Michael Sikand: The One Trade Everyone Overlooked (Not a Bubble)

gets Blackburg SEO at Wolf and joining me again is the legendary Michael Zakand. You've probably seen him creating content left and right on X talking about these high beta stocks that he has done such a great job capturing. And Michael, they have moved like crazy even since our last conversation. Many of them having 50% pullbacks [laughter] from the all-time highs in just a month. What do you make of all this? What a [ __ ] market. I mean, this is insanity. Like honestly, it's just knocked me off my feet. It's messed with my emotions. It's it's it's crazy for everyone, man, who are in these asymmetrical stocks across, you know, the whole every super cycle, right? But to see that reversal and to see that there was all that artificial selling pressure from Leopold was like just like the craziest finance tale that ever unfolded. I think we have been textbooks. They're going to have the Leopold section. >> I mean, maybe. Yeah, I mean I think he probably has a huge career ahead of him still. Like I think everyone still really respects his picks. Like he was earlier he literally called absolutely everything and I have a ton of respect for the guy. Um but he didn't stay in the trade. He put on to put on too much leverage, you know, and uh that only ends one way, right? There's going to be a like markets are irrational so you can still be right and lose everything, right? >> So >> I don't know, man. What a whipssaw. I mean just like the ferocity, >> the ferociousness with with how quickly these stocks added back market cap. I mean >> you can literally make generational wealth in this market. Like if you make like a high conviction trade into the bottom because it is it is just so volatile. Like these names can bounce back. They can go down 50%, come back 50%. Um, so it does feel a bit like gambling to be honest sometimes with these high beta names. Um, but you know, I did deploy 100K. I think it was July 16th. That ended up going really well. I'm up on every position. Almost every position, not every position. U, but the biggest buys like you know, NBIS, MU, um, AOI, even some drones. Yeah, AOI is up 32.7% since the buy that day at 100 bucks a share. Um, Sandex is the only one that's really been lagging. Memory's been a bit, it's a bit contested at the moment. It's kind of consolidating, but >> yeah, you definitely had some spring back moves, I would say. And for those that are following your portfolios, you've got a photonix portfolio, modern warfare, space economy. A lot of these have had big springs back. 20 plus percent I believe on all three of them continuing to lead right now. Are these still the sectors that you are just locked in on moving through the rest of the year? >> 100%. I I I'm really really bullish on all these super cycles, right? So whether it's a subset of the AI super cycle or it's something in defensor space, you know, these are really where I'd want to keep my money over the next two years, right? Uh and let them compound, right? Um we don't have enough compute. We don't have enough power, right? That's owning the Neoclouds. Uh there is not enough memory. We don't even know the use cases for AI that might demand more memory. Robotics is going to demand massive amounts of memory, right? All the projections right now being done. I think Camila made a great point on this are being done by number crunchers who don't we don't have the imagination yet to know what AI is going to do. Um space I mean dude there's going to be like a space is going to be like earth's economy and then just like times two right like there's going to be if there's like a business on earth there's going to be a business like that but for space like an entirely new economy. We don't we have no idea what's going to happen there like mining uh defense right golden dome there's just so much there so the space space sector's come back really nicely and um so is defense drones right that's actually been one of the top performing strategies so you know I wrote in my newsletter me and the the team we called the bottom on defense around June 30th and it wasn't the exact bottom we caught a little bit of flak but it basically was and over the past month our defense picks that we published on autopilot are up about % leading the platform over the last month as of today. Uh as to what's showing up in their data. Um and I'm proud of that. You know, um those stocks held up, you know, a little bit better, I guess, during the big AI selloff, you know, during that that kind of targeted. Well, there are a lot of things that caused that blowout, but um you know, really cool to to look at a sector like that when it was so sold off and be like, okay, like you know, this is this is a good place to buy. This is a good place to talk about it. So, um yeah, man. It's it's been crazy. I don't want to say we're back, but it's awesome to see Michael Zakon back on the charts again. Number one, >> I like it. I like it. Before we talk memory here, because I think there's a bigger conversation there. Something that you mentioned before, which was, you know, inability to stay in the trade, right? That's what played Leopold. And so, I think for people right now, how do you think people should approach this where you have something like Nebius, right? Nebas went from their all-time highs, which was at $300 basically on June 18th. They had a draw down of 40% in two weeks and six days. They then bounced back uh 27% in what uh two days or something like that. Uh from that bounce back they then fell again 30% in 5 days. Bounced back up 44% in uh less than 2 weeks and then had another 35% draw down and so on so forth. Like it's every week it's a 30 40% move. Like how do you how do you think about staying in these trades? >> Dude, it's so [ __ ] hard. You can't think rationally when your stocks are down 50 60%. Okay, I was scared. Everyone was scared on that Wednesday, that FOMC day. That was [ __ ] brutal. I know some great traders who were like, "Holy [ __ ] I'm I'm out." And even I was making moves that week earlier in the week to like try and diversify some of the thematic portfolios that I run because people's expectations aren't that you know that people have expectations that you know maybe somebody would yeah I would as a fund manager I'm stepping in to to try and like uh assuage some of these or or uh mute some of these draw downs and the impacts of them. Um, it's [ __ ] scary, dude. But, you know, you just kind of have to, uh, you know, you can't time the bottom perfectly. And I think if you bought back in once you realize what was going on, and that's what I did. You know, I had some so made some more defensive trades. And then on Friday