We dive deep into Coatue Management’s newly published list of 40 companies they believe are best positioned to dominate the AI and tech-driven world by 2030. With $60 billion under management, these guys move markets!
📊 Coatue’s Investment Methodology – top 150 tech companies, compounding returns filter, and excluding multiple compression. Is this the right way to find tomorrow’s winners?
🏆 Spotting the Next Decade’s Winners, from SpaceX ($870B projected) to Oracle’s surprising comeback story.
🚀 Can AI solve the national debt crisis? We dissect Coatue’s bold theory that AI will trigger deflation, lower interest rates, and ignite GDP growth.
⚡ Nuclear, solar, and energy storage companies positioned to power the AI boom. Plus Krzysztof’s new Bloom Energy position and Luke’s nuclear reactor timing lessons.
💡 The AI boom needs a colossal amount of energy. Coatue reveals the nuclear, solar, and energy storage plays poised to power the future.
📈 The market crashes about once a decade. We analyze historical cycles to give you a playbook for navigating the inevitable turbulence and coming out on top.
🎯 Alphabet is excluded from Coatue’s list. Is this a massive oversight or do they see something we don’t? $GOOG $GOOGL
🧠 Why being a small investor is a secret superpower, and how Luke used it to score a 15x return, crushing Coatue’s 6x performance.
Sources:
Coatue’s East Meets West conference 2025: https://www.coatue.com/blog/company-update/coatues-2025-emw-conference
Segments:
00:00 Cold Open – The Market is Rigged in Our Favor
00:38 Introduction to Coatue Management
02:44 Coatue vs. ARK Invest Comparison
06:28 Retail Investor Advantages Over Big Institutions
11:14 Coatue’s Investment Methodology
13:50 Tech is Driven by Major Waves of Innovation $IBM $MSFT $AMZN $NVDA
17:35 Technology Wave Analysis: From Mainframes to AI
20:40 The New Class of AI Winners $ORCL $GEV $BE $SMR
24:52 How to Withstand Market Downturns
31:34 The AI Economic Flywheel Theory $TSLA $NFLX
37:15 Are Private Market Valuations Reaching Bubble Territory? #SpaceX #Revolut $WISE
39:40 Today’s Top 50 Tech Companies $BTC $ETH $ISRG
41:14 The Fantastic 40 List for 2030
49:25 Why did Coatue Exclude Alphabet? $GOOG
56:00 Investment Research To-Do List #Databricks
EP93 – No Ads – Coatue
[00:00:00] Luke: AI creates cost efficiencies and more stuff gets done, more economic value gets generated.
[00:00:07] Krys: I buy that if it’s, if it’s trickling down, so to speak. I’m, yeah, I’m skeptical potentially if, if it’s up to sort of the, the people with more money to, stuff it under their mattress, but to actually give back what proportionally, what needs to be given back
[00:00:24] Luke: like if people say the market is rigged, and that’s true, what people are missing, it’s rigged in our favor
[00:00:38] Luke: Hello and welcome to Wall Street Wildlife with Christophe and Luke. Last week we had so much to talk about, we didn’t get round to it. So this week we are picking up the topic of CO two. They have just published their Fantastic 40 Growth and Innovation Index, which is a list of the 40 companies they believe are best positioned to lead in an AI and technology driven world.
By 2030, guys are legit. So listen up. What stocks did they pick and what are they missing in our opinion?
[00:01:12] Krys: Okay. What makes these guys legit badge? I have not heard of them, before.
[00:01:17] Luke: And I hadn’t either. Uh, but they, they got shared with me by a Discord buddy from the dividend talk Discord Kalin, who said, check out this deck. And he gave me a couple of, data points to go and do some research on. were founded in 1999 by Philippe Leffell. uh, they got a good pedigree. And the reason I think this is really relevant for Wall Street Wildlife and our listeners is they kind of follow a very similar methodology to you and I. invest in both private and. companies and that gives ’em like a lens of what’s happening in private markets. They can apply to their public investments. They’re serious players with nearly $60 billion under management 6.0. That’s a big number. Um, they move markets, but their philosophy is close to, certainly close to my own. Like they try to identify secular trends. So right now they’re talking about things like ai, cloud computing and FinTech. and they try and find like the category leaders who are gonna position or best are best positioned to benefit from those shifts over the long term. That’s kind of what I do. I use different words for that, but like I try and find companies driven by technology and innovation who are selling products and services the world needs more of in 10 years time. And this is interesting because they make some specific predictions, which we’re gonna get to at the back of the episode.
[00:02:44] Krys: How do they differ from Kathy Woods’s venture? Do you have a sense for that?
[00:02:51] Luke: question. I don’t know. I imagine they’re the same sort of thing. They’re not as prolific on social media, like selling their spiel and their wild price targets and they manage their own money, plus money for their clients. so maybe, I dunno, maybe similar, but they don’t have the same social media game. but I think, well, I mean, let’s take a look at some of their holdings back in 2013. So what, 12, 12 or 13 years ago? they owned some big winners. Like they had Amazon back then. They had like most of the Mag seven, you can see in here. they’re missing Nvidia. I guess they, but they certainly own that now. plus a few donkeys, but like if you look at this portfolio, I did a little bit of analysis on it to understand how are they doing their strategy. Like they had Tesla and that’s been like a 45 bagger for them through to date. had Facebook. Now meta an intuitive surgical, like those have been nine baggers. They’ve 11 bag of their investment in Netflix and Amazon. And even if you ignored everything else in the portfolio, like their exposure to those stocks more than makes up for the few losers they’ve had.
[00:04:04] Krys: Yeah, though, I do wanna talk about the donkeys. Everything’s obvious in hindsight, and like you said, a big winner will more than make up for the losers. But trying to understand, you know, go, going back a decade, what the rationale is, for example, investing in Gap, the Gap, which is a retailer close line.
