boy, there's a lot of technology in those things. Um, so >> people are worried about getting into robo taxis. You think they're going to get into robo aircraft? >> They'll be a pilot. They'll be an operator flying. Yeah. Um, so um uh >> so like air t they're air taxis. >> They're air taxis. I mean that's all they are. They're just really big drones that carry people, right? And um there's a tremendous amount of technology. In fact, um, Intel and South Korea Telecom are two of the equity partners in Job. Joviation, um, I should note along with Uber and, uh, Delta Airlines, uh, both of whom have stakes in the company. >> Oh, really? So, this is and so and and the the goal here is really to to take the pain out of that. I don't want to call it the last mile because sometimes it's longer, but that the airport the airport transit to make airport transit more convenient. >> Yeah. We'll talk about productivity. So, I live in New York City and there are three airports here. Uh, Newark over in New Jersey, Kennedy, the big one, the international one, and then LaGuardia. Um, and those three airports are really crowded. So, um, you know, because there there's only so much runway capacity and yet they keep trying to cram more flights in. So, there is an airport called Westchester County Airport that used to be the cute little airport um uh near Greenwich, Connecticut um about um 25 miles north of the city and that was where all the private jets flew. And then JetBlue, United, a couple airlines started flying some of their smaller aircraft in there. And well, we just learned last week that um uh Job's helicopter subsidiary, Blade, which it just bought in order to get landing rights uh and have helipads where it can ultimately land its its uh drones instead of helicopters. Uh but Blade, for 125 bucks, will fly you from the uh 33rd Street helport over on the East River out to Westchester County Airport in 12 minutes for 125 bucks. Well, guess what? That car trip uh in the middle of the day because of traffic can take an hour and 20 minutes. So, for 125 bucks, you can get to Westchester airport in 12 minutes. And by the way, it's a beautiful little airport with flowers everywhere and no crowds. And they now have flights to a lot of um sort of secondary and tertiary cities. Um so, that's ingenious, right? That's a productivity gain. And I mean that's the exciting kind of stuff that we're going to start to see more of. That's a palpable tangible thing I think we can all appreciate. Um because it's real word and it's transport. That's kind of cool stuff. >> Adam, you may have just saved somebody's Thanksgiving travel plans with that little tip and nugget that that not a lot of people know about. So um let me ask you uh about energy. Uh because I would think traditionally this is not a place that you would be looking. uh it's a sector that's been really beaten down even though we've seen all this action in other parts of commodity the commodity market but energy and AI seem very linked um are you looking at it for that reason or is this a sector that doesn't fit the parameters that you find attractive >> well I'm a former oil trader so I can't help myself there's certain names I always look at when they get cheap uh EOG Resources the best uh run um driller um well exploration company here in this country you buy it under 100 you sell it at 130 Um, energy transfer ET is the largest pipeline operator in this company. It pays an 8% dividend. Whenever it goes down into the teens, low teens, like 134, you buy it. Uh, goes up towards 20 gets a little toppy, right? So, I can't help myself, but I'm a growth investor. Those are sort of value trades. Um, and I mentioned them simply because you asked me the question. Um the only energy play [clears throat] uh specifically that's in my portfolio, my American ingenuity portfolio uh because it's a growthy exciting name is a company called GE Vernova, ticker GEV. This is a company that was spun off from the old uh GE GE Aerospace, right? And it's really simple and it's ingenious. Um, what they did is they took the same technology that built the jet engine, but instead of putting on a wing and running jet fuel through it to make a plane fly, they put it on steel brackets, run gas through it in order to spin a turbine and create electricity. And they can do that on site. Well, guess what? We just solved the question, how do we power data centers? >> We do it on site with Nack Gas by creating our own electricity. That's American ingenuity. Again, not a technology company, but there's a lot of tech that goes into that. And so, if you ask how I am um involved in energy uh in my American Ingenuity company, GE Vernova, again, ticker GEV, they recently beat earnings estimates again. Um there's no other energy play per se in the portfolio. I think that one's great. Um I don't own the uh small nuclear reactor companies because the cycle for those businesses is so long like 3 to 5 years. Um although I should probably take a look um just to honor discipline. Um a lot of them are pretty expensive. Since um I mentioned something that's not really in the portfolio, I'll mention something else that's not in the portfolio and that is quantum computing. Uh those companies won't have revenues for three to five years. So they certainly won't have earnings for five to seven years and so that's like buying a little biotechnology company. I mean you're just hoping that they eventually get it right one day. Um so no quantum computing in the portfolio. >> That's interesting. So this is a this is a great example of what you know and and we'll circle back and kind of end here but um how you try to impose a framework on your on your sort of larger ingenuity um theme which I think is going to resonate with a lot of people but Genova. So, uh, it's up 63% in over the past year. I think it's like around 60 68 cent year to date. So, when you see a