when we learned or Thursday when we learned about what was happening with situational awareness, you buy back in, you probably did pretty well. You probably green on basically all the the high beta AI stocks that you bought um that day. Um, but yeah, it's hard to stay in the trade. I think you just have to know what you own. I think that's really really important. Like on the last podcast AOI was like under 100 and I was like nothing's changed about AOI. Stock went back to 150. Okay. Nothing's changed about that thesis. The earnings call confirmed a lot of their ramp. Um still a very high execution risk stock. That's why there's high that's why there's upside. That's why there's debate. Um again you just got to know what you own. Otherwise you will you will be >> you will be uh >> kind of like a victim like to to these markets. I mean whether it be manipulation, whether it be fear. I mean, we're at the point in this cycle, a lot of these names have ran a lot. People are just scared, man. Like, institutions are scared to lose their money, too. They're up a lot for their clients, for themselves. They're scared. They're going to get out. So, uh you need to you really need to to to know what you own and and just pick those winners and have faith. >> Do you think do you think these institutions and larger money managers are a lot more aggressive in the beginning of the year when they're trying to basically establish those positions? And maybe you can talk to even from kind of being a money manager perspective. Do you feel like you're getting to the latter portion of the year and saying, "Okay, I want to play this a little bit more safely." Yeah, I'd say I'd say that I missed the opportunity to play it more safely. So like my funds were up hundreds of not hundreds of percent. Well, the memory one was up 200% at one point and then, you know, Photonix peaked at 150, asymmetrical bets peaked at 150. So all these portfolios were crushing. Um, and now, you know, they're they're probably they're more than half half of that performance now. But, uh, if you do want to make those choices, you need to to do it, you know, when you have the performance. If you're trying to go defensive again when your performance is hald, um, no, you need to go and make that make that back. You need to to stay in it and like, you know, try and try and make it back in my opinion. So, um, I don't know. It's just it's just really really tricky. Um, but you have to understand like what's happening in a draw down. Like what we saw in this recent draw down was basically a a perfect storm of [ __ ] which was like okay China's got EUV machines. It was like uh okay uh we've got uh you know the oil spiking, we've got the Iran situation back and like it's just crazy how quickly confidence can collapse. But then in this market, it's crazy how much confidence can rebound and just like flip in a day. Like that's what's so crazy about the stock market, right? Is because nothing fundamentally changed in these trades, whether it's memory, whether it's hypers scale or capex. Like there was no rate hike announced. Like that was not a thing. He was very vague on that call. So again, none of the information changed. So I think it's just really important to stay in trades until the information changes. If the information changes, get out. But if it doesn't, like which we saw in this sell-off, just just try and hold strong. Yeah, it makes me think back to some of the opportunities over the last few years. You sometimes had less certainty like with tariffs, but sometimes you've had more certainty with like simple things like like this, you know, Leopold Unwind, right? Once you realized, hey, this is what's happening and what Citadel is doing. Okay, it became a buying opportunity like you' mentioned there. If you just bought right away off of that, the one thing that hasn't really come back has been memory, you mentioned Sandis, his only name that's still read there. MU's kind of traversed a little bit at this point. I don't think um I've looked at SKH Highix necessarily today, but you know that's really trended down since that uh IPO on the ADR. They're moved from about 170 down to 135. So what do you think is happening with memory versus the rest of the market? >> Dude, nothing's changed with memory, right? Like these LTAs make it a pretty good long-term bet. Um you know, I saw someone posting about how SKH is going to do like what make their entire market cap and profit in three years if they continue at this rate. Um, you know, you're talking about owning oil. Like oil was like, you know, it was powering kerosene lamps like in the 1800s and then the automobile came around. And I feel like the demand for memory is similar. It's a commodity product. Everybody can make the same thing. Like it's mostly the same memory chips. Um, but when the demand is so enormous, when a functional like structural demand change comes in, think of it like oil being par powering kerosene lamps gets crushed by electricity. It's a shitty market. uh and then you know electric electricity and then you have the car you know our economy still runs on oil all these oil companies trade at uh much more premium multiples than these memory companies so um this is a a commodity product that you know will always you know there'll be ups and downs I guess you know they'll but but we don't even know what the demand could be from things like robots things we don't even know what we can do with AI still >> if if memory is the oil, what's GPUs? If memory is the oil, what's GPUs? I mean, I I don't think GPUs are like a commodity cuz like Nvidia is basically so far ahead of everybody else. There's one company. Um but but memory you have you you can look at as a commodity because basically what what um Samsung, SKH, and Micron make is all the same. um like NAND is NAND, DRM is DRAM, HPM is HBM, but Nvidia and AMD do not have a comparable product. Nvidia is not comparable to the CPU. I mean, maybe in some ways, but again, these are differentiated more structural businesses, >> um not commodities. >> Yeah. And maybe just touch on it further, you mentioned with what Camila said, hey, we're going to see robotics, you know, needing 10x more memory, right? And some of those pieces and memory being such a commodity. So, is this an area where like how much of your portfolio would you be comfortable allocating to memory and how long do you think you need to hold that for? I mean, I think memory is like a long-term trade here. The easy money's gone. Don't get me wrong. The easy money and memory is gone. Um, you know, I wasn't early to memory, but I wasn't late. Like, I set up my strategy there in I think it was early February and like honestly I had to sit