Uh, I mean in the moment, like 2013, if I could remember. You know, the internet is still sort of wet behind the ears. Things are really growing fast. Why, what was the justification for including that kind of, company, which now and again in hindsight seems like. An obvious flop.
[00:04:50] Luke: Yeah. Well, I suppose it, I mean, to give them kudos, they only had a 0.75% allocation to it back then, so obviously it wasn’t like a high conviction idea for them and their highest allocations. Okay. Amazon, apple, like those were good investments. Obviously. They’ve got a couple, like, who the heck are Castle and CBS Corp?
Like a’s like a, A news channel. Right. Like 8% in CVS?
[00:05:18] Krys: yes. crown Castle, I’m pretty sure is a kind of a real estate reit.
but still it’s not even, yeah. even I put it this way, like I, uh, to, I’m maybe repeating myself, but I could understand Seban, Netflix and Pandora, and then one of them really works out and the other one doesn’t, but. well, maybe, I don’t know, maybe they, they really thought gap was gonna take over the world somehow.
Um, I just can’t re, you know, go back that far.
[00:05:49] Luke: I dunno. And I can’t, I, I haven’t been able to dig out, even with Kaylin’s help any of the DD from back in 2013. they had some rationale. Like, today we are gonna focus on looking forwards, like what’s their rationale for the next five years and what are their predictions and their recommended, well, fantastic 40 for 2030. So I think that, you know, we, and we can judge their methodology there. And I do have some thoughts around that. I, I am just gonna say. But there’s a good reason for this. so they seemingly have six bagger, them, a UM, their money, their assets from 2013, they had about $10 billion today. at some, like disclosures and reporting, they have about 60, 60, 60 $2 billion save, like six x their money. If I look at my own performance over the same period, I have 15 Xed my money. So
[00:06:48] Krys: So how did you do? This badger.
[00:06:51] Luke: well, investing in the same companies pretty much, but getting into some of them much earlier I was in Intuitive Surgical, I was in Apple, like before these guys, I was in Netflix and had a much bigger allocation to Netflix.
Like, that’s part of it. there is something interesting here, right? This is the advantage that. We have as retail investors with our, you know, meager tiny, tiny investments that don’t move the market in any way. It’s hard for guys like Cotu and Arc and their, like, to make like big bets you move the market and if you wanted to buy like half a billion dollars worth of stock in something, if it’s relatively liquid, like you can’t do that in one transaction.
You have to go on, you know, you have to, you have like a special mechanism. You don’t just go and buy the stock. and you have to do it in trenches. And you also get slammed by regulations. Like your assets are above a certain level, and certainly these guys qualify, like you have to disclose if you have a material stake in a company. So it’s not like you could do something like secretly and build up like a stake once you have, what I think, uh, more than 5% ownership of a company. you have to disclose that you have to file a public report to the Security and Exchange Commission. And then also, like you suddenly have like insider status once you own more than 10% of a company.
And that’s gonna put like other constraints on you. us little retail investors. That’s our massive over the big boys. ’cause we can just make like highly, we can build highly concentrated portfolios if we want. And you know, our numbers are nothing like this. So we can have like big exposure to micro caps if we want to.
[00:08:40] Krys: Yeah, I’m glad you said that. Badger, there’s a huge number of people that falsely believe that they can’t beat the market, and that’s probably because statistically speaking, Is it most like hedge fund? It’s the numbers that hedge funds don’t beat the market. Like they have one grade a year, right?
Then they put their shingle out, look how great we are because we did this. But then they don’t repeat their performance for all the reasons that you mentioned. But individually, I think as long as you’re willing to do the work and to educate yourself, you could be much more nimble. And you don’t have to, you’re not susceptible to all these regulatory hurdles.
And so beating the market is totally possible. So, tip of the hat to you for whooping, for having your results. Whoop this, uh, pretty serious investing house.
[00:09:40] Luke: Yeah, well, I’m, I’m whipping everybody’s ass. So they’re, uh, they’re, they’re not standing alone. Right. like if people say the market is rigged, and that’s true, what people are missing, it’s rigged in our favor for all of those reasons. It’s rigged against the big institutions and the guys with all the money and all, like the massive like to do all this, you know, really like dark arbitrage and weird stuff.
It’s rigged against them, so it’s rigged in our favor. ’cause they have all these other, you know, they have to report to their investors every quarter. And if they’re not showing, you know, chart goes up. And if they’re not in like the hot stock at the moment, then they’re gonna get like their investors bitching and withdrawing their money and they, A OUM starts going down and the whole model starts breaking. We are not accountable to anybody like you and I, worst thing that will happen if, if our portfolios fall apart, we’re gonna impact ourselves and we’re gonna look like idiots on the podcast in a couple of years time. If we’ve massively underperformed the market for like a whole cycle, like I’m happy to underperform for a couple of years.
That’s the nature of the game. But like, if we are clearly bad investors, we can look dumb and it’s going to impact our lives. But there’s nobody saying, oh, Luke, like I’m, I want my money out. ’cause you, you are failing as an investor. I just need to convince myself. And that’s such a powerful asset to have.
[00:11:06] Krys: Amen. So, uh, their methodology,
[00:11:11] Luke: Hmm.
[00:11:11] Krys: spell it out for us.
[00:11:13] Luke: I think it’s good. Like it’s a good start. But I do, by, by the time we get to the back of this conversation, I do have a bit of a critique possibly. So the methodology is they take. The top 150 public and private tech companies. I think just by like market cap, like the 150 biggest, then they look at over the last five years. Like are they compounding returns? Like is the valuation growing and then they exclude companies facing multiple compression versus the market. gonna come back to that at the back. ’cause I think that’s, I think the way it’s written wrong, but actually what they probably do is right.