gain like that, do you just do you look at the longer term vision of what they're doing and say, I'm riding this up and to the right, or or do you say, you know what, this is a really nice looking gain. I'm going to take some money off the table and maybe redeploy it somewhere else where, you know, that hasn't seen seen these kinds of gains because as we're going into year end, I think this is the the calculation people are making. Listen, I made some really good choices. I'm sitting on some really nice profits, but I'm getting a little nervous. Like, should I take money off the table? So, how do you think about something like Genova on that? >> Yeah, what you're getting at is discipline and risk management. And so anytime I look at a stock and decide I want to buy it, uh, one of the first things I do is I set a target. Uh, what do I think this company's worth? If I, you know, project out a couple of years, um, figure out the cash flow, ultimately the earnings, and then put a forward multiple on those earnings, and I get to a target price. If I'm right and the stock gets to that target price, I sell a third. As an early mentor said to me, you're only rational once and it's before you buy the stock. Once you buy the stock, you fall in love, right? And you're never going to sell it. So, if it does what you expected it to do, it goes to your target. Say, "Thank you very much and sell a third." And then rerun the numbers. And if you can get to um a higher target, because presumably it took some period of time, so things have changed, evolved, the market has grown, the business has grown, etc. If you can get to a higher target at that future date uh when you make that sale, great. Then keep the balance and set a new target and just repeat the process. I mean, with Nvidia, I've made like four sales along the way and I kept upping my target. You say, "Oh, what a shame. You sold your Nvidia. You bought it at 16. It's now like 216." Uh yeah, but if I had kept all the Nvidia, it would now be like 25% of my portfolio, and that's too much. Um, plus you want to be able to have some cash to go find the next Nvidia or the next GE Verova or the next Joby um or the next, you know, whatever. So, um, that keeps the portfolio vibrant and active. You know, you don't want a portfolio that looks like a pond because ponds are stagnant. You want a portfolio that looks like a river where it's flowing and there's always something new coming down. >> Yeah, that's a that's a great image to leave us with. Um, Adam, always such a pleasure to catch up with you. Thank you so much for sharing your thoughts and it's always nice to catch up with someone who's feeling bullish. Uh it's good to get get a variety of opinions out there. >> Yep. That's important. Well, thanks for having me, Maggie. It's a pleasure to be with you. >> Thanks so much. And if you are um listening and uh especially if you're invested in technology and trying to figure out what you need to do into year end and want a little help, um you can get a free portfolio review from one of the adviserss in the Wealthy Network. Just go to the link in the description or go to wealthon.comfree for a free portfolio review. Thanks so much for watching everyone. We'll see you again soon. [music]
Adam Johnson: AI Boom, Not Bubble. Why This Bull Market Still Has Room to Run
Summary
Transcript
There is far more to like than to fear. Think about it. We've just gotten through the uh recent quarterly earnings report and it's one of the best that we've seen in the past several years. Corporate America is doing great. Uh look at the economy GDP. The economy itself growing almost 4%. That's a lot stronger than than people thought. So I have been buying on dips and there have been plenty of them because it's been very choppy. But yes, I am very comfortable being fully invested and I think that markets go up from here. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Hello and welcome to Wealthon. I'm Maggie Lake and today I'm joined by Adam Johnson, portfolio manager of the Bullseye American Ingenuity Fund, who's going to share his thoughts on the best way to make some money into year end. Hey Adam, it's great to have you back with us. >> Oh, great to see you. And this is the perfect time of the year to actually make money because uh it's the seasonally strongest uh period of the year, not to mention all the things that I think are going right both for corporate America and uh America itself. >> I I always love your your sort of positive outlook, Adam. Uh and you're right, it is, you know, we we talk whether we talk about sort of year end or Santa Claus rally. There's all sorts of, you know, terms for it, but it is typically a really seasonally strong time of year, but it seems like, uh, equity markets and investors have kind of run into a wall of worry lately. Um, we didn't get that sort of downturn people were thinking about earlier in the fall, which is seasonally a little bit weaker time. We blew right past that and we have a lot of people talking about an AI bubble. They're worried about the economy. There just seems to be a lot of like sort of angst out there. Why are you so positive? >> Well, in short, because there is far more to like than to fear. Think about it. We've just gotten through the uh recent quarterly earnings report, and it's one of the best that we've seen in the past several years. It was a fourth consecutive quarter of double-digit growth and it was accompanied by near record profit margins in spite of tariffs and everything else. So, corporate America is doing great. Uh, look at the economy, GDP, the economy itself growing almost 4%. That's a lot stronger than than people thought. Meanwhile, unemployment, I know that there's been a lot of talk about weakening um jobs trends, but we're still creating 50,000 jobs on average per month. So unemployment's down at 4.2. That is very near the