through a lot of like chop there. So, I bought this started these published these picss on February 10th. They chopped they chopped pretty heavily from from February to early April. Like they they didn't even rebound that hard after the ceasefire. Uh and then they really started to run like mid April and beyond and then all the way into June. Um how long do you hold them for? I think they're they're an important part of any AI investor's portfolio. You know, a doubledigit concentration of an AI focused portfolio. These are extremely important companies. um you know they they h they they own the bottleneck and I think they're a good long-term investment um if you if you are bullish AI and if you understand that there's just infinite ways that we can use this like I'm personally finding so many ways to use AI in my own life in my own business whether it's tracking my calories or like trying to fix my car or trying to like I just found this new use case for my business which is like creating a lot of content right I have this new AI tool that I'm using that syncs across all the context of all the content I made on Instagram YouTube, everything. And now it's like working with my team so we can generate, you know, better uh better content that's more in my voice and faster. And I don't know. I genuinely have so much [ __ ] fun with this. I just built a a lovable website. Like I know it's been around for a while, but I did it in like two weeks. It's like such a golden age. And I again like we're just never going to find enough use cases and ideas to make our lives better. Did you um post recently about a new like faceless channel or something along those lines that was just being run by? >> Yeah, 11 Labs. Nobody knew it wasn't my voice. Like I have an 11 Labs voice running my Instagram. Nobody knew it wasn't me and people were shocked. Uh 11 Labs took a while for me to like be like, "Okay, like this is pretty good." Now it's pretty good. Still like not not perfect, but it's it's just a golden age, man. Like to be able to to create I think to be able to create content. And that account went from zero to 10,000 followers on just AI created content. >> No, I mean it requires the human touch and intuition. Like AI is just not very good at making like AI is not going to help you build like a ton of followers. Like I've been in media for a long time. [snorts] You need like human genius >> to to to scale virality. Uh but if you just layer that human genius on top of like the base substrate, like you just miss all of the [ __ ] of research, scripting, um factchecking, uh just designing the core structure. So like I see myself as an ice sculptor, as a content creator, uh and with AI, I can get a block of ice and I just carve it into the ice sculpture. Boom. It's [ __ ] magic. I I think for me one of the things that's kind of changed is I don't feel like I could ever sign another contract in my life without putting it into AI first. Like Claude has gotten so good at contracts, drafting contracts, analyzing contracts, comparing across multiple contracts, similarities, it'll catch uh you know an extra period, right? Whatever it is. Um that for me has been one of the biggest things that I use AI for. >> Yeah, dude. But that is like the most basic use. It's like there's so much more if that's just the start and it's adding so much economic >> value. The basic uses are gamechanging. How about that? >> Yeah, they're great already. And just imagine like how how much people will come to maybe enjoy using AI and not want to protest against it because it helps their life a lot. Um >> once AI is like truly like your companion, your personal assistant, you know, I'm someone who always just trying to optimize my life. So that's why I like playing around with it. But >> just connecting it also across all these services and platforms adds a ton of value, >> right? Connecting it to Gmail was also another huge thing. >> Dude, I just did that [ __ ] like just now and like, you know, we're already kind of far into the cycle. >> The I mean the Google search for email has been terrible for forever. Trying to find an email is just awful. Um, now I just go in, it has access to all of my emails, and I just say, "Hey, you know, I think I talked about this in an email somewhere. What's the subject title?" Or, "Where can I find that email?" and it'll go find it. It'll pull data. Now, the next thing is they have to right now it can access the email, but it can't access attachments. Can't read the attachment just through email. I need them to add that in so that it could actually read PDFs inside of email. >> Wait, but but that's what's so great. We're using it and we're like this can go so much further. Like just add this one thing and it'll add like like >> you know a ton of extra economic value. >> Yeah, you you might like this cuz I did create it into my personal assistant. So, right now every single morning I just have uh this was easy. I just set it up on Claude um just to make an agent. So it gives me a briefing every day. One at 9:00 a.m. and one at 2 p.m. At 9:00 a.m. and 2 p.m. Claude goes and it runs through. So the scheduled task is uh you are preparing a high signal briefing for GV Blackburg. Only focus on what he must not miss since the last briefing. You're going to go through email. Search all Gmails for any unread messages from the last 24 hours. Flag. Give insights. Calendar. Go through calendar. List schedule. Create that. Slack. Go through all Slack channels. find anything that is a blocker that needs me to weigh in on that people are waiting for me uh and lets me know that urgent, you know, items and then compile everything into one message and send it to me twice a day. >> I need uh I need that for Discord, dude. There's so much good alphaations I have on there. Yeah, I need to get in that. But uh >> did you connect it to Discord yet? >> No, not yet. Not yet. >> That's an interesting one. >> Mhm. >> I'm sure it can go there. Um All right. So, we we're obviously very fascinated with the capabilities of AI. [laughter] Um, so if anybody else, you know, if there's things that we're missing, drop them in the comments. We're happy to take a look. I know it can also go to like notion and Canva and all types of stuff. Um, I want to talk a little bit about AOI, uh, because they reported earnings. And then just the Phutonics as a whole, I still feel like 99% of people don't know what photonics is. Um, if I had to guess, uh, they probably don't exactly like memory, I think, is a little bit easier for people to understand as a concept. I'd be curious for you to go a little bit into Phetonics and then also, you know, just a breakdown of the AOI earnings and where obviously you're clearly bullish