🌐 Tariff Chaos Comes to an End? – Is the market doom over? We break down the surprise US-China trade agreement and what it means for investors navigating the chaos
🔗 Chainlink Build Rewards: Crypto Dividends in Action – Krzysztof receives his first airdrop worth $1,500 from the Chainlink Build program. Is this the future of non-casino crypto investing? $LINK
🛒 Two International E-Commerce Titans – Luke dives deep into his biggest holdings, comparing two international e-commerce giants
💸 Investing in Quantum Computing: When Shorts Go Wrong – Krzysztof’s options play on an alleged “fraud” company. The anatomy of being right about direction but wrong about timing
🔍 Google: The AI Debate – Luke breaks his own rule to buy more Alphabet stock. Is the company perfectly positioned to win the AI race, or is Krzysztof right to be cautious? $GOOG $GOOGL
⚡ This AI Infrastructure Pick – Krzysztof’s Safari pick explains why this picks-and-shovels play in AI data centers could be the smart way to invest in the AI boom
Sources:
Why Google Will Win the AI Race: https://x.com/7LukeHallard/status/1922155046948475083
Space and Time (SXT Chain) whitepaper: https://spaceandtime.io/whitepaper
Space and Time – The Defiant: https://www.youtube.com/watch?v=zMZZdICGgQc
Segments:
00:00 Cold Open
01:04 Introduction and Sicily Check-in
08:16 Tariff Chaos: Is the End in Sight?
20:50 Chainlink Build Rewards Explained $LINK
29:38 e-Commerce Deep Dive
40:24 Quantum Computing Short Update
49:22 The Great Google Debate $GOOG $GOOGL
01:00:44 Safari Stock: An AI Infrastructure Stock
E80 – Google MELI Chainlink – Video – With Ads
[00:00:00] Luke: we’ve got a bit of a debate around alphabet slash Google. Is it a buy seller or a hold?
[00:00:04] Kryszstoff: It reminds me a little bit of the moment we had with Meta a couple years ago the fact that they were world class company kind of, so deeply embedded in everything
already
[00:00:14] Luke: the very peak of the valuation, you were like, this is bs, this is, this is overvalued.
[00:00:19] Kryszstoff: it’s almost like, I wanna say this is Google’s to lose and they would have to fumble it.
[00:00:23] Luke: the zeitgeist right now, you know, like the Wall Street bets crowd, like they go crazy over stocks like this.
[00:00:30] Kryszstoff: And what’s great about Sterile Labs is that they serve products across both dimensions, basically making all of AI their tam really.
[00:00:39] Luke: So if we go back into boom time, like everything’s gonna go up, whether it’s a real CO or a shit co.
[00:00:45] Kryszstoff: we can’t sit here with a straight face and say the AI tuna, you know, is, there’s gonna be a hiccup there. So,
[00:00:52] Luke: For an advertising free version of the show, check out patreon.com/wall Street Wildlife.
[00:01:04] Luke: Hello and welcome to Wall Street Wildlife with Christophe and Luke. On this week’s episode, it’s the end in sight for Tariffs. Plus we’ll be looking at the Chain Link Built Rewards program and what that means for owners. I’m gonna check out Mercado Libre’s latest quarterly results, and we’re gonna revisit Christoph’s Short on Quantum Computing Inc.
How’s that playing out? Plus we’ve got a bit of a debate around alphabet slash Google. Is it a buy seller or a hold? And Christophe is gonna take us on safari with a picks and shovels play in the data center, arms race action packed episode as ever, stick around for some great insights. Your, your motorcycle is broken. What? Whatcha telling me? You have a
[00:01:59] Kryszstoff: so.
[00:02:00] Luke: Your red out cheese, your pizza.
[00:02:02] Kryszstoff: It’s so good to see you and, uh, to be on the same side of the pond as you this time for three months. Chow from, from Sicily, Italy. Where, where? I’m back. Ha. Happy to leave the good old US of a behind me Pop quiz for you. Do you know what the expected temperatures in Austin on Wednesday are going to be?
[00:02:28] Luke: 40 centigrade maybe.
[00:02:31] Kryszstoff: 41 Centigrade. That’s a hun. That’s 105 for EU Fahrenheit keepers, and that is in early May. I’m pretty sure that’s going to be a record of some kind. Doesn’t bold well for the summer for the Po. Poor Austinites. So man, am I glad to have gotten. Out of there. Here in Sicily, it’s about 70 degrees today. Just
[00:03:00] Luke: Beautiful. Very nice.
[00:03:01] Kryszstoff: yes.
[00:03:02] Luke: walking in like the vineyards and picking olives and things here this morning.
[00:03:05] Kryszstoff: Yeah. Uh, smell flowers, eating capers, swimming in olive, olive oil, uh, all of the things. You know what? You know what else I’ve done? I have used my wise card with I. Pable Flawlessness from just, you know, withdrawing money from the ATM with zero fees and then using it as a debit card. And I just can’t, uh, I’m just so happy with, uh, with your company wise, so I hope your investment does well.
They’re sh they sure are helping me out, just so convenient.
[00:03:42] Luke: investment for me and I, one of my buddies, uh, was coming in from Canada. I saw him yesterday and he’s on his way. He went to Athens yesterday and then I saw his wise card at some point, like he’s also a fan. It’s awesome, awesome company. I love to see
[00:03:56] Kryszstoff: Mm-hmm.
[00:03:56] Luke: hands of like Canadians and people like that.
[00:03:59] Kryszstoff: Yeah, I mean, I was just surprised. It’s just, just worked so flawlessly, seamlessly. Uh, kind of like a magic fix almost for international travel. So if you are one of these cross border travelers like yours truly, and you don’t have a wise account or you don’t have a card, check it out. Uh, last maybe most obvious point, uh, I could keep my money in the checking account at Wells Fargo, or I could put it over in Wise checking account gets zero a PY wise, gets 3.9% at the moment.
Plus all of the fearless stuff. So it’s like free, you know, it’s, it’s kind of like free money. It’s just a, a no brainer.
[00:04:40] Luke: and, and I guess like, not to keep like harping on about that company, but like, I guess you are spending Euros for the next month or two, like you are earning interest on your Euros. A pretty decent rate if you turn on the interest product. So yeah, go do
[00:04:53] Kryszstoff: Yeah. Amen.
[00:04:55] Luke: Lemme scratch my head and think like, when was the last time one of Christoph’s companies helped my life? I dunno. Um, I ain’t using quantum computers. I I haven’t got satellite phones yet. I haven’t got like an EOS battery parked on my driveway.
[00:05:10] Kryszstoff: Well, whose problem is that?
[00:05:14] Luke: Do something for me, Christoph. I wanna be a customer of yours.
[00:05:18] Kryszstoff: Look yourself in the mirror badger and ask yourself why you don’t have an EOS cube parked outside in your driveway. So what’s, uh, so anyway, I’m delighted to be here in, uh, in Europe. The pace of life is just so much, you know, quieter and, and slower. Way more my speed. living in the side of the mountain now though, I already re-injured my hamstring, so that’s not great.