historical lows. Um add to that the fact that you have uh two massive stimulus programs in the form of number one artificial intelligence total hyperscaler expenditures going from 350 billion this year to 420 billion next year. That's a stimulus program for technology. And then secondly, the stimulus program that's in the form of foreign direct investment into this country. $17 trillion, that's equivalent to half of GDP in announced deals since uh uh inauguration day. So, um you add those two stimulus programs to the fact that corporate America is already doing quite well. Uh that makes me very bullish on the future. And then we think about this seasonal trade that happens. It's the seasonally strongest time. And so you add all that together. Oh yeah. And then there's this thing of businessfriendly Washington, right? lower tax rates, uh, accelerated depreciation, fewer regulations, drill, baby drill. Add all of that up and I think that is a very positive backdrop. So, I have been buying on dips and there have been plenty of them because it's been very choppy. But yes, I am very comfortable being fully invested and I think that markets go up from here. Megan, >> so that's super interesting. Le let's take a couple of those components. So for the FDI, uh you're right, and this is sort of like Trump the great negotiator theory, right, in order to in some of these trade talks and tariff talks, um he's been able to get these some some countries to sort of agree to invest or they're front running it, thinking this is the best way to avoid being in the crosshairs of the Trump administration. But you'll have skeptics out there who will say like, listen, they're announced, but that doesn't necessarily mean that all of that money will make its way here or that we won't see a reversal. Uh, you know, there are a lot of people who say they're going to nominate him for the peace prize, too. And I don't know if everybody believes that, you know. So, um, you know, in in the art of the deal, there's a lot of people who think there's a lot of noise and what's real. Why why should we actually think that that is going to trans that that's we're going to see that happen? Well, we've already seen not only have we seen the um heard the commitments of 17 trillion, but we're actually starting to see evidence of that where factories are moving over, jobs are being created. And yeah, you're right. U that 17 trillion isn't just money that's coming in this quarter or next quarter. Uh it's over time. In some cases, some of that money will come in over the next 3 to 5 years. Uh, but you you know when when you go to the altar and you say, "Let's get married." You don't say, "Well, you know, we might get divorced, too." I mean, I know some people do prenups. I recently got married. No prenup here. I'm all in. Uh, that's my personality. But, you know, I think you have to take um I think you have to take things uh at face value in many cases. When you talk about countries um saying they are bringing uh capital over when you see companies that actually are um bringing capital over I think you have to take that for for what they say and what they present and yes over time we'll we'll get the evidence of that but so far I like what I see and I think it's playing through in the fact that GDP is coming in a lot stronger than people thought I mean remember it was only six seven eight weeks ago that we were still sort of debating recession recession probabilities. Hm. Is it a 20% 30%? What do you think? Oh, Goldman thinks it's going to be 30%. You know, and now here we are with 4% GDP. U the highest earnings we've ever seen, consistent double digit earnings growth, record profit margins, you know, proofs in the pudding. >> Yeah. Um and there have been people calling for this recession. I think we're at four years now um waiting for it to happen. And it's it's been a tricky one. Uh AI stimulus plan. I like I like the way you phrase that. That's a really interesting way to think of it. There are a lot and I think this is where the the wall of worry is most pronounced that there are a lot of fears that we are in an AI bubble and that all of this uh spending that you're seeing cap capital spending that you're seeing investment in this space is a is a little bit of an arms race but not clear it's going to actually result in revenue and not clear it's sustainable. a lot of concerns about circular financing, you know, clients um subsidizing uh their uh their own um you know, suppliers and vice versa. H what are do you worry that we are in the later stages of this? How are you thinking about that? >> Well, I think there are two components to the question that you're getting at. Number one is valuation and number two is structure. So, let me address each. In terms of valuation, we are nowhere near an AI bubble. Here's why. The NASDAQ, which is, you know, effectively a proxy for uh technology, especially the triple Q's, the largest 100 non-financial companies on the NASDAQ. Again, a proxy for tech and things AI. Uh trading at 35 times earnings. For comparison sake, the S&P is trading at 23. So, yeah, it's more expensive than the S&P 500, but at 35 times earnings, that is a fraction of what we have seen during previous bubbles. If you look at NASDAQ valuation in both 2000, the dotcom bubble and then 20089 right before the great financial crisis um the NASDAQ traded as high as um 85 to 90 times earnings and again we're 35. All right. So we are onethird the valuation that we saw way back in those previous tops. Now yes I agree there are some stocks that are expensive. I will not touch Palunteer. Palanteer trades at 300 times earnings, 100 times sales. You'd have to have uh an entire century worth of revenue, not [snorts] even earnings, revenue, just to get to the valuation, the market cap of Palanteer. So, no, I will not touch Palunteer. That to me is its own unique special bubble. Um Nvidia, by contrast, sort of the other poster child for AI. I think it's quite cheap. earnings are going to grow 75% and you're paying 32 times earnings uh for that growth at 32 times that's cheaper than the NASDAQ as a whole 35 times. And um you say, "Yeah, but it's more expensive than the S&P." Yeah, of course it is because you're getting 75% growth versus 12 to 13% growth for the S&P 500. So I think Nvidia is quite cheap. Palanteer I won't touch. And I think you have to I think that's a lesson those two stocks, Palanteer versus Infid um In Nvidia. Uh you can't paint AI with the same brush. You have to uh do what I do, which is pick stocks and look at each company individually. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hard Assets Alliance, at hardassallalliance.com. That's hardassallalliance.com. Yeah, I think that is really important and we do tend to group them under this sort of gi you know gigantic uh placard saying AI uh that you know a lot of the these are operating in different businesses there are different points of the cycle so you're right to point that out uh you t you mentioned the volatility before we we'll come we'll dig a little bit into a little further into tech in a minute but you can't you know when we're talking about the broader market you mentioned that volatility um how do you know when to lighten up when you see this and then decide to come in and buy like how are you making that decision what to buy and where to sell? >> Well, I'll just make it easy for um for for viewers and listeners and and note that over the past several months, call it since August 1st, the NASDAQ went from a low of um call it one to uh 17% higher, right? So, um, 17% growth over 3 months and yet along the way there have been seven pullbacks of, um, 3 to 4%. Right? So, we're in an uptrend, but every few weeks we pull back 3 to 4%. And I I think we'll probably see more of the same. I mean, that's what's been happening over the past week. It was one of those 3 to 4% pullbacks. And um and then you say, well, if it's happened seven times before where the market pulled back and then continued on and pulled back and continue. If it's done seven times, it's probably going to do it an eighth and a ninth and a tenth. So let that be your template. Uh as I said, there's much more to like than to fear. We are in an uptrend. We are in a bull market. So uh pullbacks remain viable. >> So you feel pretty confident that buy the dip is is working. >> Yeah. By definition, >> it's happened the past seven times. Why wouldn't it continue to happen when you have double-digit earnings growth and 4% GDP growth uh and an accommodative Fed and uh effectively an accommodative White House and Washington DC in the form of businessfriendly uh policy. So there is again a lot to like. So just don't fight the trend. Don't try to be too cute. Don't try to be too smart and outsmart the market. Bears always sound smarter than bulls. You know, they see something we don't. But actually, no. Sometimes it just pays to be a bull and go with the trend. So, that's point number one that I think um >> and we're kind of programmed to worry. I think that's where it gets hard, you know, like what what what is real and what is just our sense that this has come too far. >> Uh you the the economy growing really strongly. It's interesting that we're having this conversation today because we've been without economic data for a few weeks here in the US. Um there's sort of green shoots of hope that we may be coming to some sort of you know resolution to that and getting things back open, but clearly there's a disruption. It's going to take some weeks to clear. Is there a risk that the US economy is weaker than we think since we haven't really had any clarity on that? >> No. And you know what? I I'm I'm thrilled that quite frankly uh we continue to grow and have wonderful earnings in spite of Washington. Um yeah, I mean I I think I and many of us have become so skeptical uh and tired of um Congress and the shenanigans and the infighting and um what's wonderful about this country is that we move forward in spite of ourselves, right? Um uh Winston Churchill um the the thing about America is they they eventually get it right after trying everything else. And um so yes, leave it up to corporate America, leave it up to private citizens to uh and entrepreneurs and hardworking people to just get stuff done again in spite of Washington. And so um yeah, I I I really discount Washington. I quite frankly don't really ever put much um credence into what's happening in Washington, nor do I necessarily let it impact my investment decisions. I mean, I'm long a bunch of AI names, and yes, they've been down for any number of reasons over the past week. Um, but certainly I I don't look at what Washington is doing or saying and say, maybe I should trim an AI position because of Washington. To me, it's completely relevant. Uh, what happens in Washington a lot of times is not a market story. It can affect markets in the short term. Um, but generally speaking, uh, corporate America, thank goodness, operates outside of the, uh, the many, uh, screw-ups and, uh, inabilities, uh, of Washington and politicians in general, >> at least up till now. And I the government shutdown is probably evidence of that, right? Because it really really hasn't been a market mover. But that that, you know, the longer it went on potentially, um, that that may have changed. Um, but but hopefully they they're able to move past that. Um, if you're not worried about recession, do you see risks out there? What's on your radar? >> Well, if inflation reacelerated, we'd have a problem. That is a market story. Um, you know, what happens in the halls of Congress kind of a market story, but no, if if if inflation were to suddenly reacelerate, uh, that would be a problem uh, for everybody. Uh, because we're assuming I'm certainly assuming