on them. They're up 30% in just a week and you're still bullish on them. Where you think this company is going to continue to go as well as the sector as a whole? Yeah, I mean I wouldn't it's really not that complicated, right? Like light moves data a lot faster than copper. Um fiber optics, you've heard about it for years through your home internet. Like that's why your home internet is probably a lot faster than it was. Um, you know, light is like imagine you're copper is like you're rolling a a bowling ball down, you know, the hallway and then it'll reach the door, right? But with a flashlight, you instantly shine the flashlight and boom, flashlights at the other end of the the hallway, right? Um, there's not enough silicon photonics technology in the world to meet the demand for data centers. Uh, so there's a bottleneck. Um, >> is the bottle, you know, it's on par with memory. I think, you know, there's like a lot of photonix bowls, a lot of memory bulls. Some people are really excited about both. I'd say I'm in that camp. Um, but uh there's just not enough of it. Uh, you know, there's not enough lasers, right, to functionally build like uh uh these uh uh uh optical networking systems. Uh there's not enough lasers to flash that light to communicate the data like faster inside that that wire. So companies like AOI are catching a bid. Um, you know, we've been in AOI since $50 and uh on autopilot, which has been one of our best trades and has been, you know, an incredible for our performance. Now, you know, it's been up to a 4x. It's now something like a 2 and a half at whatever price it is today, but again, it's had 100% reversal or something crazy. AOI is very controversial because it has a much lower market cap than its peers in momentum and coherent. Uh, those businesses are much farther along. They have more capacity. They've in two billion they've already done $2 billion supply deals with Nvidia. Um AOI is more asymmetrical because it has a smaller market cap, but it has the pieces and the underlying IP and and team and and history to be uh a laser producer and transceiver producer. Light doesn't make transceivers, but to be on par with those big photonic heavy weights. [snorts] M >> um now they're expanding significantly. They're investing a lot in manufacturing and they're trying to accomplish this like Michael Jordanesque ramp, right? Which is like, okay, we're going to go from 500 million in annual revenue to over a billion and then to 5 billion in and a run rate. So 20 2027 run rate H2, they want to be doing something like in the high 400 millions of dollars of revenue. Okay. On top of this, AOI is like the Intel thesis kind of as well for optics because they're domestic manufacturer of transceivers and uh the the government is now thinking of banning transceivers from China. As for the earnings call, everything seems to be on target. Um based on their original projections, they had a slight beat. Um wasn't really that material to be honest. The call wasn't anything too crazy other than that, yeah, there were some good nuggets. The CEO said they might hit 500 million in revenue in Q4 and that was significantly above the highest analyst estimate before the call. >> So, I mean, if they can pull this off, I mean, this is a stock that can be significantly more valuable. >> Um, but you have this asymmetry because a lot of people don't think that they can pull it off and the stock has a pretty negative history. My view on it is I mean this is a company that's been around since I think the 90s like Dr. Lynn it's founder le um he's been working and doing his PhD research on lasers and he just wanted to emphasize on the call like we're not just a transceiver maker trans and and transceivers are what commun what what uh translates light uh electricity into light and vice versa. So these servers can communicate with one another. That's why they're in such high demand because they're part of this whole optical uh uh all these data centers getting re rejiggered to to be faster and move data quicker to new standards. Um so yeah, everything seems to be on track. It's just a it's just a controversial trade, a very high beta trade. It's certainly takes some big nuts to hold it. I'm amazed by how many retail investors are in this trade. This is one of the most popular stocks ever. Like I make an Instagram post on this [ __ ] and it goes viral. like it it's reached like the both the the super deep alpha retail traders and like the everyday people. It's kind of wild. I >> think you've helped popularize it for sure as well as part of that. I was showing people some of those data numbers as you were talking and certainly revenue has ramped. Revenue back in 2024 uh Q2 that year was 43 million. And now you look at Q2 in 2026 which they just reported and that's 191 million. So that is, you know, significant increase. But yeah, to go from there to 500 million potentially um in just six months from now is a massive massive jump and it makes you feel great about getting in on a stock that you know isn't necessarily reflecting that like has had such a pullback like you talked about. The pullback was pretty massive on this one. We went from uh 230 bucks all the way back down to 75. >> Um and then from there we've jumped from 75 to 133. So >> madness. >> Yeah, actual madness. I mean that is a 67% draw down in just 2 and 1/2 months that it went through only to then go up literally I mean it's down a little bit now today but 80% in two weeks um on this. So if anybody you know was able to add to be honest I've seen a lot of these stocks as well. I know you're not on the technical side but if you added on the 200 day this was a great one um just adding on the 200 SMA. Nebas had the most perfect bounds I've ever seen off of a 200 SMA um as well. So, I encourage people, you know, you can put the kind of two and two together uh with a lot of these pieces, too. And then in terms of the the finances, you know, they're an interesting one. Always love to see the growing revenue. They're obviously spending a ton. They spend more and more and more each year on R&D, on SGNA. Um this year, they're going to spend over 100 million for the first time ever on R&D. Uh they're going to spend um over 130 million on SGNA within these pieces. And so obviously not not profitable yet within these items, but they're investing heavily into the company. Um, and what's nice is while they are spending more, their revenue is significantly increasing faster than their spend. 