[00:05:43] Luke: have you found a wild swimming spot under, you’re a fan of like, getting naked in the, in the forests? I.
[00:05:51] Kryszstoff: Like a forest. And then, yes, I am a, a fan, fan of being naked in the forest, but I have not found a wild swimming spot to, uh, yeah, but I’ll send photos as soon as I do.
[00:06:05] Luke: Yeah. Maybe censored. Yeah.
[00:06:07] Kryszstoff: Okay,
[00:06:08] Luke: Don’t wanna see too much monkey paraphernalia.
[00:06:11] Kryszstoff: Badger, what’s happening on your side of the pond since I last spoke to you?
[00:06:14] Luke: Uh, I’m still like, um, what, 10 days into my like. Nutrition science experiments. I’ve got lots of interesting data. I like Gemini. I said I’ve been logging like everything I eat and exercise and do in Gemini, and I’ve had this one conversation running for coming up two weeks. It’s getting pretty freaking preachy
[00:06:34] Kryszstoff: Uh oh.
[00:06:35] Luke: I had a, I’ve just had a boozy weekend away and we ate like a lot of food. Like we did some Texas barbecue thing and then we had like a barbecue up hid the guy’s house and some others like it was like a meat fest And, uh. Like I could, I got soundly lectured by Gemini whenever I updated it on my food intake.
I think the nicest thing it said it had to say was, uh, at least you’re hitting your protein goals, Luke. I could see it. I I could hear it. Rolling its eyes. So, yeah, I’m getting taken down by ai.
[00:07:05] Kryszstoff: You know, I don’t know. For, for, uh, for our YouTube viewers, you, if you see my shirt, it’s my Alec Baldwin. Glengarry Glen Ross Coffee is foreclosure shirt. In which speech? He says something like, Badger, put that donut down.
[00:07:25] Luke: I’ve just, you know, you know, I’m watching succession and I’ve just seen the episode where like, revolt is about to happen and then like a box of donuts arrives and then like chaos is used. So I’m, I’m deep into series three now.
[00:07:38] Kryszstoff: Oh, fantastic. Which reminded me, uh, I almost, I don’t know if this is projecting or deflecting or whatever psychoanalytic tool, but I sometimes feel like when you look at me. You see cousin Greg,
but just you wait. Just you wait.
[00:08:01] Luke: you’re gonna come. Good. Okay. I definitely don’t see cousin Greg in you. You’re a bit more Roman as far.
[00:08:06] Kryszstoff: Fair, fair, fair.
No. Right. No, no.
[00:08:14] Luke: I hope Greg comes good, but like Yeah, don’t
[00:08:16] Kryszstoff: Oh no. We know cousin Greg can’t do no wrong. All right, so what in the goodness gracious is going on with the tariffs?
[00:08:26] Luke: Yeah, like it’s all over. We’re back to normal kind of. So, uh. No, literally no idea what’s going on. So we are recording on Monday the 12th of May, over the weekend I think we’ve just seen an announcement that, like the US and China have come to some preliminary agreement to slash tariffs for the next three months while they negotiate some of the finer points and the finer points are still some pretty big material things. So we could kind of go anywhere from here, but I think from Wednesday this week. Both sides are gonna cut tariffs by over a hundred percent. So we’re going to essentially come back to pretty close to where we started, which is tariffs on China, imports falling to 30%, Chinese tariffs on US goods falling to 10%, and that’s a much bigger cut than probably anybody expected given the, like the magnitude of where we started. So interesting. I mean. We had the US UK trade deal, which actually I think was pretty reasonable in round on it. It should have been a straightforward one because the US has a trade surplus with the UK and we’re like, we’re partners and blah, blah, blah. But that kind of came out pretty cleanly and like I’m, I’m pretty happy with how things worked out, but quite surprised to see what, it could have been one of the most acrimonious aspects of the negotiation US China. And actually seems to have landed in a relatively sensible place. And who knows if this will hold, but if it does, it’s probably gonna, um, well, almost certainly will unblock like supply lines and logistics and that sort of stuff, like shipping something I’ve been bleeding about for the last couple of episodes.
So like maybe Doom is averted.
[00:10:13] Kryszstoff: Maybe dooms have averted. That should be our headline. Uh, I’m so frustrated with the, I don’t know, I don’t know what better moniker to call it, mainstream. Media or news? Media because everything is so partisan that I find I can’t trust or feel like I can’t even Yeah. Trust, uh, is it, it’s not just trust, but I can’t even take seriously any analysis that is not so fully partisan because even if, let’s say Trump did some good.
And I actually did say negotiate with the kind of, you know, using his style and he got results. I just can’t believe that it would be reported relatively objectively by many news sources that I’m used to reading. And so I can’t, you know, question mark that you’re talking about has some good come out of this.
Seems like it’s possible, right? It seems legitimately possible. And yet, would you bet, would you like, are we out of, are we past the point of, uh, uncertainty? No. I don’t know. Do you know? You don’t know. Right? And so it still feels like business is unfinished and, and I don’t know, where are you? Maybe, maybe that’s me stumbling to asking you.
What sources are you relying on? To make you feel like you can come to some conclusion about this that’s stable.
[00:11:53] Luke: Yeah, like I suppose the primary source of this is like Trump on truth social, but I can’t bring myself to install that. Uh, so I, I get most of my news from X using like. Gemini with deep research quite a lot and I think deep research is quite a useful tool. it goes out and if you ask it, an update on what’s happening with tariffs in the last 48 hours, it goes and surfs the web for you and looks at like hundreds of websites. But the, the most useful thing is you some analysis, which is really structured, but you get all the citations. So if you wanna fact check what it’s telling you, like it’s really easy to do that. And I, if it’s something important, like I go and check the citations and make sure like I’m getting, at least like straightforward reporting.
Not hallucinations, but kind of, who knows, like the, the way the US administration have played this could have been artful, but, but it does feel like they’re sort of making up as they go along a little bit. But how does. How does this serve, say, let’s say we end here and all these ne finer points get negotiated and we finish on like 30% tariffs on inbound Chinese goods. Does that really create a strong incentive for domestic manufacturing, which was supposed to be the reason for all of this? think so. So it would be net cheaper still for. Apple to manufacture its iPhones overseas while they, they’re doing it in India, not China now, but it’s a bad example.
But, you know, x, Y, z other company to manufacture in China, add on the 30% tariff to land the goods into the US and sell them. Probably cheaper and more efficient to do that than it would be to set up like a whole manufacturing plant, an onshore, like a whole load of stuff. So, I dunno that this serves like the ultimate, supposed, ultimate goal.
[00:13:48] Kryszstoff: My understanding was Trump wanted some, well, he uses the word fairness because we’re always being ripped off. And maybe some, I mean, maybe there’s some truth to the extent that it was way over misaligned and even, uh, a little bit more toward the middle. Seems if it’s still a global economy, then the whole system stabilizes a little bit.
Uh, I’m, I’m no expert, so I can’t, I can’t speak to that for sure, but anytime, So that could be a good, because then, then that trust quotient will be, uh, resolved. You know, that the United States doesn’t feel like it’s being bullied. That means it’ll be more open towards the supporting, I guess not, not being taken advantage of, but also welcoming its partners into its fold.