[00:11:55] Krys: And so if I could translate this into normal speak, it seems to me that this was, this is the way you mostly invest and this is the way I used to mostly invest. You just take the best companies in the world. How do you define best? Well, you look at the numbers. The companies that are growing the quickest for an extended period of time and have already established themselves, that’s the, the pool that you sort of swim in.
And from within that pool, you then, I would say filter the, the companies that most catch your eye or perhaps most have the most number of tailwinds, due to macro forces. And then you sort of winnow down. But one way or another, you’re dealing with the best of the best,
[00:12:43] Luke: Yeah, I probably, if there’s of these like filters, I don’t apply. It’s the first one. I don’t just look at the top 150 companies, I’ll, I’ll look at all ends of the market.
[00:12:52] Krys: right? But they certainly, uh, this procedure certainly goes against. More than 50% of my current portfolio at the moment. They’re not even looking at small stuff. They’re not looking for, relatively undervalued companies. They’re certainly not, uh, looking at problem companies in any, in any way.
[00:13:13] Luke: yeah. Well, because again though, because they can’t, right? Because like when they write a check, like their checks are 50 to a hundred billion dollars, sorry, million dollars to start with. Like some of your companies, that’s the entire market cap of some of the stuff you own. Yeah. Yeah. So yeah, the nature of being a big boy, you know, you can’t make small bets anyway.
I think methodology is robust and it’s appropriate to their scale.
[00:13:38] Krys: That’s kind of, I mean, I don’t know if it’s obvious, but it’s a kind of, uh, interesting to me to see that, uh, they label the tech, periods by their name, mainframe to pc, to networking to the internet 1.0 mobile internet web 2.0 to the cloud SaaS era. And now we are at the beginning of the next wave.
They’re calling it AI obviously, but each curve is higher than the previous one. And they give examples of each company that fits the curves. and so.
[00:14:14] Luke: Yeah, I like this. It’s a good diagram. I like this. and I agree with it entirely and like the, the comment that like each hump is getting higher and higher. Like that’s accurate because back in the 1960s, like technology was here and companies like IBM and hp, they’ve called out where like that’s like the sixties through to the eighties. Like those were important companies, but like technology wasn’t driving the world in the same way it is today. And now, like, you know, in the cra, the cloud and software as a service era, 2015 to 2020, companies like Amazon and Microsoft are far more dominant and forces in the world and like shaping society. now what CO two are calling like the AI era or wave and companies like Meta, Microsoft, Nvidia Open ai, like. If you’re, if you are in business, if you are not using ai, like that’s it. You’re toast. You’re gonna get eaten up by the people who do.
[00:15:18] Krys: I think the one critique I have here in this moment, because we have hindsight in favor is, let’s go back to in our favor, is, let’s go back to the 2002 thousands, their examples for what they call desktop internet, web 1.0 was Facebook, Google, and Amazon. Those were obviously the big winners of that decade, but we know there were like hundreds or thousands of companies that showed up, tried, failed, and I think.
[00:15:53] Luke: Yeah. Yeah.
[00:15:54] Krys: So, so I think this is, this is the trick. I mean, if it was this easy, we’d all be multimillionaires, right? But I think the, the problem here is that today every company is saying they’re an AI company, and every company to some extent is using ai. That’s not the problem. The problem is can we identify what, I guess they would call the foundational, call it backbone.
Like these are the companies that will make everything go in the future. And that will require much more than, saying, yeah, AI is the next wave and let’s just invest in ai.
[00:16:33] Luke: Yeah, totally. and they’ve been a bit like economical with the truth, right? Because if really, if we’re talking about like the desktop internet era in the two thousands, where’s Microsoft? Right? Surely they are the number one and surely Apple, right? They are, you know, up there as well. That was the desktop era.
It wasn’t. Really companies like it was Google, but they weren’t, they weren’t super dominant until like the end of the two thousands. And it’s more, you know, it’s more like the last 10 or 15 years have been Alphabet zero.
[00:17:06] Krys: Right. But, okay, so the optimistic point here though is that it’s so obvious that from an investing standpoint, we are still at the very beginning of what looks to be human’s largest wave of innovation. And that’s beyond, I, I don’t know, it’s beyond cliche at this point. But the world will be transformed in the next 10 years.
And the companies that do most of the transforming will be the biggest investing winners.
[00:17:35] Luke: yeah. No doubt. Let’s, let’s have a look at how some of this has changed over the years. So this is again, a backward looking thing. This wasn’t like predictions they made. I mean, maybe it was, but but we don’t have that data. But what this slide is something, it’s a slide they only published a few weeks ago, and it’s like, who were the biggest companies in the world in 2015?
In 2020 and today? it is interesting to see how some of these names sort of move up and down the list and come and go. Anything that caught your eye in particular?
[00:18:07] Krys: Yeah, I mean, uh, it’s man hindsight, I’d noticed, for example, uh, visa.
[00:18:14] Luke: Mm-hmm.
[00:18:15] Krys: Is, uh, like at one point Visa and MasterCard, they’re there in 2015. They’re there in 2020. And then when I look at it today, MasterCard is there, but Visa is not. And as somebody who is, you know, really paying attention to Chain Link and the new global paradigm shift that might be happening, I’m like, hmm.
Is MasterCard also the next to go? I don’t know.
[00:18:42] Luke: yeah, they are, they are both there, but they’re, yeah, they, they sort of haven’t moved materially, certainly compared to some of the other winners. I guess Visas dropped places and looks like MasterCard has dropped five places.
Yeah, I have some thoughts on Adobe. So they, they weren’t really in the, a tech leader in 2015, but in 2020 they were like top 20 with 188, uh, billion dollar market cap. But they’ve dropped out of the, um, the top, whatever this is, top 25 or so, universe, and like, I think they’re on a, like, declining trajectory.
I mean, they, they have all, they have all companies seem like they’re getting their lunch eaten by AI despite like the efforts they’ve made to acquire and build some of these capabilities.