100%. They're also benefiting from like cable TV. So that's the division of their businesses like fiber optics and upgrades. There's a structural cycle going on there too to make home internet faster um for the age of AI cuz it's like necessary to like you know do for anyone to like be doing inference at home like a lot of devices and all that stuff. So I mean yeah it's structural like optics is is viewed as more structural than memory um because uh mainly mainly because uh it's just it's just a different product like there's more differentiation >> but with AOI they're investing a ton to build that onshore American made in USA optical capacity. So that's the thesis. This is like a USA made in USA play. And then you have this Chinese potential transceiver ban and AOI is in great position. Most transceivers like the the big chunk of of of transceivers are made in China. So if this becomes a there's like a ban on that like AOI mean they're going to be they're building the capacity to be the largest transceiver maker in the United States and they're vertically integrated because they make the laser source as well. So that's why it's just an interesting stock. Like it's a really really interesting stock for like people who are trying to chase like an asymmetrical setup that's super high risk high reward that has like a near near-term catalyst. Like you know you want to buy like there's earnings right now for Rocket Lab and as like those businesses like I have I have conviction in those businesses long term but like you're not you may not see like some kind of insane like near-term ramp, right? Um, I feel like a business like AOI is is is kind of in that in that fits that bill. >> Definitely. Let's uh let's talk about some of the companies that aren't getting love. Like what's a underrated Nobody's talking about a company that you're bullish on right now. >> Yeah. So, I actually made the largest options, one of the largest options trades in my life uh in late June on Sony. So, I basically was getting excited about the G the launch of GTA 6 or maybe it I made the trade earlier than late July. Maybe it was like mid June. I was getting really excited about GTA 6 and I was like, "Okay, like how am I going to make money off GTA 6? I know everybody in my brother is going to be getting this game." Um, and I looked into it and Take 2 is priced in. They might still do well like over exceed their guidance or whatever. It's mostly priced in. Sony is the business where nobody is like nobody is ready for like seeing the metrics that are come out of their gaming business because for one I don't think people are going to come buy a console in the fall but that's not that what matters. Sony is viewed by many as this memory constrained console maker. There's not really good margins on PlayStations. The value is in the digital services and purchases. So it's a toll booth on the gaming economy. GTA is this it's like another world. It's literally a new economy, right? And Sony takes a cut on not only every sale of the game that's made on PlayStation, but every inapp purchase. So, the in-game purchases that you buy and then people are going to reactivate their PlayStation subscriptions to play the game. So, we're going to see I think we're going to just see gaming explode. It's not baked into the guidance. Um, so I'm really excited about Sony. They also have an amazing image sensing business. They just launched a they just uh had a $6.3 billion deal with TSMC today for uh for that. So the stock's about 15%. My options positions up 130% as of today. Um so it was an amazing trade. Um while everybody got bagged on AI, you know, I had some of my followers get in on this Sony trade with me and it's been like a great position. Um let's see. So this is just one of my accounts. I actually have a larger position than this. But yeah, I mean I don't know if people can see. >> Oh, sorry. I couldn't see. >> Up and >> it's upund and something. >> Okay. >> I don't know. It's like upside down. But >> you're good. >> Crush it on that trade. I think it's really important to have like a nonbubble trade running in your book. Um because like my Sony position crushed when everyone rotated out of high beta and into like safer stocks out of outside of technology. So, I really like Sony. It's a $24 stock. Uh I think this is a 30 at least a $30 stock. Um you know, in the in, you know, in the next half year, uh something in that range. Um but I really really like it. No one talks about it. I'm the only bull physical AI GTA 6 super cycle. >> Yeah, another one where um you know, I'll walk through some of the numbers real quick on it, but great technicals finally getting it back above 200 day. It cracked that 200 day back here and then you could just see it went from 26 bucks to 19. Now you're getting back over it for a second time. That is a very bullish sign right there. Also, um, when did GTA 5 come out? Because I think I only have 10 years of data here. >> I think it was ago >> too long ago. Um, >> but what's but it's just like really interesting too like you um GTA 6 is going to be discless. So you can't buy it on anywhere but the Xbox storefront and the PlayStation storefront. So Sony just uh intercepts more value there than they did in previous cycles. Um so they're getting a cut. Remember they're getting a cut on every game. Um so the pre-orders just went through. Sony knows how much they they made. I'm surprised you know they're notoriously conservative on guidance. I you know again I'm in 20 2027 options. I think I'm going to actually end up rotating uh those into 2028s. So I can see the thesis play out over a longer period of time. Um, so I really want to see those Q1 numbers in 2027 of like how GTA 6 impacted their gaming business from like signups PSN purchases topline operating profit. Um, and again, they also have Spider-Man Brand New Day, so that was like the biggest movie ever. Spider- I don't know if you saw it. It was a great movie. Uh, it already it grossed like a billion dollars in its first weekend. >> Yeah. >> And they they own Spider-Man, >> you know. I I think there's definitely opportunity here for a breakout. Just kind of looking at the numbers, they've been pretty stagnant. Um now they make a lot of money obviously make $20 billion a quarter, but um you know there's there's not been necessarily growth within this piece. And so if they can get that spike like you're talking about, maybe have a quarter where they hit 30 billion um that would be pretty epic for them. This is you know just to match this kind of the last stock chart you can just see similarly has kind of moved in tandem with it. And then the other interesting piece here, um, same on the, you know, total revenues for the year instead of just looking at the quarter. Yeah. >> Yeah. 82. I mean, it's it's it's it's actually gone down a little bit, um, over the last year. And so, this is an intriguing one because if you can get a bit of a breakout like