So that’s kind of how I understand it. Like our things state did the, did this move. Get rid of the jagged edges and kind of smooth out the surfaces.
[00:14:50] Luke: Yeah, I think that’s the key terms, stability and unlike predictability as well. ’cause like even if the US said okay, like a hundred percent, 200% tariffs like, but that is here to stay. That’s still stability. Like businesses can then strategize around that. It’s just when you, like, things are going up and
[00:15:08] Kryszstoff: Right.
[00:15:08] Luke: day and you don’t know where you’re gonna end up. Like you can’t plan in that environment.
[00:15:12] Kryszstoff: Right, and to backtrack to the news source, if, if LLMs like Gemini are just sort of scanning the web, and I guess, I don’t know doing what neural networks do, but if the data themselves are so polarized. I know the answer isn’t. Just take the average of, of extremes. Then how do, how does something like Gemini come to what we would call an objective conclusion if the data sets themselves are extreme?
[00:15:48] Luke: Um, well, I mean, when I, I try and frame questions where I deliberately ask, okay. We’re turning it into like an AI conversation, I suppose, but that’s like our, it’s our nature. It, like, I try and frame questions that delivery. the LLM, go and seek like counter sources of information, apply some critical thinking, like, give me both sides of the argument and I’ll try and gesture myself. ultimately I’m just gonna probably at the, this sort of data, like rely on reputable news sources.
[00:16:18] Kryszstoff: Right. See that, but Right. I think that’s maybe my, my point of open confusion is if I ahead of time know that the dominant data source, and this is maybe where it’s in the overextended assumption, that the data sets on both sides are overly exaggerated. Then even if I say look at both sides or give me counterarguments, then I’m asking the da, the, the AI agent to say, go from one extreme and then look at the other extreme.
But if they’re both polarized extremes, that’s still sort of not exactly the middle and the averaging them isn’t exactly objective truth. So it’s a weirder, it’s a weirder moment that I’m intuiting frustration about. Even with skillful use of AI tools.
[00:17:13] Luke: Yeah. Fair enough. Fair enough. this, this like the specifics. Like if I say, look, if I look at, say the UK US trade deal and I watched like Trump’s speech in full and K speech in full. So. You know, I suppose that’s like the source of truth, but there was no detail in there. It’s, it was kind of hand wavy and, oh, you know, who are 80 years from uh, V
day, unlike look at this like centenary kind of, you know, like, you know, major milestone and we’ve achieved all this stuff.
But you try and get into the detail. There’s no detail there at all. It’s probably still being trashed out, like probably both negotiating teams were just told like, get something that we can announce today. Like today.
is the day. So, um, so yeah, what is the truth? Like, who knows? But,
um,
[00:17:59] Kryszstoff: But
[00:17:59] Luke: at least that one, like, well, the all, I suppose
[00:18:00] Kryszstoff: yeah.
[00:18:01] Luke: the main takeaway is like we’re, we are navi, like the, the world is navigating this chaos
quickly, and that’s probably the the best we could ask for.
Like, just get through this, get to some kind of resolution, some stability as quickly as you can. So I think they’re doing a good job of that.
[00:18:18] Kryszstoff: Yeah. I’m all for that. I mean, the market today, as we’re recording likes with its saw, so fingers crossed.
[00:18:25] Luke: Yeah. Like I’m, I look at my, don’t drag this segment out ’cause got so much else to talk about, but I look at my own like 21, 22 cash position I’m like, maybe if we are, if we are coming outta like suddenly you last 24 hours coming out of like doom and tariffs and fear, like a lot of my. Bear it. Bearishness of the last couple of months has been predicated around tariff, chaos. Volatility. We’re gonna speed run into a recession and then like massive unemployment and like we’re gonna go to shit. Maybe that’s all moot now. I don’t know. So I’m gonna take a breath and probably not try, try not to do anything for a couple of weeks just to see if some of this stuff sticks and see if the next couple of agreements that get announced are similarly reasonable. if they are, I need to get that money reinvested.
[00:19:16] Kryszstoff: Right. So two points on that. One. I still believe your theory that there is gonna be that kind of, uh, temporary sticker price shock. That’s delayed, that might freak people out. So there might be a couple, you know, down waves, but then the market is always forward looking. So if we know that those knots have been untangled, then the market might actually not react as poorly temporarily.
So, uh, I’m thinking more like two, three months. Before we could kind of say, okay, coast is clear-ish, rather than a few weeks.
[00:19:57] Luke: I agree. Agree. I, I think sort of a few weeks where I forced myself to do nothing. Just to see which way the wind continues to blow. But you’re right, like it’d be good to see like another quarter of earnings from my main, like the companies I’m mostly invested in, ’cause we just had earnings season.
We’re still in the middle of it to some extent
[00:20:14] Kryszstoff: Hmm.
[00:20:15] Luke: and we’re not seeing like the tariff and the chaos impact yet. ’cause this is data up to March. So probably the quarter that these companies are living now is a mess. maybe the news of the last 48 hours might mean like the following quarter is better. So,
[00:20:32] Kryszstoff: Yeah. Oh, to be determined. Yeah.
[00:20:36] Luke: you probably, if you’re listening, we probably taught you nothing there ’cause we haven’t got a fricking clue what’s going on, just like you guys. Um, let’s talk about something we do understand though, Christophe, do you wanna take us on and tell us about the bleeding edge of crypto tech?
[00:21:26] Kryszstoff: Yeah, I’m really excited about what I’m about to tell you, and I know I’m talking to my forever crypto skeptic, but I be, here’s why I am excited, because I feel like I got a chance to experience. Something that is non circusy in the crypto world, even though it also felt somewhat circusy. So let me give you the specifics.
And this is purely educational, uh, because this is how the future is still unfolding. So most people were not, uh, did not have access to this stuff that I, I did, uh, but you will in the future. So in the stock world. We have dividends, right? Where you own a stock and you get a bonus payment coming from out of the, uh, company’s call it treasury.
In the crypto world, there’s something called airdrops and token deliveries. Were basically supporters of the, of the project. Get incentivized to buy it and then they, the company kind of gives them free stuff, free tokens, which then kind of enables the casino like nature of many, many projects. Right.
Well, as a chain link holder, I received my first. Airdrop of tokens this weekend. Now, how I was able to do this, this is the part where I’m, where I was one of the few early ones that was, were able to stake my link tokens and there’s only a limited window when that possibility was open and the pool was full.
And so most people simply do not have access to this. Or did not have access to this, and currently don’t have access to the staking thing. But in the future, as Chainlink evolves, those staking pools will open. So this is more, you know, me trying to inform people about what will be available in the future.
So, because I had staked my Chainlink tokens, which means I put them up as collateral to make sure that the system runs. Cleanly, and that’s kind of one of it. It’s sort of like, um, you, uh, what’s the best analogy you want? The, the crypto world is all about making sure that the numbers that are in front of you are actual, are actually true, so that they’re transparent.