[00:19:31] Krys: yeah, you know, um, a bet I would make for another company that drops off will be Walt Disney,
[00:19:38] Luke: Yeah, that used to be a company close to my heart. I bought it for like the kids in the family years ago, and I sold it like last year. Just like just a bit of a shambles.
[00:19:48] Krys: although it is interesting, I wanna go back to them because these guys have really put Oracle back on my map as a company do much more research on. But it’s interesting, you see in 2015, Oracle is near the top, in the top 10. Then they drop to call it the Bottom third of 2020 of, and then now they’re, they’ve moved up again.
So, and I imagine they’re going to keep moving up based on my current understanding. So it’s not like once you start falling, it’s inevitable, but those companies definitely need to have a serious pivot in there somewhere to make that kind of, to fight.
[00:20:28] Luke: a, that’s a, that’s a really interesting transition to like another slide we picked out so on this slide from the code two deck, they’re highlighting who they think the new class of AI winners are gonna be. So this is like, you know, the current wave and now they’re starting to look to the, like, this is a hundred page deck.
We’ll drop a link to it in the show notes. Go, go read the whole thing. It’s actually quite interesting. but they certainly have Oracle there as one of the, like, future AI software winners and it, it’s not really on my radar either. I think one of us should check, check it out.
[00:21:00] Krys: Yep. And obviously, yeah, this deck is, uh, I mean this slide is incomplete because my question is, uh, for AI semis, for example, when they call that, uh, the key driver token growth, new inflection in computer demand. I as an a MD shareholder, wonder why a MD is nowhere as far as I have seen on these decks, and it’s already a 200 something billion dollar company.
So do they not believe the thesis or are they just being, you know, picky in what, what they selected? Interesting question, but for a little bit of confirmation bias, I do love that they have AI power, as you know, one of their main themes and my King of the Jungle portfolio. I have, three companies that represent that trend.
[00:21:47] Luke: Yeah. Have you looked at all the companies they call out, which are ge, anova, constellation, and ra?
[00:21:55] Krys: No, but this is exactly why something like this is valuable. They are, they are in my to-do, uh, to-do list to research list.
[00:22:04] Luke: Yeah. Yeah, yeah. Yeah. Very good.
[00:22:07] Krys: Small quick, sorry. Small just hint, uh, uh, value drop for our audience. I recently, uh, added a very small position to my real money portfolio, bloom energy, and I’m planning on doing a Safari stock, uh, segment on that, but that fits entirely in the AI power domain.
[00:22:30] Luke: good stuff. Very good. Very good. um, like, it makes me ru how I navigated small modular reactors. Like I was one of the first guys to start talking about, new scale power ticket, SMR, and I recommended it, as a seven investing lead advisor. but I sold out a year ago. I mean, I’m still conflicted around this because like AI power, like that’s small modular reactors are a potential answer to that. like I sold out because I think I was just too early to this segment, like this, like nuclear power, even small modular reactors, like that dream is 10 years away like the need for power is today. So actually unfortunately, it’s like non-renewable are gonna service that need and hopefully like the superior economics of solar and battery gonna, you know, that as a providing source as well.
[00:23:31] Krys: Alo is in the same category, correct? Uh, now when I hear you say that, I compare that a little bit to the quantum problem. a little bit because I want, I wonder, here’s actually, I predict this when times are fine and the market is ripping these companies, basically everyone’s excited because they will be the future.
Just not yet, but now just turn the script around when the bear comes up. There’s still nothing to show on the financial sheets, which companies are gonna get absolutely murdered. It’s exactly the ones you mentioned because it’s just a little too soon. So your genius on the way up, but you’re gonna be an absolute fool on the way down, and I think all you are doing is playing it relatively conservatively and saying it’s still a little bit too early on.
The fun based on the fundamentals. So you can wait and the fact that you missed or whatever, sold too early, however you wanna call it. I don’t think that’s a, that’s an error of process. I think that’s an error of result, which we, you know. Yeah.
[00:24:36] Luke: a bit of both. Bit of both. Well, anyway, you forced me to become an EOS shareholder, so I guess I’m now invested in AI energy anyway,
[00:24:44] Krys: Good.
[00:24:45] Luke: kind of an aside a little bit from the, the whole story of the deck, but I thought this slide was quite interesting. And they, they’re drawing attention to major market D downturns since the 1980s, and they’re kind of classifying crises and then corrections. And so like directionally it seems like they, they class something as a crisis.
If it’s like above a 30% drawdown and a correction, if it’s, you know, 15 or 20% up to about 30%, they sort of stick a pin in that and say, okay, generally we seem to have one crisis per decade and two corrections per decade. pretty interesting that we’ve only been invested through a couple of these.
[00:25:32] Krys: the main takeaway I think with these is they will happen, but you have to survive them in order to keep in the game. And this is why one of our main rules is do not use margin ever under any circumstances, because that could wipe you out. And that’s one of the things I learned very early on in my investing career in 2008.
I lost way more than I should have because I took too, too many risks. Then, uh.
[00:26:04] Luke: Were you, you were trading on margin back then, were you?
[00:26:07] Krys: Uh, yes or two. Yeah, I mean, it was lesson learned, you know, the, the very hard way. the only other crisis that I lived through, is 2020. My own actions, there are a little bit unusual in that I decide, I actually believed that we might be entering into a global great Depression. So I took out a, a huge chunk of my investment earnings, and I paid off all my mortgages.
And so, you know, I as basically, if nothing else, I, I’m living clean. and I don’t think I ever told you this. The few things I kept were a bunch of CrowdStrike calls, which ended up going up by the made massive, you know, uh, amount off that. So I just played COVID perfectly.
[00:26:55] Luke: Well, I think I played COVID more perfectly ’cause that was 2020 was the best year
I’ve ever had and that’s the one that got me to retirement.
looking at CO’s deck, the market. to trough took a draw down of 34% in 2020. I dunno, my peak to trough, but my whole year, 2020, nearly doubled my entire portfolio.