they're kind of doing like what Nike is doing right here, but obviously with a different business model where they've been stagnant a little bit of time. And so, I definitely I'd be intrigued see them break out um, from there. But yeah, it's an interesting play. This is where you get into like the nitty-gritty stuff, you know? You're like, >> well, this is where you can make this is where you can make a really good options trade. Like, you don't want to be making, in my opinion, you don't really want to be making options trades on these super high IV, high beta, >> multiple 100% run. Like, you want to play high low IV >> trades when you know something the market doesn't, you have a really differentiated opinion on a low IV stock. So, if you looked at Sony option chain, the expected move is dirt. And it probably still is. From when I got in, it's higher. But like, you know, it's it's like you you find opportunities like this. I think trades like this only come around once or twice a year. So, this is like my big non-AI idea. I'm going to I'm going to stand by. I mean, there is AI with physical AI. The 23% of their business is image sensors, which are basically the eyes of robots, autonomous vehicles, drones. Um, Sony has a 50% market share on the image sensor chip market. So, they're a semiplay too, but more for physical AI, nothing near-term data center. So, this is my this is the the Michael Zakon like unconventional, still cheap stock, still lots of room to run. I know that thesis has played out a bit. Um, but uh I still don't think the information and like the market understands what they're looking at. >> Got it. And then just kind of, you know, similar question to that, but less so a stock that's, you know, not getting love. What do you think is a stock that's gotten kind of destroyed recently, but doesn't necessarily deserve to be down so much? We saw some real hammerings during earning season. >> Yeah. So, okay, we did. It was brutal. So, I'd say Reddit and App 11 are probably like my two like wounded birds that I like. So, Reddit, amazing numbers. I have some of them up here. 61% revenue growth. Uh 91.3% gross margin. So, you know, that's the beauty of advertising, right? Um you know, it's uh really compressed. It's multiple. I think people are worried that they're not an AI beneficiary. I personally think that there's this bullc case for Reddit where they basically uh get some kind of the the best licensing deal in the media sector where there's like a dynamic pricing deal where maybe they get paid out on LLM queries that tap their data. If they did like a you know like a I don't even know like a tenth of a cent like model like Spotify does for like every time you stream a song, every time you grab a Reddit query like they get paid. So, if there's some asymmetrical like revenue driver there with deals with LLMs, I think that's really cool. I think on a quarterly basis, they're only making about 40 million from OpenAI and Google, but that could be way higher. >> Ju just to ask because I I see this as a potential bare case. Are you familiar with Stack Overflow? >> No, not really. So, Stack Overflow was the number one pretty much website. Maybe Reddit was in there, but it was a website that was very popular for about a decade to two decades for developers. If you were developing and you had a question, how do I make this work? How do I loop this? How do I do this? You went to Stack Overflow, you put up your question. At the peak, they were getting over, I don't know, like 200,000 questions or something. >> Yeah. >> Um, since the advent of AI, they have dropped now and they do >> literally 1,000 or something like questions a year or something compared to like 200,000. And so, it's shown like, hey, people don't necessarily need to go to the internet anymore to ask the question and crowdsource it from other people. Most things already been asked. They can get it from AI. I feel like the, you know, Reddit's interesting because it's half, you know, social media of people sharing content things. But yeah, the reason that I always use Reddit was I had a question and I wanted to learn from other people's experiences, but AI solves that for me. So, I don't really need to use Reddit anymore. Do you see that as a bare case? >> No, I don't because they're the number one most uh quoted source in LLM. So, there was a study done and they were like the number one source that LLMs were drawing from to provide an AI query. So Reddit is part of the value chain of delivering good information uh in in the new search paradigm. Um yes maybe less people are going to the website but they're still getting information from Reddit. So again the asymmetrical thesis on like why this stock might still be cheap is that they could get some crazy deal with Google that's like double triple what they had last time market starts to view them as more of like an AI beneficiary. So that's where I think like the misconception the market has on Reddit right now. Um but what you said is true. people will probably go to Reddit less like uh to find the answer to questions. But in that case, I'd hope that they get paid from the LLMs. And then on the side of cuz they have such valuable data and then on the side of um on the social media side, yeah, people are going to want to go to platforms where they know they can talk to other humans and talk about their favorite movies or the Odyssey or the World Cup. >> Are they talking to other humans? That's the other uh bear case I saw was are we moving? It's like dead internet theory where like it's a lot of it's a AI posts and AI agents and LinkedIn even introduced recently uh markers AI slop button um that they put in because they're concerned that it's just like it's just going to be AI talking for a lot of it. >> Yeah. So I don't know what protocols Reddit has in place. It should probably know for for that. I assume that bots have been a problem for them far longer than AI's been around. In fact, they actually the app got started, Reddit got started back in the day because they used bots to growth hack. So, someone would post something and the team over there would use the guys who started it would use bots to like create fake engagement. Yeah. >> So, I'm sure it's always been a part of the platform, but there's got to be some some way to police it. And also like I I mean, for right now, we can tell a lot of like what bots are because they're so stupid and they phrase things so horribly. >> Does anybody have a good system for getting paid like you're talking about right now? because I know that they've already scraped tons of data from Reddit and then even like earlier today I had the editor-in chief of Investipedia on and I was like man I I definitely