that it has uh, stabilized somewhere around three and probably kind of trends a little bit lower. Uh, so that'd be a problem. Um, in part because the Fed would have to reverse course on rates and higher interest rates are a problem for stocks because higher interest rates mean that you have uh to discount future earnings at a higher price, meaning stocks today are worth less if rates are going to be higher tomorrow. That's just the inflationary impact of higher rates. So, um, that would be my biggest concern. And um are there other concerns? >> I mean, the tariff thing that's trying to be sorted out at the Supreme Court, are they legal? Are they not legal? Uh that's probably a gray area. Um that would cause if if the tariffs were clawed back, if the Supreme Court said, you know what, they were illegal and President Trump had no right to do that. uh all of a sudden that revenue that in theory offsets the budget deficit uh means that the government would have to go out and issue more bonds to fund that larger than we thought deficit and that would force rates higher and uh higher rates again for the same reason that inflation is a bad thing would be bad for stocks. So those two issues are are on my radar. We don't really know. Fortunately, corporate America is growing. Uh, and all the other things that I mentioned are are happening in the background. But yeah, those two issues um, you know, they're they're real. >> Yeah. Yeah. It's interesting. We we we aren't seeing it show up in the data. We haven't had any data. Uh, but clearly there are parts of the economy that do feel like inflation's an issue. We had the an election that just happened and, you know, a lot of constituents affordability. It was all about affordability. So, it's the it's the murkiness of that K-shaped economy, right? Obviously, financial assets doing well. Those who hold assets are are benefiting, but the but the rest of the economy is feeling the pinch and they do feel like there's higher prices everywhere if it's not captured in traditional CPI data. Uh, does that worry you or if you're thinking about tech, is that sort of not really relevant to that that narrative? Well, the nice thing about technology is that um tech companies create new products and they set the prices for them as opposed to say an oil company which drills for oil and just has to take the price that the market gives it. So I invest in companies that are price makers um as opposed to um oil companies or um cosmetics companies or staples you know food etc uh that are price taking companies. So there's a difference there. Um in terms of the pressures on people, yeah, there's no escaping the fact that everything costs more. Part of that was a function of COVID and um and we're still dealing right with inefficiencies. Um and part of that is population growth. I think um one of the promises of AI is increased productivity, meaning we could do more with less. that might actually um provide a a push back to um inflation doesn't happen overnight but that's actually a positive narrative to the story. Um for example, if you are Amazon and you no longer need to um pay whatever it is um I don't know is it 50,000 65,000 pickers right people who work in the warehouses to go pick stuff and then put it in bags. If you can instead have um robots doing that well that's cheaper. it's more efficient. So, Amazon in theory could uh pass some of those savings on to consumers in the form of lower prices. Um it'll certainly get passed on to investors of Amazon stock in the form of greater productivity, meaning higher earnings. Um so, who knows how much of that will translate and go to just regular mom and pops um shopping at Amazon. But I I do think that uh that AI holds the promise or at least the possibility of productivity gains and therefore a push back against higher prices. >> Yeah, it's it's it this is I think this is you know with a longer view this is where it's hard though, right? Because then you also have layoffs and so like where you know how do you how do you square that. Um it that that's tricky and the same with pricing. I mean do do tech companies have pricing power and AI? Right now it's all for free. Uh so I think that's what concerns people. I mean, do we think they're eventually going to be able to monetize that? >> Yeah. Well, Chat GBT, um, wonderful interview in the Wall Street Journal last week, and the, um, uh, chief financial officer of Chat GBT said, "Yeah, I get a lot of questions about break even. When will you be break even?" And she said, um, I thought very um, succinctly and insightfully, she said, "Yeah, I don't worry about break even. If I had to make it break even, I could just slow capex spending and we'd be break even this quarter. But quite frankly, we're happy to continue to invest in the business and grow it. I remember a few years ago when um Meta or Facebook if you prefer uh traded down to 80 bucks. I know cuz I bought some at 82. Uh having started buying it at 150. Uh people said, "Why are you doing this?" I said, "Well, because if Mark Zuckerberg just stops spending all this money on the metaverse, it earnings will double." He was at the time spending um uh oh gosh it was some crazy number like eight or 10 billion uh which now sounds small relative to what we're spending but you know back then eight or 10 billion was real money. Um and he's and so he got them basically got the memo. I mean the analyst community, Wall Street, um shareholders, people like me said you got to stop spending on this metaverse thing because we can't see the payout. It's just these cute little figures jumping around the screen that young kids seem to like to play with. how will that actually accomplish anything or increase sales or drive growth or what? Anyway, he stopped spending on the metaverse and instantaneously in one quarter uh the earnings doubled. So, the stock went from >> uh uh trading