I was up 90%. and I think I need to go and weed through exactly how I got there, but I definitely did like reposition into what I felt were like the work from home kind of stocks, things like Zoom, and a bunch of other companies like that. And that really paid off.
[00:27:35] Krys: Yeah. So looking at your performance chart, you know, in, in terms of squeezing value for our listeners, I, I would encourage people to ask yourselves, how would you feel? I suppose if you lost in 2006, 1.4%, probably, eh, no big deal. Right? Then look, next year you make 54%, yay. You know? Right. But then you lose 4%.
Not that bad. Okay, sure. But what do you do in the year, like 20, 22 when the whole portfolio, you know, drops 38% and that’s where the whole, I think, Double down on the process and due diligence in stealing your loins. Girding your loins really pays off because one of those years could pop out of seemingly nowhere, right?
Yeah. So anyway, Badger kudos to you for, you know, surviving that kind of year and then following that up with, you know, uh, really, really good numbers.
[00:28:34] Luke: Yeah, like 2022 is tough. I think I said on other podcasts, like I had just retired. I was just suddenly being a net withdrawer from my portfolio and this is like gonna fund, you know, the next thousand years. I took like a, you know, nearly a 40% haircut. So that certainly made me like, question myself.
But I just doubled down on fundamental research and not panicking. I, I think actually like my performance in 2023 and 2024 and year to date, like I’ve beaten the market pretty soundly. and I’m now back above like my all time high that was set in 2021. like that’s mostly, most of my alpha there was because. Like I was investing when everyone else was panicking and selling in 2022. If you’re a growth investor, you were selling in 2022. Like the streets, there was panic and fear. I was just putting my cash back into play and trying to buy companies that felt beaten down like CrowdStrike and trying to add to these like secular long-term winners. So I’m now starting to see the benefits of those investments made in that year.
[00:29:48] Krys: And the other obvious point I think to make is you’re beating the index quite regularly. so in the down years, right, having all of the, owning all the companies is better. But, in the up years being very selective about what you own is the greater alpha and in general that creates the larger alpha.
It’s just that the, your worse years are more painful for you obviously, but your good years more than make up for it. So you moral of the story just have to have more of that inner fortitude and the right behavioral psychology to withstand the down years for your up years to make it a good strategy.
[00:30:30] Luke: Yeah, and like, and have a process and then, you know, honest with yourself and track your results and like analyze your decisions and just try and improve. Like, I just try and get 1% better. Like every week, every time we do a podcast, I try and be a tiny bit better. those, those improvements compound.
like, really we’ve skipped over like a whole bunch of slides, but really the story CO two are focusing on for this year is the AI story maybe this what they position as the AI flywheel, um, is kind of the key to that.
Do you wanna unpack this one a little bit?
[00:31:09] Krys: Sure. it shows that you get the AI brain creating, the technology that makes lower unit labor cost, which then lowers inflation. Because prices drop that gets lower interest rates, that gets to higher GDP growth that gets you to more income via taxes, then that gets you to a lower debt to GDP ratio, which then lowers unit labor cost.
so I think this is, if true, this is the optimistic scenario and how the US avoids the debt crisis. Because if you, you have to remember, debt without context means nothing. It’s relative to the economy and how quickly the economy is growing. So if the AI mirror, if the magic of the AI can actually begin accelerating and getting in front of the debt, then we don’t really have a problem.
Right? And I, I think it’s possible. don’t think this is a pie in the sky kind kind of thing. The only, I suppose, critique I have of this has to do with the nature of paradigm shifts that they, they haven’t happened. This is obviously going to restructure the world in so many ways. Potentially revolutions might happen, right?
I mean, like, things might be de destabilized. There might be a really wobbly period. Uh, what happens if there is a default on US debt before this gets going, so on and so forth. So I don’t have, I like the theory. I just, I just don’t know if I, if I could turn this into anything useful like actionably useful in this moment.
[00:33:02] Luke: Yeah, that’s interesting point. Maybe you are right, like the only action here is you would invest in the companies enabling those efficiencies if you kind of buy the story. I mean, maybe I, I think I buy the AI story even if it doesn’t drive this flywheel and ultimately fix like the massive debt problem the US has. Because I, I feel like is probably not gonna come quick enough to drive this deflationary cycle. And the US have kind of buried this problem of the, this like debt crisis under the carpet for now. But you only be able to do that for so long. Like your visitor’s gonna come over and they’d be like, what’s that lump in the lounge? And you’re trying to like hide it with a sofa and it’s gonna get too big at some point.
[00:33:51] Krys: One more critique potentially. You see that where it says higher tax receipts.
[00:33:56] Luke: Yeah.
[00:33:57] Krys: Well, that really depends on the kind of government, government structure we agree to. Right. Which party is basically in power, so to speak. And I’m not convinced that the winners, say, for example, let’s say Tesla is one of the winners here, that they will give back, so to speak, as much as they find a way to create a loophole and keep more for themselves one way or another.
[00:34:28] Luke: Maybe like if we were to simplify this flywheel though, it’s like AI creates cost efficiencies and more stuff gets done, more economic value gets generated. So like, I don’t know, simplistic example, but leaning into what you were just saying, like let’s say a, let’s say Tesla successfully deploy robo taxii across the whole of the continental US in the next couple of years. And then suddenly like logistics and meetings and like remote work and different things suddenly become cheaper and easier to do because it’s like the cost of going from A to B is suddenly like cut down by 90%. And so, so that’s economic value that the whole of society will experience. People are spending much less on taxis, let’s say, so they got more money to spend on Netflix or you know, whatever in a restaurant or something.
So then there’s more restaurants and they’re in more diverse locations. So then it enables like, you know, smaller communities. I’m just giving like a weird example, but essentially more stuff gets done, more economic value. So that’s where like higher tax receipts ultimately come from.