used to go to Investipedia more but now my LLM just quotes Investopedia so it's like are people getting paid for that? Are there any deals you've seen in place? >> I think I think if anyone's going to get paid it's going to be a platform like Reddit like that is going to have like the best negotiating power because they just have such a unique data set compared to all the other publishers. Um because again like I said there was that study where like they were the number one source. >> I've seen that. I know that. >> Yeah. Yeah. They are the number one. So I think they just have they just have negotiating power because the we've run out of content to train on and where's the new content being created? Humans on Reddit, humans on YouTube, right? Humans on social media. Um, so yeah, I I think like they have like that that that fertile stream of like consistent human intelligence that you can draw from. Um, so again, yeah, I I think I think I own Reddit. Um, you know, so in a kind of a long-term oriented one of my long-term oriented portfolios. Um, it's not in any of the autopilot strategies just because I I really focus on like the most asymmetrical stuff in there in terms of like what what's more like retail. It doesn't fit in any of like the super cycle themes right now um necessarily for me, but I think it's a good stock. Same with Apploven, you know, they also have insane fundamentals. >> I don't know if you saw that crash. >> I saw what was it 25% uh drop on app on earnings. >> Yeah. I mean, dude, if you look at this company, like I've never seen metrics like this. Like it's just so incredible. Like they're trading at like under 20 Ford PE now. They're growing like 50% quarter over quarter. They slightly missed their guidance for the first time. Actually, sorry. Before we go into I just want to show people the visualize because the numbers on Reddit are so strong. Sorry. Um >> yeah, just for people to look real quick. So the revenue growth on Reddit trilling 12 months is like a 60some percentile. It's really good. It's you know this is in comparison to the rest of publicly traded companies or sorry top 500 stocks. And then their EPS growth is incredible on trailing 12 months. It's almost at 300%. Here's just like a bar graph you can see or histogram of the other 500, you know, top stocks here. So they're really outperforming and even where they're not, you know, as amazing, let's say PE ratio. It's still not, you know, the worst thing ever and they're still clustered towards a lot of others. It's really just their price to sales ratio that's a little bit not as good, but you do have some great ratios here um for them as well. And then yeah, we can go to um uh Apploven just to give people This one hasn't really bounced back at all yet either. >> I mean, this has been this has been a hog of a stock >> over the past year. It's been a real pig. >> And um you know, but but like they also there was like a lot of fear over an SEC investigation that got dropped. They sat on the most recent earnings. There was something around model training or some kind of delay that made their results a little less effective. They were just under their midpoint of guidance, I believe. uh which caused this massive reaction. I just I don't understand it. Like this this company has such crazy fundamentals. Look at this. >> Yeah. Here's >> the EPS growth. I mean trading under 24 26 NTM >> um >> EPS every quarter beat double beat there. >> The growth I mean all their ratios I mean honestly very similar looking to Reddit with maybe even slightly better ratios. >> Yeah. Well, look, they're both super high margin, high growth advertising businesses. They both help companies reach new audiences and grow their companies outside of the meta monopoly, the meta and Google monopoly. Now, like you look at like a business like Google, like their advertising revenue looks to be kind of up like kind of debatable. Um, but like app like they serves these ads in this super captive environment. Uh, same with Reddit. Like you're you're in Reddit and clearly it's working really well. Like these businesses are growing. They're proving ROI to advertiser. I mean, both these businesses to me look like meta in the 2010s. No AI capex buybacks, huge EPS, you know, that kind of that kind of uh that kind of asymmetrical ramp as the advertising business is so big. It's such a huge TAM. You know, these are great businesses. I just I don't know why people don't want to own adte. Um there was even conversation I think that app was talking to OpenAI about powering their advertising system. These guys have really good tech, good CEO. Um, you know, yeah, look, Seeking Alpha has got a lot of got a lot of love for this. Those guys love fundamentals, right? They love looking at fundamentals and making a case for a cheap stock on that app on that platform. Um, and it and and it is cheap. I mean, I don't understand how a stock that's growing like 50% >> year-over-year is trading at under 20 times forward. Like, >> I I think it's a I think it's a good buy. Yeah, I mean the growth you've mentioned 60% revenue growth uh year-over-year, the forward revenue growth, the IBIDA, all these different pieces. Um I just I I saw an ad that they did recently for their own service and it was awful. >> It is. Yeah, I did notice that. I also am confused why they're advertising with All-In podcast for their e-commerce product. I I don't think e-commerce business owners watch Allin podcast. I think they watch other stuff >> like but they also said the gong they had on TVPM was driving a ton of business and that's a very small like tech focused decision maker audience I don't know but look there needs to be more advertising platforms outside of meta it's a huge market these businesses are growing really well um probably probably good like non AI exposure fast growing growth to own >> did they mention the TVPN going on their earnings call >> yeah couple earnings call back >> okay okay got it got But I wasn't sure if that was on this last. >> Neat stuff. Neat stuff. Hey, we're uh >> we're we're getting in the mix here. We might be actually helping run an earnings call soon uh for a publicly traded company. So, hey, people are definitely interested in this stuff. Yeah. Um okay, very cool stuff. Good thoughts there shared on Reddit and App1. So, to be clear, you already own Reddit. Do you own App Leven as well? >> Yeah. Okay. Yeah, it's not a huge position. Yeah, I did. I added like I don't It was like small like a thousand bucks or something on the dip, but uh I like Apple 11. It's got good fundamentals. >> Nice. All right. Uh last couple topics here as we wrap up. What are the biggest takeaways from the past month, month and a half in the