And if they’re transparent, how do you make them transparent rather well? Uh, you stake some collateral so that when a bad actor call it lies or manipulates, they’re, they lose money, so everybody’s economically incentivized to speak the truth. Anyhow, I staked my Chainlink tokens and Chainlink built this program called Build Rewards.
So that the stakers would receive tokens from some of these projects at a certain date, and the first one went live this past weekend, meaning the rewards were called airdropped. I think that’s the the terminology. I pressed all the buttons. I followed all the directions. And in my account and my chainlink address, I received a not insubstantial amount of, uh, tokens seemingly coming out of the air, lack of dividend coming into my account.
These were, uh, speak, they’re called. Space and time tokens, SXT. So you can now look them up on, uh, on any crypto exchange. And each one is worth 15 cents at the moment. They’re, they’re tradable. So unlike dividends, which are, it’s just cash, these are tradable, but at the moment, they’re worth about 14 cents.
And so, uh, that’s an equivalent for me of about 1,500 bucks.
[00:25:49] Luke: Yeah. Cool.
[00:25:50] Kryszstoff: Kind of seemingly out of nowhere. Now this project, this particular project, I won’t go on and on and about it. They’re partnered with Microsoft. It’s a way for, uh. Data sets themselves to be verified on chain. Uh, we’ll put a link to, in the show notes to the white paper, uh, and there’s a YouTube video that’s actually quite decent in explaining that particular project, but really sorry for rambling.
The real reason I want to talk to you about this is because to me, and I don’t know how this sounds to you. The main fork in the road is, is it circus or is it legit? And I’ve always maintained that chain link is a purely, thoroughly no bullshit, completely legit program or protocol or a project or you know, group of developers, however you want to think of them.
And the fact that I now received a not unsubstantial amount of. Actual money coming in, meaning like value, right? Backed by a project that itself is backed by Microsoft.
I mean, I, uh, da, you know, verifying databases and, and that this is where the world is going in terms of, you know, building the finance on top of blockchains. It’s like this first taste of the economic opportunity here. That doesn’t involve the gambling stuff. I did nothing that was gambling ish. Right. I just, I, I just followed the directions and all of a sudden I got rewarded as a owner or as an investor, or as in the early token, you know, uh, investor in the, in the project.
So that felt really satisfying. Now, some of our listeners might be sitting there saying, okay, that’s great for you, monkey. You know, you were one of these early bleeding edge cases, but it wasn’t open to me. Sure. However, Chainlink currently is supporting over a hundred of these build projects. This was just the first one to have coughed up the fruit.
So in the future, and then coming months and years, I believe, you know, they’re going to as, as the public starts getting informed about and it, we crossed past that chasm of bleeding edge stuff. Then, then anybody that has the tokens will be able to more readily follow the, you know, the steps and also set themselves up for these kinds of drops.
So just putting it on the map for y’all.
[00:28:25] Luke: Yeah. Very good. I like your sort of like using the metaphor of it’s like a dividend. You’re right. That’s pretty, that’s a kind of cool way of thinking
[00:28:33] Kryszstoff: Okay.
[00:28:34] Luke: Getting paid to be an owner essentially of that thing.
[00:28:37] Kryszstoff: Yeah. And, uh, it’s, it’s actually, I’ll say. Let me develop this thought just a little bit more. This space and time development team were incentivized themselves to use chainlink. Chainlink has a suite of services. Everything’s about security and transparency. So like we want Chainlink services. Okay. But in order to use them or like the negotiating, you know, sweet middle ground was okay.
You’re gonna have to cough up. 4% of your tokens to our user base, and it’s this kind of symbiotic relationship. So now the space and time people lose four, lose, you know, donate whatever, 4% of their tokens to chain link. But what they get is, you know, uh, a better product. So it’s kind of, that’s what we were talking about.
If, when you remember the whole. Sort of impetus for how are networked, uh, decentralized things going to compete with the large corporations like Google and Apple? Well, there is this more, this feeling of people working together, incentivizing all of the owners rather than just the sort of, you know, creme de la creme.
And this is one of these proof points, which feels satisfying.
[00:30:02] Luke: Good stuff. Well done.
[00:30:04] Kryszstoff: Thank you.
[00:30:05] Luke: Alright. I didn’t get in early, but shall I tell you about where we’re at with Mercado Libre? It’s one of my biggest holdings.
[00:30:11] Kryszstoff: Yes, please.
[00:30:14] Luke: Let’s do it because, and I was prompted to go into this one a little bit because. if you caught a few weeks ago, episode Katrina and I visited an Amazon fulfillment center, saw the robots doing their robotic stuff, so thought it’d be worth just touching on not just Mercado Libre, but also Sea Limited and kind of arguably these are similar kind of companies.
Serving different parts of the world. So Mercado Libre’s, main markets are Brazil, Mexico, Argentina, like a bunch of other Latin America, and Sea Limited is like Southeast Asia. enough also has, um, a major logistics and e-commerce arm in Brazil. So they kind of, uh, they do baffle in Brazil as competitors. So Mecado Libre put in like rock solid results. I thought it might be nice to go check out fin chat.io. Yeah, so Mecado, Libre, and C Limited, Mecado Libre on screen is in blue, CLI is in Orange, so they’re sort of broadly similar market cap today, Mecado Libre’s $124 billion. Company C Limited is an $82 billion company, they have similar, similar-ish revenues, so latest quarter reporting from Mecado.
Livo. You haven’t seen the matching numbers from. C Limited yet $5.9 billion in revenues, and you can see there. Mecado Libre has always kind of led the way, but they’re kind of running in lockstep. And then on a net income basis, which is the real profit after you’ve paid for everything else, and depreciation, amortization, everything else. So they’re both healthy net income generating companies. And this is particularly pleasing to me for C Limited because I kind of bottomed tick this one when I recommended it for seven investing a couple of years ago and also added it to. I topped it up in my own portfolio. getting in just as the company was starting to pivot back to profitable growth. So again, see limited trailing Mercado Libre, which is generating nearly half a billion dollars in net income positive in the latest quarter, but they’re both profitable companies and I mentioned. That they kind of do battle in Brazil. So something really nice you can do with Fin Chat. And if you go check out Fin chat.io/wildlife, you’ll get a handsome discount off of any paid plan chat.
Pull out some segment data and a bunch of other. Like bespoke data from the reporting. So here I’m mapping Brazil revenues for Mercado Libre against Latin America Revenues for Sea, which is essentially also Brazil. It’s their main Latin market. And you can see Blue Line again. Mercado Libre is dominant in Brazil, but they’re both still growing at a similar kind of rate. So probably that that sort of demonstrates that the whole market for e-commerce is expanding and really their competitors are like offline commerce as opposed to each other. So much So Mercado Libre versus CI like both companies.
They’re both putting in solid results. I’m happy to be a long-term owner of both of these. One thing I had been grappling with in with Mercado Libre, and it has been a bit of a hangover on the stock for a little bit, is really crazy. Levels of inflation, essentially hyperinflation in. Argentina, which is one of their bigger markets.
Um, I think Argentina today is about 25% of their revenues and like it was wild. Uh, annual inflation was triple digits, but it’s come down to 55.9% as of March, like two months ago. So like 55% inflation is still insane. But at least it’s sort of stabilizing and, uh, coming down. I think the market expects 22, 20 3% inflation by year end.