[00:35:43] Krys: yeah, I buy that if it’s, if it’s trickling down, so to speak. I’m, yeah, I’m skeptical potentially if, if it’s up to sort of the, the people with more money to, you know, not stuff it under their mattress, but to actually give back what proportionally, what needs to be given back. But that remains to be seen.
[00:36:03] Luke: Well, like luckily, a free market causes that, like as long as Tesla are not the only game in town, they’ll get forced to lower cost because they’re in competition with like Waymo and Uber and then BYD and whoever else is playing in that same space.
[00:36:18] Krys: And of course there’s a wild card here, not even on this is the possibility or potentiality of universal basic income. And how would, where does that fit in? So I don’t know. Nobody knows. I think at this moment.
[00:36:32] Luke: so one last slide before we really get to like the big conclusion, but it is interesting. So remember, CO two in private markets and in public markets. And I think what they’re pointing out with this slide, like they’re saying innovation is everywhere, across all these different sectors, but actually, like, it’s interesting to note that the valuations of private companies getting significant, like SpaceX at $350 billion, one of the world’s biggest companies, but it’s not, it’s not a company. and say Revolut, like I’m a fan of an, uh, investor and a customer of Wise, but Revolut are private. They’re not really competitors, but they are in the same space. Like they’re essentially like a, a FinTech bank. like their valuation is double wise, its valuation.
[00:37:23] Krys: all I could squeeze out of this is that I’m getting a little bit of the 2122 vibes. and maybe that’s just recent, you know, recent trauma. Uh, who knows if history will repeat, but we, we’ve been talking about this quite, quite a bit, right? Like in these kinds of psych market moments, there’s a reason to be optimistic because yes, companies are being built and now you have the most powerful technology of all time backing it.
So maybe that extends the market cycle for far longer than it’s ever been extended, and also caution. I mean, we do know that things can get overheated and overly optimistic, and now you’re paying whatever, you know, uh, the, the math, the basic math just goes out the window and I think all the other things being equal, if you’re not cautious, you will be burnt, and quite badly potentially if you don’t really back the correct horse.
[00:38:24] Luke: And you either believe in the AI cycle or you don’t, I suppose. and then maybe becomes, we always talk about in recent weeks, like narrative versus numbers. Like is, is still like a narrative theme. It’ll become a numbers theme at some point. And certainly it’s not, it’s a numbers thing when it comes to like a company like Nvidia who are literally just like, they cannot make
[00:38:47] Krys: Hmm.
[00:38:47] Luke: enough, uh, hardware to fulfill, like the demand for this stuff. But, you know, maybe the bubble bops pops for different reasons.
[00:38:57] Krys: So the next slide shows us today’s top 50 tech companies.
Uh, what’s interesting about this slide to you,
[00:39:06] Luke: it’s interesting to see Bitcoin in there, uh, in sort of. Top six and like mixed up with the magnificent seven. It’s a bit of a kind of false analogy, really. Like it’s not a company, but as an asset class. Like if you were to put gold on here, I dunno where it would sit, probably above Microsoft. but it’s interesting, but CO two think of it as a, like a tech company.
Like obviously they’re putting like air quotes around that.
[00:39:33] Krys: well also, and, and also Badger, uh, Ethereum is on here. So Ethereum, remember Bitcoin is, is like the OG of crypto stuff, but Ethereum is basically the world’s decentralized computer and that’s between Palantir and A SML. And so, um, that they’re calling them tech companies is of interest. And obviously as a big chain link guy myself, I’m like, ah, okay.
Yeah, they’re not just outright dismissing the, the big players.
[00:40:06] Luke: Like this is, this is objectively an elite list. Like these are the top 50 by market cap, the top 50 tech companies in the world today. you know, we’re, we’re the, the, the next slide is the interesting one, but you know, it’s hard to argue with the dominance of companies like Microsoft, Nvidia, apple, Amazon, alphabet, right?
[00:40:28] Krys: All right, so let’s get to the next slide. I mean, this kind of is, uh, sort of the, the big payoff for the slide deck, right? I mean, it’s kind of the, their list of the 40 companies they think in 20, 30, so five years from now will be the champs, right? So it’s their ranking of, of, uh, it’s their, it’s their crystal ball. Um, I, I really hope we remember five years from now to, to look back and compare what they thought would happen versus what did happen.
What’s interest, what’s most interesting to you about this list?
[00:41:06] Luke: There’s a whole bunch I think we should talk about here. I think this is not, I mean, I’m guessing because unless I’ve gone blind, is no alphabet slash Google anywhere in this list. so I’m guessing they are not saying these are gonna be the world’s 40 most valuable tech companies. are their fantastic 40 IE These are like the tech companies that fit their methodology.
If remember like their methodology was the top 150 companies, which are growing. And exclude companies facing margin compression. So I guess when you apply that methodology, these are like their 40 favorite investments. so let’s talk about the stuff that’s in the list and then we can talk about some of the stuff that’s not in the list. Like, so, one that caught my eye, SpaceX. So SpaceX today is a $350 billion valuation. They’ve, they’re pegging SpaceX at $870 billion in 2030. I think I, I buy that, that’s like a, you know, a bit more than a double over the next five years. The trajectory looks good for that.
[00:42:13] Krys: Right. Uh, I noticed that, uh, snowflake is not on here, but they have Databricks. So for people in the SaaS slash AI databases world, there. they’re obviously given databricks, the, the thumbs up and in no, no ad space to snowflake.
[00:42:35] Luke: Yeah, that’s a good observation. Agree. Yeah.
[00:42:38] Krys: I’ll also say I, not that I was expecting this, but because they are in the Bitcoin, I mean, I’m sorry, in the crypto space, they’re not, they’re not burning their hand heads in the sand. They have Bitcoin at $5 trillion, which I think might be actually a little conservative. If the current pattern continues to play out.