at what appeared to be like 15 times um to suddenly only seven and a half times because earnings were higher. Um, and it's the same kind of thing. If you slow cap, same kind of thing for chat GBT. If you slow the amount of money that you're spending on capital expenditures, that money is left over to go down to the bottom line or earnings. And so, um, I think right now we are in a significant investment, um, cycle and like all cycles that will inflect. And then all of a sudden as you see that capex uh start to go down, companies will reap the war the rewards of having spent all that money. It's like drilling for an oil company. There are times where you just have to go spend the money, suck it up, and drill for new oil because your existing wells are getting depleted. Fine. So you go spend money, you find new wells. Oh great, all of a sudden we've got some cheap oil that we found. Wonderful. Earnings can continue. And I think you have to be sensitive to the eb and flow of spending cycles. Right now we're in a we're in a high spend cycle. When that comes down, earnings are going to accelerate for a lot of these companies. I believe >> that's so interesting. Do you think that these companies will have a moat? Do you think they will have pricing power? Or is that one of the questions out there that as we get a little further in is going to be the thing that um differentiates the winners from the losers? Well, knowledge is power. And if you have the knowledge gleaned from having run uh artificial intelligence programs across all of your data sets and then you can figure out how to sell more stuff because of that insight or to just operate your business more efficiently. Um then yes, you will reap the benefits. Uh though they'll probably be some companies that can't, but there's some that are going to do things that will will blow all of our minds. I'll give you an example. Um Target. So Target was one of the first companies, their chief marketing officer uh was one of the first executives to really embrace AI way before everyone was talking about it. Back then they just called it deep data analysis. Now we call it AI. But as an example, they would note in a particular store um how many I'll make this up just to illustrate the point. how many um bright yellow dresses they would sell if they put the mannequin uh at the escalator on a Tuesday versus if they put it by um the the ladies fashion section on a Thursday versus um what if it um uh was green rather than yellow or if they changed the season yellow for spring and maybe green for right I mean it's incredible to think about all the variations of what I just said I mean we probably just identify 10, 11, maybe 12 different data sets just on that one example that again I made up to illustrate the point, but they would track the sales results of that particular item based upon all those decisions. And they actually came out with concrete um recommendations to marketing managers in the stores about which dress to put on which mannequin and where and on which day to drive sales. Um, another example, um, you go into Costco and they have, uh, an app that, uh, has GPS which is so accurate that it can track exactly where you are within the store on the aisle to the point of which products you stopped to look at. I mean, that's incredible. Talk about American ingenuity. And um, they can tell if you pull something off the shelf, look at it, and then you put it back but didn't put it in your cart. And before you leave the store, you'll get a little notification on your phone that says, "Hey, go back to aisle 14 to that item because we're going to run a spot sale. If you go back and buy it, put it in your cart in the next 10 minutes, we'll give you 10% off." What are you kidding me? I mean, that's brilliant. And that's the kind of increased um if not productivity um increased sales um that I think u is is a great example for how companies can actually use AI. Right now we're all talking about AI as this amazing thing. Wow, it helped my kid write a research report faster. I hope she didn't plagiarize. Um but actually, you know, it really can uh drive uh sales. There are use cases that go beyond just neat stuff, you know, creating a a new emoji, uh, chat GBT, right? Oh, look at my face. Uh, you know, but whatever. Um, I mean, there are real use cases for real companies out there. >> So, it it brings up an interesting question. Are you um looking outside is are part of your AI plays or is your part of your plan to look at um outside of technology sort of away from the pick and axes to companies that are best utilizing it? Is that part of your investment thesis moving forward? >> Yeah. And it's [clears throat] harder to do that. It's easier to just buy Google or Meta um uh or Microsoft which owns 51% of Open AI that created ChatGpt. But you know, I mean, that's like a fraction of what Microsoft does. So, pure plays are hard. Uh, but there are starting to appear some use cases. I'll give you an example of one. It's a company I've owned for a long time. It's very volatile. Symbotic, S YM. Um, I bought that down in the teens, a couple of years ago. It's now in the 70s. And this company is converting all 47 of Walmart's distribution facilities into robotic uh distrib distribution facilities. And that's very exciting. And now they're actually starting to convert even some of the warehouses for Walmart. Uh and there are hundreds of those. And I mean it's really amazing to see uh these robots just I mean it's incredible. It's like ballet. It's robotic ballet. Uh, another company, GXO Logistics, which was a spin-off from XPO Logistics, one of Brad Jacobs companies. Brad Jacobs is the man. The guy just keeps creating these billion-dollar companies from United Rentals to XBO. He's got a new building product supply company he just started. Um, so stay tuned on that. I don't own that one, but I've owned the