So that’ll be good. Just in terms of getting a bit of stability in that market.
[00:34:23] Kryszstoff: All right, Badger, two questions for you. Regarding Scene Limited.
[00:34:28] Luke: Hmm.
[00:34:28] Kryszstoff: I used to be an owner back in the day. Luckily I sold that peak valuation,
[00:34:33] Luke: Put on.
[00:34:33] Kryszstoff: of the things I remember. was sort of confusing about the company was the way they were tying all these sort of like funnel products, gaming as a way to get people onto their platform.
And it was like multiple arms and it kind of felt, dunno for short, to use your, like, somewhat casino ish, uh, versus mercado’s clean focused operations, I suppose. Uh. you update me on whether C Limited is still doing that kind of thing? And second question is, what the hell? How are they even succeeding?
Even a little bit on mercado’s home turf,
[00:35:14] Luke: yeah, so Garina is the Gaming Division of Sea Limited, and they were, they were really dependent on gaming revenues for a long time, and that fueled essentially like over expansion. So when you sold at the peak, that would’ve been probably. What, 20 21, 20 22. Somewhere around there. Um, like they had this gaming division and they massively overexpanded into like Poland, other bits of Europe, India, south America, and it went really badly wrong.
Um, and particularly as we were coming, like the pandemic was really great for e-commerce stocks. The pandemic ended like a lot of e-commerce stocks kind of reset back to their original, like pre pandemic. Profitability and C was caught with his pants down, and at the same time as that. Like its main gaming property, which is a, a game called Free Fire was starting to lose users.
So when I pitched C Limited for seven investing, I recall saying like, ignore Garina. It’s just irrelevant. It’s no longer the case, like it’s come back into relevance. So today and the most recent reporting. On an annual basis for Sea Limited e-commerce was about $12 billion a year. Revenues, um, financial services was about $2.3 billion and now.
The gaming side of things is just under $2 billion. So it’s not immaterial and it’s very high margin revenue. And it is profitable like it’s fueling. ’cause in fact, like it’s steel limit’s biggest segment. E-commerce is actually like loss making still because they’re investing to try and like build their logistics, make it more robust in their home markets.
Um. So that gaming revenue is still helpful for them to kind of fuel the engine, but they can’t rely on that forever, and I think they recognize that. And so they’re trying to make like build a sustainable competitive advantage, which is in like the Amazon model, having like an unassailably. Efficient and effective and fast, reliable e-commerce kind of capability with real logistics and delivery in the main markets where they are the leader, if they can really like get their claws in and establish themselves and like maintain that leadership edge.
That’s what makes ’em resilient to a, like an Amazon coming in and trying to like battle with them.
[00:37:47] Kryszstoff: Well, when I think of Mercado Libra, I just think of a thoroughly dominant company that now has scale and it has capital, and it has. Trust and all these partnerships, and it’s local, and it’s so, I don’t, I don’t quite understand the thinking in C Limited saying, oh, we’re going to to compete with these guys there too. How? How are they
[00:38:12] Luke: Yeah,
[00:38:13] Kryszstoff: A little.
[00:38:14] Luke: I think they, like they did that over expansion. I think they got to like having a somewhat profitable model in Brazil, so let’s, they’ve withdrawn from the majority of their non Southeast Asia markets. They literally just pulled out of a bunch of markets and got kicked out of some others. Brazil they didn’t get thrown out of, and they’ve been able to operate that.
At, I don’t, I haven’t got the detailed numbers in front of me, but at somewhat of a profit or at least like not massively loss making. So I guess they’ve just kind of hung on to like the remnant in that over expansion that they think they could, uh, continue to scale out profitably. I. But you’re right, like it doesn’t quite fit with the Southeast Asia idea.
Maybe this is their CEO fors Lee kind of hanging on to something outside of his home turf, just in case it’s like a springboard. If they do want to re-expand again in a more kind of controlled and managed way into the rest of Latin America, they’ve kind of got a base to do that, at least if they’ve maintained the presence in Brazil.
[00:39:16] Kryszstoff: Okay. Uh, call me a skeptic, uh, terms of that being a strategy, because at the end of the day, if Mercado is the dominant gorilla, I. Then they’ll be able to compete on price eventually due to all of the synergies. Then what advantage does an outsider have, even if now it’s good enough? So, I don’t know,
[00:39:42] Luke: Yeah.
[00:39:43] Kryszstoff: but I don’t know what I don’t know about that.
[00:39:45] Luke: No, that’s totally fair. Um, like it’s reflected in the valuation. You, you’re buying c at a materially cheaper valuation than Mercado Libre today. So I think they’re both good holds, like good long-term holdings. If I had to pick a winner, it would be Mercado Libre. But as an investors, like you don’t need to pick the winner.
You can back every horse if you really like, like a theme or a segment or a, you know, a particular. Uh, investing idea.
[00:40:14] Kryszstoff: Yeah, that’s the whole idea of buckets. This is like your little
[00:40:17] Luke: Hmm,
[00:40:17] Kryszstoff: e-commerce bucket, especially
[00:40:20] Luke: Yeah. Not so many. It’s pretty material. Yeah. Yeah.
[00:40:23] Kryszstoff: Cool.
[00:40:24] Luke: Cool. Alright, well, so my Mercado Libre investment’s going pretty well. Um, you took out a short on Quantum Computing Inc. Do you wanna tell us how that’s going?
[00:40:35] Kryszstoff: Yeah. I closed. The, well, first of all, I lost, yes, I closed all my puts. Majority of them were in my real money portfolio in King of the Jungle. I bought one put for 10 bucks and that went to zero. So I lost 10 bananas on that. Unfortunately. Here’s the lesson here. at one point I was up a couple hundred bucks, but I decided not to close it because remember, my thesis is that this is a, as borderline to a fraudulent company as as you can get, and.
[00:41:05] Luke: was the, remind us, like this was the quantum computing company that previously sold beverage beverages or something. Right.
[00:41:11] Kryszstoff: correct. This company goes way back and you could tell that the operators behind it are into massive share dilution and changes in, it’s like they know how to, incorporate and then they go to where the hottest next thing is. And it’s weird because they changed their name to quantum computing.
So when quantum computing became, everyone became excited about that. And they’re just buying all the quantum stocks. This is the best name, one of the best names in the business, quantum Computing Inc. Right? But, uh, when you look at their finances, they make zero money. And it just, like I’ve, it’s just, it reeks, it absolutely reeks of like shell fraud. Bad stuff, even though they do have legitimate quantum physicists on the team, it just, that doesn’t translate to billion dollar valuation. So I was betting that it’s gonna go to zero. If you look at the chart, if, uh, our editors could put up the quantum computing chart that I made using fin chat. I bought the puts near the all time high and I sold them.
I timed it pretty, pretty well and sold it near the local low. And after all told I’m still down, uh, $55 as a whole, and that’s for two reasons. One,
[00:42:37] Luke: Let’s, and let’s just, let’s, let’s just explain like the picture a little bit. So
[00:42:41] Kryszstoff: no.