They have Ethereum still dominating, but to no surprise, they do not have chain link anywhere on there. And, um, to me those are the big three. So, maybe they just haven’t done the work or maybe it’s just too much of an asymmetric moment right now for them to make that kind of call.
[00:43:17] Luke: Yeah, like chain link is a, is a minnow, and a different kind of thing. So, you know, maybe, maybe they like it, but it’s just not on their radar ’cause it’s too small for them right now, perhaps. And they believe it’s still gonna be too small in 2030. Probably. Hard to argue with that. Again, we both need to take a look at Oracle.
They’re pecking Oracle as being a one point, nearly $1.5 trillion valuation in 2030.
[00:43:40] Krys: You know, I’m a little surprised, Netflix still being so high up, and that’s only because if I kind of compare, you know, the internet era, how quickly sort of entertainment type stuff, kind of like fashion could go out of style. I, I love Netflix, but to see, you know, but to see it basically be right there next to the companies that create.
Reality, is a little bit odd. And that would be my, one of my first bets to say, what if I don’t know, some next better thing comes along? And virtual reality takes, you know, the place of streaming movies and you know, all the customers go to the new thing. So,
[00:44:30] Luke: the new thing is looking increasingly like it’s gonna be like personalized entertainment. So like, you know, the Netflix show that I watch will be different and have different actors and a different like. Course trajectory than the, the thing that you watched. cause you know, maybe I’m into horror and you are into like, drama or something,
[00:44:50] Krys: and right, and you know, I mean that’s why I think meta could be justified because it’s not just Facebook, but they’re working on the metaverse and so on. So if that works out, you know, that that’s the horse to back.
[00:45:02] Luke: And I think there might have been a bit optimistic with Intuitive Surgical. they and I have owned this one for a long time. but they’ve got intuitive from a market cap today of $185 billion up to $460 billion. Like, I think they’re gonna grow. I don’t think they’re going to nearly two and a half x over the next five years. Like Intuitive are pretty embedded. Like this is now a mature company with, like on the fifth major iteration of its product. That’s embedded in most of the world’s hospitals, certainly in the, well, in the west and in China. so like, it’s gonna be growth, but I dunno if it’s gonna be like two and a half bagger territory.
[00:45:50] Krys: Stripe is at 511. I mean, that’s a company right up your alley, but it’s private. Have you ever, have you done any work on. Trying to own, become an owner of Stripe.
[00:46:00] Luke: I have not, no, the, the valuation’s big even today. Uh, like they were in the same territory as SpaceX, as being like vying for the world’s most expensive slash valuable private company. although SpaceX have outstripped them now, and yeah, it just didn’t appeal. Like I, yeah, I own other stuff in that space that’s public market and is significantly cheaper than their private market valuation today.
[00:46:25] Krys: But see, that’s the question though. This is in your stripes, in your wheelhouse because of your expertise in that particular domain. And these guys are saying that they expect Stripe to be even more valuable by, probably by a lot, to make it in, into the 19th position at 511 billion. So why wouldn’t you be incentivized to, do do more work on becoming the Stripe owner?
[00:46:54] Luke: Wait, I mean you, I can’t, I can’t sort of pitch and try and get access to these things. They either hit my radar or they don’t. ’cause I’m a tiny guy writing small checks. So if it did come up with an opportunity, then I’d look at it in more detail. But there’s like a lot of hurdles to jump when you invest in private market stuff.
There’s a whole bunch of and complexity and like backend. And terms that might be inferior to like other classes of shareholder. Like, it’s like you need to, it needs to be like a multibagger investment over a reasonable period of time to make any sense at all. ’cause most of them, well not when you’re in Stripes League, but most like smaller companies fail to be honest.
They don’t get there.
[00:47:38] Krys: I need to look into this, uh, GE ver Nova company.
[00:47:44] Luke: yeah.
[00:47:44] Krys: I’ve heard obviously of GE before, but I don’t know what GE Ver Nova is.
[00:47:48] Luke: That’s kinda my first job. Actually, my first ever job at university was working for Eeds, like a, kind of like a consultancy slash software developer. I was working on air traffic control software and they were like a subsidiary, I think of ge.
No they weren’t. Actually, no, I’ve got that wrong. They were a subsidiary of gm, not ge.
Anyway, another GE company. Forget what I said.
[00:48:10] Krys: Okay. Uh,
[00:48:12] Luke: But anyway, GE is your warehouse.
[00:48:14] Krys: anyway, let’s remember, let’s, let’s, put a reminder. Can our calendars do that? Remind me five years on July 30th and 2030 to look at, this slide and see what the reality is versus, their expectations. That’ll be fascinating. Truth.
[00:48:30] Luke: yeah. Well, let’s stick it on our radar for stuff we come back to every year. ’cause I’m hoping they, now, this is the first time I think they’ve published the Fantastic 40.
[00:48:37] Krys: Okay.
[00:48:37] Luke: just like monitor Philippe’s track record. Yeah. I do have a bone to pick. I do have a bone to pick and it, I think I know the answer to this, but I’m just gonna go at it. Right. where the heck is Alphabet on their chart in their Fantastic 40. It does not appear. Right. And here are some beautiful pictures, numbers from our friends@fiscal.ai. Fantastic. and stock analysis service company analysis service. So like on my pretty picture here Google Alphabet is the purple and the blue line, right? So much lower market cap, 2.3 billion, trillion dollars, $2.3 trillion versus Microsoft’s $3.8 trillion revenues Google’s that are much higher. Uh, on the last, uh, sort of last 12 months basis, directionally alphabet are doing $370 billion a year of revenue. Microsoft are doing $270 billion a year of revenue. Better, much better valuation, I think a much better trajectory than Microsoft, even though Microsoft had tried to reinvent themselves. And if you go and look at some of the slides we didn’t show in this deck, like Philippe has positioned Microsoft as, oh no, we did look at this slide. It was, uh, the, the, uh, the peaks and trough slides.
and if you go back and look at some of the other slides in this deck, has labeled Microsoft as leading the reasoning moment. the F like No, that’s not the case. They don’t, but they try to buy a piece of open AI and partner with them and embed open ai and now that relationship is question is like questionable. Yeah. Okay. They’ve got copilot and they’ve embedded some of that stuff into their product set. Are they leading reasoning They’re not. Right. The people who are leading reasoning are open AI are anthropic, are alphabet.