other two. So, there are all these um use cases, especially in logistics that are starting to crop up. Um, I would argue even Salesforce.com, uh, which I guess renamed itself to Salesforce Inc., CRM is that ticker, um, using AI very aggressively to, uh, help clients drive greater sales, um, for any number of different businesses. You know, CRM, Salesforce is the largest customer relationship management company in the world. They created that whole business. They do it bigger and better than anyone. And in the past two earnings reports, they have specifically cited AI as uh the reason why their earnings were up. And their earnings were up because more of their clients are using their special AI packages and they charge more for that um to drive their own sales. So, we're starting to see use cases um come into um just the businesses we already know, but that'll take time. And I quite frankly hope it does take time because the longer it takes, the better it is for all these companies. >> Yeah. And you another reason why you've got to be doing the due diligence and listening really carefully in on those calls. They're not going to ring a bell and tell you they're doing it. You're really going to need to sort of understand what's going on under the hood of the companies that you invest in to get a to get a jump on that. Anyway, um is there any are you are you is there any opportunity you see outside of the world of technology that interests you that fits into your American ingenuity theme? >> Well, the funny thing about um what I do is that every company is effectively a technology company in one way or another. Um even if it's not a tech company like Symbotic, the one I mentioned, the company that's converting all these warehouses uh for Walmart. I mean, that's not a tech company, but they're loaded with tech. Um, Joy Aviation, exciting little company. Again, we bought that one around three bucks and it's in the high teens. It's been as high as the 20s. I think it's going a lot higher. J OY. They are building and soon will be operating uh air taxi drones. Um, an operator plus five passengers plus luggage, six rotors. So, they're very safe. If you lose a rotor, you can you could lose two, even three rotors. are still going to fly 150 m an hour. They can go 200 miles on a single charge. They can recharge in 7 minutes. And the goal will be to get people from city centers to airports. They're going to be operating in Dubai starting the first quarter of next year. And the FAA test pilots are already testing them. The Air Force has a few of theirs. They're about to go in production. I mean, that's an aviation company, but boy oh boy, there's a lot of technology in those things. Um, so >> people are worried about getting into robo taxis. You think they're going to get into robo aircraft? >> They'll be a pilot. They'll be an operator flying. Yeah. Um, so um uh >> so like air t they're air taxis. >> They're air taxis. I mean that's all they are. They're just really big drones that carry people, right? And um there's a tremendous amount of technology. In fact, um, Intel and South Korea Telecom are two of the equity partners in Job. Joviation, um, I should note along with Uber and, uh, Delta Airlines, uh, both of whom have stakes in the company. >> Oh, really? So, this is and so and and the the goal here is really to to take the pain out of that. I don't want to call it the last mile because sometimes it's longer, but that the airport the airport transit to make airport transit more convenient. >> Yeah. We'll talk about productivity. So, I live in New York City and there are three airports here. Uh, Newark over in New Jersey, Kennedy, the big one, the international one, and then LaGuardia. Um, and those three airports are really crowded. So, um, you know, because there there's only so much runway capacity and yet they keep trying to cram more flights in. So, there is an airport called Westchester County Airport that used to be the cute little airport um uh near Greenwich, Connecticut um about um 25 miles north of the city and that was where all the private jets flew. And then JetBlue, United, a couple airlines started flying some of their smaller aircraft in there. And well, we just learned last week that um uh Job's helicopter subsidiary, Blade, which it just bought in order to get landing rights uh and have helipads where it can ultimately land its its uh drones instead of helicopters. Uh but Blade, for 125 bucks, will fly you from the uh 33rd Street helport over on the East River out to Westchester County Airport in 12 minutes for 125 bucks. Well, guess what? That car trip uh in the middle of the day because of traffic can take an hour and 20 minutes. So, for 125 bucks, you can get to Westchester airport in 12 minutes. And by the way, it's a beautiful little airport with flowers everywhere and no crowds. And they now have flights to a lot of um sort of secondary and tertiary cities. Um so, that's ingenious, right? That's a productivity gain. And I mean that's the exciting kind of stuff that we're going to start to see more of. That's a palpable tangible thing I think we can all appreciate. Um because it's real word and it's transport. That's kind of cool stuff. >> Adam, you may have just saved somebody's Thanksgiving travel plans with that little tip and nugget that that not a lot of people know about. So um let me ask you uh about energy. Uh because I would think traditionally this is not a place that you would be looking. uh it's a sector that's been really beaten down even though we've seen all this action in other parts of commodity the commodity market but energy and AI seem very linked um are you looking at it for that reason or is this a sector that doesn't fit the parameters that you find attractive >> well I'm a former oil trader so I can't help myself there's certain names I always look at when they get cheap uh EOG Resources the best