[00:42:41] Luke: the very peak of the valuation, you were like, this is bs, this is, this is overvalued. I’m buying puts, which means you. You are betting the stock is gonna go down ’cause you’re buying the right to sell the stock at some point in the future.
[00:42:57] Kryszstoff: Correct. I bought the right to sell the stock at $10 and uh, I think I bought several, one at 10, one at five, and a bunch of 2.5. Dollars per share. ’cause thesis was, it’s going to at least one. If it’s a fraud, it was gonna go to one or below one. Uh, so I bought near the peak and I sold most of those puts when it was, uh, fell all the way down to about $5.
So I was right. I was completely right in the direction. I was right pretty clearly in terms of time, but I also bought a whole bunch of puts that were two and a half dollars and it never went below the $4 price, and I never sold those, so I lost. The entire value of those contracts, which was $310. So that’s why the net in total is like, it’s almost, you know, nothing right?
It, but lesson here is that when I was buying these, the premiums option makers know when the stock is really volatile. So they were expensive to buy and that’s why the profit wasn’t a lot more than I’m showing on paper. So it’s one of those things where I was right, my reasons were right-ish, but because it never fully turned out to be a fraud yet, I couldn’t cash out maximum value for the puts.
And that’s why I wasn’t really, you know, it was in a big money making venture. The better question for you Badger, is now that the stock is up to, what is it today? Um. It’s now trading at $9 and 30 cents, which makes it a, it’s back to being a several billion dollar company. Its earnings are coming out I think in two days. And you know, at some point I think the music is gonna stop. I just don’t know if, given the market, obviously this is one of these market manipulated companies where enough of the shadow players get to do with the price whatever they want of situations.
[00:45:10] Luke: Allegedly. Allegedly
[00:45:12] Kryszstoff: allegedly that means we don’t really know when the, I’m right, when the fraud will catch up to the company’s actual finances and it goes bankrupt. So. I’m tempted to play the lottery again. Uh, but I don’t have a sense of timing anymore.
[00:45:34] Luke: Yeah, fair enough. Not for me, but like I, for some reason I find myself shorting like really solid, robust companies like American Tower rather than this dumb shit.
[00:45:43] Kryszstoff: Yeah.
[00:45:43] Luke: should probably be doing it your way. Uh, yeah, like I suppose we, if you think back to like where we are in the cycle, like if tariff chaos is behind us, like, and if we go, we could be going back into like boom times.
And like the zeitgeist right now, you know, like the Wall Street bets crowd, like they go crazy over stocks like this. So if we go back into boom time, like everything’s gonna go up, whether it’s a real CO or a shit co.
[00:46:12] Kryszstoff: and that’s the lesson to, I suppose, the majority of investors here. I to buy more puts on this thing, it would be clearly labeled. You know, it’s the circus. It’s the circus fund, you could be right, you could be wrong, and the market will still do what it wants to do in the short term. only way I would consider this, even like a quasi investment instrument, is if I could buy puts that were long dated, certainly past January, so maybe at least a year out. Where, you know, the company actually does go bankrupt or has to like dilute investors so severely that, you know, breaks the, the algos somehow.
[00:46:55] Luke: Yeah, well, I guess you could look at like their burn rate, like how much money they’re spending to stay afloat every quarter. And you could look at how much money they have and like you could, you know, you can just, that’s a pretty easy calculation to work out when they need to raise more money. So that, that, that’s, if the market like goes, oh, like that dilution is pretty ugly.
[00:47:16] Kryszstoff: Yeah, the uh, there is like a, maybe I’m overstating it. It’s fraudulent in all the ways we’ve talked about, but because they have legit quantum physicists working there and it’s a newly emerging industry, I can’t for sure whether all of a sudden they could pull a rabbit out of their hat and say, we have actually. Come up with some new contract with a legit player, and it’s something that nobody knows and it’s not in the open. Uh, it just seems like the probabilities of that happening are so small.
[00:47:49] Luke: You gotta go find those guys. If there’s like a handful of those legit quantum physicists, you gotta go find them on LinkedIn and like set up some sort of like price alert. Like if any of those guys suddenly flag, they’re looking for work like immediately. That’s your like trigger. Yeah.
[00:48:04] Kryszstoff: Yeah, that’d be a good tell for sure.
[00:48:07] Luke: Alright, well you know here this way lies danger. If you play with options kids, and it, sometimes it works out and sometimes it doesn’t. Sometimes like Christoph just, did you get it right? You have the right plan. Your timing is good, but you get hosed anyway, so,
[00:48:22] Kryszstoff: Yeah. Well, I didn’t get host, I didn’t, I
[00:48:24] Luke: Hmm.
[00:48:25] Kryszstoff: get host,
[00:48:26] Luke: Yeah.
[00:48:27] Kryszstoff: uh. could have cashed out on the positive,
[00:48:31] Luke: Right.
[00:48:31] Kryszstoff: Yeah,
[00:48:32] Luke: No, well played, to be honest. Like you, you top ticked it and you bottom ticked it with your, like buying and selling your put, I guess like the, the downside was maybe you were a bit too aggressive in terms of what the downside could have been, and then like a bunch of your options didn’t, they just expired as opposed to printing.
[00:48:50] Kryszstoff: yeah.
[00:48:51] Luke: Yeah.
[00:48:51] Kryszstoff: look at that though, if you look at that line from where I bought to where I sold. mean, it’s kind of straight down. And once
[00:48:58] Luke: Right.
[00:48:58] Kryszstoff: kind of momentum, you think, okay, yeah, the, the story’s over. And then somehow the market, you know, players reversed it. So,
[00:49:06] Luke: And it hit our docket ’cause it was up like 40% just like a few days ago. So like God knows, who knows what’s going on. Maybe they hired another quantum physicist.
[00:49:16] Kryszstoff: I’ll keep you updated if I, if I go in on the puts again, but I’ll have to do more
[00:49:20] Luke: Okay.
[00:49:21] Kryszstoff: before doing that.
[00:49:22] Luke: Okay. Well, should we have a bit of a similar debate, but around an actual legit company who does actually do some quantum computing stuff as well, but I’m talking about alphabet slash Google cars. I just broke one of my Golden Immutable rules. Rules are there to be broken. At least I bent it. My rule has been never add new money to a position.
Oh, to take yourself above 6%.
[00:49:48] Kryszstoff: Hmm.
[00:49:48] Luke: I wanna have like a 10% position, it’s gotta grow there from 6%. But Alphabet took a ding last week on what I think is immaterial news, and I just couldn’t resist taking the opportunity. ’cause my position had drifted below a 6% allocation. So I’m like, I’m gonna add. So I’ve, I’ve added myself up to 7.5%.
I like this company, but you are not such a fan, so tell me why.