[00:50:46] Krys: So Badger, so, right, they’re insulting your thesis, uh, in favor of Google, basically by admitting them. And that’s why I think, uh, you’re, you’re asking good questions, but I think this shows the other problem. Now, I don’t understand. In that case, they’re, uh, what’s it called? Their methodology exclude multiple compression versus the market.
Well, according to your chart, Microsoft is the company that has the higher multiple, right? they’re worth more, but they make less money. Then Google. So if any company’s gonna compress, it’s gonna be Microsoft, not Google. So they’re ex, in terms of multiple, then they obviously must outright, just not believe Google will be right.
Will be able to cross this ca. Ai chasm.
[00:51:39] Luke: Yeah, I’m glad you went there ’cause that this was my conclusion, but I, I think you’ve done it the other way round. So I think, I think they’ve excluded alphabet because Alphabet has experienced market. Like valuation compression versus the market
[00:51:54] Krys: Oh, has Rather than Will. Oh.
[00:51:57] Luke: Has, whereas Microsoft,
[00:51:59] Krys: Oh,
[00:51:59] Luke: uh, valuation multiple has expanded. ’cause you know, if we go back to what you always say about technical trading, even though neither of us are technical traders, but you say when you apply this sort of simplistic lens, if price go up, good if price go down bad
[00:52:16] Krys: okay.
[00:52:16] Luke: like the price of alphabet has gone up, but the, like the, the
[00:52:21] Krys: I see.
[00:52:21] Luke: valuation in terms of like PE or price to free cash flow, like whichever valuation ratio you look at, alphabet’s getting cheaper and cheaper.
So the margin, the multiple is compressing. so I think that’s why they’ve excluded it. And if it was, here’s my kind of critique slash Okay. I, I kind of agree. Like if they literally just took that as a blunt tool and they said gonna now just chop out blindly any company where the multiple is compressing. Well, that’s just
[00:52:52] Krys: Mm-hmm.
[00:52:53] Luke: I don’t believe they’re doing that because it’s companies where the valuation is improving and the company is still growing. Like if all the other metrics are, are looking good, but the valuation is improving, they are the companies you want to invest in, not the ones you want to disinvest from and ignore. I can’t believe for a second that’s what CO two are doing. I think what they’re doing, ’cause they have to, they’re putting together like a nice pretty slide and, you know, making it simple. they’re really doing with that filter is they’re doing a whole bunch of very deep nuanced work where they’re not just looking at the multiple, like they’re understanding the reason for the compression like there are good reasons why something could get cheaper because maybe, like the market, well not, that’s okay. There are, there are good reasons why a multiple, why a multiple might be compressing and there are bad reasons why a multiple might be compressing, and I’m certain they’re doing that work. And probably it’s just that their view and my view disagree and we both understand these companies well and we just happen to disagree on the facts, which is fine.
You know, that’s how a market gets made. Someone’s a seller and someone else is a buyer.
[00:54:03] Krys: Uh, agree with everything you said. Uh, blunt the instruments. To be used bluntly. And in this case, this is, uh, this is such an interesting moment. you have these world class investors basically tossing the egg at a company that you recently gave 10 outta 10 badgers, and you defended your thesis. I think quite, a d Watley, if I may like, uh, with a, you have a sophisticated series of, thesis statements and these guys are, I mean, I don’t know, maybe there’s some other hidden thing who, who knows.
But these guys are obviously disagreeing with you, in a way that now that you pointed out it out is very, very strange. They must legitimately not believe the same things you believe. And for what it’s worth, I’m on your side in this one.
[00:54:54] Luke: Sure time will tell. Like I, I guess it is the fear around, AI disintermediating search, and that’s gonna lead to like revenue declines, I suppose. But they haven’t published anything on that. But that’s a, that’s a reasonable thing to believe on the current position. I just happen to believe otherwise.
[00:55:14] Krys: All right.
[00:55:15] Luke: All right. Anyway, it’s a good deck. I like it. I think we should definitely, uh, thank you to Kaylinn for bringing this to our attention, and we should definitely come back and look at this in few years.
[00:55:23] Krys: Yeah, and it certainly, uh, made, uh, put a couple of companies on my research list. Top of, top of them, uh, is Oracle, as we mentioned. I also need to do a little bit more digging about Broadcom, to be honest. I’m staying away from market, you know, mega, mega caps, but, when something that is that big, and I don’t really have a good handle on what they even do, and unlike the other ones, I gotta, I gotta figure out what I’m missing, uh, plus the ge Verone Ver Nova Company because it’s in that AI energy space.
And I need to find out what they’re seeing.
[00:56:01] Luke: Yeah, and I own Snowflake, and I’ve not had an opportunity to look at buying Databricks, so I’m gonna sniff around there a little bit more.
[00:56:10] Krys: And I’m sure you, it feels good, uh, for the, for you to see Mercado Libre on the list and CrowdStrike still on the list.
[00:56:20] Luke: Yeah. Yep, definitely. All right. So that was good, interesting conversation. We’ll come back to that again in the year’s time. Well, you have been listening to Wall Street Wildlife. We, uh, we do lean heavily on fiscal ai, excellent research tool, and we do, we use it every episode, so do check it out. If you wanna get a tasty discount, go to fiscal ai slash wildlife.
[00:56:44] Krys: Are you ready to become a beast of an investor?
[00:56:47] Luke: Your journey starts here.