uh run um driller um well exploration company here in this country you buy it under 100 you sell it at 130 Um, energy transfer ET is the largest pipeline operator in this company. It pays an 8% dividend. Whenever it goes down into the teens, low teens, like 134, you buy it. Uh, goes up towards 20 gets a little toppy, right? So, I can't help myself, but I'm a growth investor. Those are sort of value trades. Um, and I mentioned them simply because you asked me the question. Um the only energy play [clears throat] uh specifically that's in my portfolio, my American ingenuity portfolio uh because it's a growthy exciting name is a company called GE Vernova, ticker GEV. This is a company that was spun off from the old uh GE GE Aerospace, right? And it's really simple and it's ingenious. Um, what they did is they took the same technology that built the jet engine, but instead of putting on a wing and running jet fuel through it to make a plane fly, they put it on steel brackets, run gas through it in order to spin a turbine and create electricity. And they can do that on site. Well, guess what? We just solved the question, how do we power data centers? >> We do it on site with Nack Gas by creating our own electricity. That's American ingenuity. Again, not a technology company, but there's a lot of tech that goes into that. And so, if you ask how I am um involved in energy uh in my American Ingenuity company, GE Vernova, again, ticker GEV, they recently beat earnings estimates again. Um there's no other energy play per se in the portfolio. I think that one's great. Um I don't own the uh small nuclear reactor companies because the cycle for those businesses is so long like 3 to 5 years. Um although I should probably take a look um just to honor discipline. Um a lot of them are pretty expensive. Since um I mentioned something that's not really in the portfolio, I'll mention something else that's not in the portfolio and that is quantum computing. Uh those companies won't have revenues for three to five years. So they certainly won't have earnings for five to seven years and so that's like buying a little biotechnology company. I mean you're just hoping that they eventually get it right one day. Um so no quantum computing in the portfolio. >> That's interesting. So this is a this is a great example of what you know and and we'll circle back and kind of end here but um how you try to impose a framework on your on your sort of larger ingenuity um theme which I think is going to resonate with a lot of people but Genova. So, uh, it's up 63% in over the past year. I think it's like around 60 68 cent year to date. So, when you see a gain like that, do you just do you look at the longer term vision of what they're doing and say, I'm riding this up and to the right, or or do you say, you know what, this is a really nice looking gain. I'm going to take some money off the table and maybe redeploy it somewhere else where, you know, that hasn't seen seen these kinds of gains because as we're going into year end, I think this is the the calculation people are making. Listen, I made some really good choices. I'm sitting on some really nice profits, but I'm getting a little nervous. Like, should I take money off the table? So, how do you think about something like Genova on that? >> Yeah, what you're getting at is discipline and risk management. And so anytime I look at a stock and decide I want to buy it, uh, one of the first things I do is I set a target. Uh, what do I think this company's worth? If I, you know, project out a couple of years, um, figure out the cash flow, ultimately the earnings, and then put a forward multiple on those earnings, and I get to a target price. If I'm right and the stock gets to that target price, I sell a third. As an early mentor said to me, you're only rational once and it's before you buy the stock. Once you buy the stock, you fall in love, right? And you're never going to sell it. So, if it does what you expected it to do, it goes to your target. Say, "Thank you very much and sell a third." And then rerun the numbers. And if you can get to um a higher target, because presumably it took some period of time, so things have changed, evolved, the market has grown, the business has grown, etc. If you can get to a higher target at that future date uh when you make that sale, great. Then keep the balance and set a new target and just repeat the process. I mean, with Nvidia, I've made like four sales along the way and I kept upping my target. You say, "Oh, what a shame. You sold your Nvidia. You bought it at 16. It's now like 216." Uh yeah, but if I had kept all the Nvidia, it would now be like 25% of my portfolio, and that's too much. Um, plus you want to be able to have some cash to go find the next Nvidia or the next GE Verova or the next Joby um or the next, you know, whatever. So, um, that keeps the portfolio vibrant and active. You know, you don't want a portfolio that looks like a pond because ponds are stagnant. You want a portfolio that looks like a river where it's flowing and there's always something new coming down. >> Yeah, that's a that's a great image to leave us with. Um, Adam, always such a pleasure to catch up with you. Thank you so much for sharing your thoughts and it's always nice to catch up with someone who's feeling bullish. Uh it's good to get get a variety of opinions out there. >> Yep. That's important. Well, thanks for having me, Maggie. It's a pleasure to be with you. >> Thanks so much. And if you are um listening and uh especially if you're invested in technology and trying to figure out what you need to do into year end and want a little help, um you can get a free portfolio review from one of the adviserss in the Wealthy Network. Just go to the link in the description or go to wealthon.comfree for a free portfolio review. Thanks so much for watching everyone. We'll see you again soon. [music]