[00:50:15] Kryszstoff: It’s not that I’m not a fan. Uh, obviously, uh, world’s best business ever. Maybe it’s that, especially in the context that you’re talking about it, making it one of your biggest positions. I just, in this moment, I honestly can’t really be sure if. Because of its size, if they’re too slow. In reacting to the AI threat, the whole innovator’s dilemma problem, which any listener just knows inside out, I’m sure that that. They’re being too slow or not proactive enough to counter the potential disruption of their core revenue generating ad business. And I, it’s not that I, I don’t know, I, it’s not that I don’t believe them, it’s not that I don’t think they’re a great business. It’s not that. But when you are, when the whole world is just, you know, the moment we’re in. you have a capitalist capitalized competitor to the tune of open ai and these things are, you know, updating themselves so quickly and how can you in this moment, badger feel confident that something won’t, I dunno, not break, but, uh. Jeopardize their main cash cow. So even if all their other bets do work and you know you can’t, yeah. Uh,
[00:51:56] Luke: I’m high conviction in this ’cause I see really clearly how they are gonna win the AI race.
[00:52:03] Kryszstoff: tell me.
[00:52:03] Luke: Like so, like I pay for a bunch of these tools. I pay for Gemini, I pay for chat. GPTI even used Manus on a free trial last week. Like I’m always playing with these tools and I think. As a sort of simplistic, you know, I’m using them mostly to do like investment research and understand the world better and explore ideas and, you know, management and nutrition and stuff.
I’m like, the best models from Google are as good or better than the best models for everybody else, like, but this, the models themselves are a commodity, really like. Someone will get slightly better than the other, and then someone else will catch up. Like, no one’s gonna get an unassailable lead in this space.
Even Google added their own, like video VO two model, like video generation model a few weeks ago. Um, like their, uh, parity. But the bearishness around this is, I think the bearish, the, the idea is right, but the bearishness is misplaced because the bearishness says. Like the, the blue links, like, you know, you go to Google and you say, you know, Google, whatever, some company something, something you wanna buy.
Like, I bought something the other day, I bought this water bottle and uh, like I wanna find the best one. So I like Google it and um, and then Google earns its money because certain people will buy those keywords knowing my demographics, and then they earn a bit of money. Well, ’cause I essentially bought my search and that’s like the main engine of their revenues for a long time.
And the bearishness is, well, AI is gonna come along and instead of Googling it, you’re just gonna ask your AI about this thing. And it might even in the world of Agen ai, which we’re moving into right now. It might even do the research for you and go and buy the thing on your behalf, and you never have to do any research and you never see any adverts.
Um, and so that whole advert revenue goes away. I don’t think that’s what’s gonna happen. Um, I’m, I might ask my AI to do a thing. Well, if the advert is buried in the AI’s response, or maybe the AI actually. I say, buy me the best water bottle that fits my soda Stream machine. And if the AI chooses to buy one that got, you know, had like advertising behind it, IE rather the company selling the thing paid Google to make me buy this one rather than their competitor’s one.
That is such a high value. Um. Thing to have happened for the advertiser, like CPMs, cost per milli. That’s how you pay for adverts. Like you pay for like a thousand eyeballs seeing your thing. Well, the CPM rate, like the amount of money that an advertiser pays will go through the roof when it’s highly targeted.
Almost like not just give me like 10 options, 10 links. It’s like, buy this one for these reasons. So advertisers will pay more for this like intelligent, embedded contextual adverts within a user’s. Res like results or the kind of outcome they get and yeah, there’s gonna be some nuance. ’cause if I ask my Gemini and IT to buy me like a water bottle and it buys me like a shitty water bottle, ’cause those guys paid the most, that’s gonna jeopardize my user experience.
I might not use Gemini next time. Like there’s some nuance for, for companies like, well all of them open AI and Alpha Alphabet and everybody to kind of navigate to maximize their ad revenues, but at the same time, give. Like a good quality result. The reason why I think Alpha be are gonna win here though, is they’ve got distribution with Android, so like Android has been the dominant. Mobile operating system for some time, and it’s just massively dominant. Now, if we look at most recent data, something like 71% of all handset worldwide are Android handsets and like, so it’s like, you know, three out of four.
And then one out of four is an IS apple, and then it’s like other stuff on the fringes. But virtually everything is Android and Gemini is now packaged with Android and not in the best way. It’s like a separate experience. It’s not really embedded, but we’ve got Google io, the developer conference just like next week in 10 days time, I think.
And I’m. Entirely expecting to see some big announcements around Android 16, which is like the latest os that’s gonna be coming out of beta. Like people are using it now. Um, I’m expecting to see like Gemini baked into Android 16 at a much deeper level where like Gemini already sits in, um, what, seven seven of.
Alphabet. Alphabet has seven 2 billion user products. So Android, Chrome Gmail maps the Play store search and YouTube, Gemini is already in, in all seven of those 2 billion user products. And I think the system become much more pervasive, add more value, and then pivot from this like selling impressions and selling clicks to actually embedding advertising revenue into those experiences.
I. Do you want me to drink to life with a real example, like maps, right? It’s one of their 2 billion user products. Even most iPhone users use Apple Maps. Sorry. They use uh, like Google Maps because it’s just a better product, right? But you know, if I say, okay, I’m gonna like find me the nearest pizza. In maps, well, like there’s an advertising opportunity, not just like the old style where I’ll say, okay, here’s like 10 pizza stores with the reviews and maybe the one I chose to go to.
Google learns a lot with Info Wong. Like if they embedded Gemini into that, it’d be like, Luke, you like this kind of pizza and there’s one that’s like a little bit further away, but we know you’re gonna like this ’cause you’re focusing on your nutrition and like a bunch. ’cause we know you’re to nutrition because like, you know, you did some searches around that.
A few weeks ago, and I know you’re talking to me about like your macros intake and you can get like a healthier pizza if you go to this place. And by the way, they’re offering this discount right now. And I know you’re like a discount hound. So like if you bring this stuff together intelligently, people are gonna make decisions, which ideally a win-win, like better for me, I get a better, better quality, healthier pizza and better for that pizza store.
And then they paid Google for that like high intent outcome. And Google learn a lot more than them being like number one on like a list of 10, somewhat arbitrary pizza options.
[00:58:53] Kryszstoff: You know, that’s pretty convincing. It reminds me a little bit of the moment we had with Meta a couple years ago where it just seemed like it was over bloated. And, and of course, uh, the fact that they were world class company kind of, so deeply embedded in everything already that turned out to, if you invested in them at that point, it was, uh, a really profitable trade.
So I hope this works out for you. Uh, ’cause I was actually considering this trade myself, and then I couldn’t, I couldn’t, I couldn’t, I couldn’t, despite everything you just said. I couldn’t discount in the end. Uh, what if the whole paradigm just shifts so massively to something other, but then. It has to run on something like you’re saying. it, it’s almost like, I wanna say this is Google’s to lose and they would have to fumble it. I know the all in guys were critiquing Google, like how could you not have Gemini in front of more people embedding it?
But that’s a problem that they really should solve way
[01:00:07] Luke: Yep.
[01:00:07] Kryszstoff: than they have. And that’s what maybe that conference you’re talking about, you know, if they still are fumbling it after that point, then I’d be a little more worried. But. now, I’ll, I’ll almost say you convinced me to be less, afraid. Uh, uneasy, but less afraid.
[01:00:27] Luke: Yeah, good. Like I wouldn’t be buying shorts on this one.
[01:00:33] Kryszstoff: Okay.
[01:00:36] Luke: Uh, you wanna take us into your Safari stock for this week, which sounds very interesting. Sure. Uh.
[01:00:44] Kryszstoff: So my Safari stock is ticker symbol, A LAB. Labs recently bought an opening share in King of the Jungle after they reported really terrific earnings, and then the stock was down after hours. And I was like, wait, this just, you know, it was all valuation algorithmic trading. but I liked the. The financials.
Well, so, so well in all the tailwinds that I was like, I gotta have me an opening share. So Sterile Labs, uh, forgive me because there’s so many acronyms in this thing and there are also so many technical things I think are way besides the point. It’s really, they’re the guys that provide the connective tissue. And making memory run a little bit better in terms of all connecting all the AI data center stuffs and chips to one another. So. Think of the all the AI tailwinds. There’s data centers and then there’s servers, and then there’s chips inside the servers. And everything needs to run basically as fast as possible with as much flexibility as possible.
And these guys make different kinds of tools to optimize all of those interconnective things. have products they call, um, Aries, Leo, Scorpio, and Terrace. All of that is just nomenclature. But here’s the one thing I want investors to know, is that you have like GPUs that Nvidia makes that are, you could call general chips, you buy them off the shelf, right?
And they work for general purposes. But then you have something called asics, which are application specific integrated circuits. Those you have to customize for very narrow. Use cases. And what’s great about Sterile Labs is that they serve products across both dimensions, basically making all of AI their tam really. after the, uh, earnings report, revenue was up 144% over the years. So that’s how I reverse engineer. I always reverse engineer. If they’re growing that fast, I don’t really need to know. The, how these little gadgets do and what the switch does here and what the specific name is there. ahead and read up on it.
I did. Um, but it’s kind of besides the point. They are, um, the shovels and, you know, picks and shovels to all the da basically all the data centers that are evolving and it’s a bottleneck situation You know, all these companies trying to build things out and get the most, what juice out of their already expensive equipment, how are they gonna squeeze the last bit of juice out of all the CapEx they’re gonna hire, buy from a sterile labs to make the inner plumbing more efficient? And so, um, yeah, I I mean, are you, you know, as I ramble on about this, are you even interested in something like. Pick ease or CXL or does it even matter to you? You know the name code names for some of these internal or is it enough to say, look how fast this revenue’s growing. We’re at the beginning of build out. We’re waiting for essentially, I guess one more thing. We’re waiting for Nvidia. To say NVIDIA’s one of their main customers, they have customer concentration risks. So there’s something, but you know, Nvidia is one of your customers. Like NVIDIA’s not gonna go go anywhere. Um, it seems like to me it’s enough to say, look, they’re growing like mad.
They have 70%, over 70% margins. They have fancy toys that all the AI players are buying. Uh, and it’s just a valuation question and. I, I went for, because the valuation got better with the latest earnings report.
[01:05:06] Luke: Great stuff. Can’t say, I can’t say I still understand what they really do, but to maybe field your question, I. Do you have to really understand the nuts and bolts of like what a techie company like this does? Probably don’t like, to some extent, you wanna understand the market and is it growing and you know, other customers wanting to use more and more of them, you can get a lens into a lot of those things just by looking at the numbers.
So yeah, that is certainly a way to play. You don’t have what’s my TLDR here. You don’t have to be like a super domain expert to be a successful investor in a particular sector.
[01:05:41] Kryszstoff: In fact, that often goes against you. This is very counterintuitive, but I’ve, I’ve made bad investments because I was convinced on the specific tech, and then
[01:05:50] Luke: Yep.
[01:05:50] Kryszstoff: other things just didn’t work out the way I thought I did. So in order to prep for this episode, I actually learned a whole lot of this stuff, right?
And then I’m, you know, then all of a sudden it’s time to report on it. And I’m like, God, even saying things like CXL and PC lowercase E is like, what’s the point when all you really need to know is that ai ML models need increasing speed and power. I. in order to make all this stuff work, you need better connective tissue and these guys make the better connective tissue. maybe investment wise, the only real question is, is the valuation justified? That’ll only be justified if they continue to see sharp and or accelerated growth. And what we know is that Nvidia is probably gonna have a bad first quarter because their Blackwell chips were sort of delayed. But then when they finally come out. In quarter two, quarter three, ster Labs is going to book a whole bunch of revenue to connect all those chips to the other chips. And so the ramp is just basically getting going, and we’re at the beginning of this generational shift. So this past report basically proved that this company is not a one time. You know, um, one time blip in the sky, kind of like air systems was because if you, you know, for seven investing, I was really big on that company because I said, oh, the, the future of electric vehicles depends on having better, semiconductors and these guys, uh, you know, provide the testing systems for all these chips.
But then all of a sudden you have this sort of, what’s it called? Um. Slow down in, in electric vehicle projections and all kinds of, yeah, the tsunami basically then tsunami. Whereas we can’t sit here with a straight face and say the AI tuna, you know, is, there’s gonna be a hiccup there. So, Let me give a summary cap for maybe another little short. Sterile labs reduce bottlenecks and AI training workloads. They improve server reliability and scale. They enable faster connections between components like CPUs, GPUs, scaling memory. save power and cost using copper instead of fiber, and they prepare infrastructure for that connectivity between CPUs and GPUs, which is a very big deal for the future of AI computing.
[01:08:29] Luke: Thank you for doing that research for our Safari and nice to know you bought one share even though it’s immaterial. That’s how you stick stuff on your watch list. That’s how you do it
[01:08:38] Kryszstoff: Correct.
[01:08:39] Luke: all. Very good. Uh, we got through our long docket, uh, and we managed to battle with me being an idiot and pressing the one button.
Stopping our recording and your, like, slightly dubious Italian upload. Yeah.
[01:08:55] Kryszstoff: Yeah, not, not, not bad.
[01:08:57] Luke: We are hoping next week to be joined by um, Alex, who is a venture capitalist in Singapore, who’s got many years of running successful VC funds around space technology. So if you’re interested in space and what’s happening in the private markets and how that might. Like help public market investors in space, which, uh, I’m definitely one of.
Then tune in next week for exciting conversation.
[01:09:25] Kryszstoff: And in the meantime, anytime Badger and monkey talk about any stock or any investing headwind, tailwind or even complicated stuff like my Bonanza with Chainlink rewards and all that, sometimes it is complicated and you might have a question or follow up for us. So head over to patreon.com/wall Street Wildlife, where in our community forms, that’s where we. Banter and are happy to answer questions in a way that is more satisfying than we did during recording.
[01:10:02] Luke: And if you enjoyed Paul’s question last week where we went pretty deep on, uh, where he is in life as an investor and how his own portfolio shaped and how we might manage it if we are investors. Then, uh, drop us in like an audio or a video question. Hit us up on the Patreon ideally, but if not, you’re not there, then catch us on the Xs and then let us know.
You wanna submit an audio or video question and we’ll tell you how to do that.
[01:10:27] Kryszstoff: Are you ready to be a beast of an investor?
[01:10:31] Luke: Your journey starts here.