market? >> I think it's just so easy to get scared and like every time there's a draw down think that it's over. But I think that every time we've seen like misinformation, smoky environment around the AI trade, like it's bounced back really hard. >> Yeah. >> I don't think that I think it was just a perfect storm of things at once, but nothing fundamentally changed. I think that's what a lot of the ex influencers did a really good job of, the guys that that I follow, they were just like, "Look guys, nothing's changed in the thesis. You know, stay strong, stay convicted." Um and look what happened, right? A lot of these stocks recovered their, you know, a lot of their losses. Um, maybe not all of them, maybe maybe half of them, right? Cuz if a stock goes down 50%, you need 100% to get get the bag back. [snorts] Um, don't sell unless the information changes and nothing changed in terms of like AI capex, AI advancement, AI use cases, AI ROI. Um, and then I also just think it's you got to have some original ideas. Like I went into Sony in June because I realized I was just like, damn, like I feel like all the alphas dried up. like all these AI stocks are so rich. So, I made a a trade on a nonAI stock that I really liked and still saw a growth story in that the market might appreciate [snorts] another super cycle, right, which is like this huge entertainment thing with with gaming and GTA 6. And it worked out really well and that really helped protect my trading portfolio that I do like kind of really concentrated stuff in. I shared on my my Discord to my followers who who are in my substock. I have a trading portfolio that I share [snorts] and I shared the show and trade and everyone was super thankful. they had some kind of hedge. None of my other analysts had a [ __ ] hedge, okay? And nobody, you know, everybody was just full poor at this [ __ ] So, I think I love having original ideas um like fresh cool stuff that like not everyone's talking about. So, I'm trying to get better at that. Sony's kind of like my first one um >> that's not in like a hot theme. So, those two things >> I like that Sony play as and also the idea of like a hedge doesn't have to be a downside play necessarily, right? It can just be >> uh another sector that's just not getting loved that could be rotated into like >> but that's the thing right like the money didn't go away it just hid in other sectors during that draw down right it just got you just went went to go hide and grocery stores and restaurants >> right >> I I kind of use Yeah exactly I mean honestly the restaurant play has actually been working really well lately funny enough um >> Cheesecake Factory baby >> yeah I I use something like um to be honest like some of these like high dividend names are almost like hedges in this area where you have like a lot of like health care and >> consumer defensive and energy and stuff like that. Like I'll play with like those ETFs as my defensive areas. >> 100%. Those are great ones like XLE for energy like anything that starts with XL. They've got a ton of good stuff there for for defensive ETF. though I think if anything like again leverage just like [ __ ] le like [ __ ] leverage in in most situations because like if you look at my autopilot portfolios like memory was started in February that thing is still up 98% since February okay during a a historic memory draw down it's still down it's still up 98% okay Leopold's wiped my book here is up 98%. So, if we go to let's go to the Phutonix one. Okay, Phutonix is up 74% and it's up 61% year to date. It's like six times the S&P and it peaked atund and something percent. Um, but like it's still up huge. So, had I been using leverage like I would have gotten wiped. I wouldn't h have a portfolio. And it's cool. I mean, maybe that's a good part of this platform, autopilot. You only can own Commons. There's plenty of asymmetry in commons. The reason like I wouldn't use Commons for a uh company like Sony is just because it's so big and I just don't expect the equity to appreciate like like 2x. You also see less downside risk in terms of the deterioration of, you know, and stuff like that, right? It's just >> it's knowing it's it's that it goes back to what you said, know what you own. Uh, >> yeah. I just think options around options around memory are so [ __ ] dumb. Like you like you basically just move with the equity at that point because they're so expensive. >> Yeah. >> Like I just wouldn't trade options on an AOI. Like dude, this [ __ ] did 100%. >> And if you are taking them, typically you're taking them around some type of event like you know Chris Camilo with the Amazon play, right? Yeah. That was a very specific >> play around earnings, right? Like and then those were zero hero there, right? he kind of but he went in knowing that you know as well. >> Mhm. >> And typically also definitely don't use leverage with other people's capital. >> That's uh I think that that was also the big mistake there with situational awareness. >> Yeah. I mean a lot of funds use leverage right but to that end I mean having the thing is his shorts also ripped against him. Like he was short software and all this money rotated back into software. Like it was like a perfect storm. Like the guy's the guy's like a genius. Like he's a beast. But like also like yeah, he he got greedy. Like he got >> he kind of guy went to his head, you know, like a classic Scorsesei movie, right? Where like you're killing it and then there's like some downfall like you just don't see your blind spots anymore >> and and still, you know, still up 80% this year married and managing billions of dollars. So uh may may we all be so lucky that after our worst moments, we're uh we're still killing it, you know. >> Yeah. Yeah, I mean that's that's kind of how I feel like you know I had a lot of those Leopold trades too like AI infrastructure and I'm still huge on these autopilot portfolios for the year to date and the one-year charts. So again I don't know like these bears I'm not sure I can respect them if they're like oh yeah you should have been careful dude like I'm still like I'm still six times or eight times or 10 times the S&P >> okay after after the draw down. >> It just comes back to old saying bears sound smart bulls make money. Uh yeah, you know, that's that's what it comes back to. Really good stuff, Michael. We've been running for a while here. Appreciate you coming on. Uh super helpful. I'm I'm excited to really also take some clips out of this as well for the audience. I think there's a lot of stuff that they can learn and great deep dives. We're going to try to get this up ASAP because it's pretty pertinent content. Any final thoughts? >> No, man. Just uh let's keep escaping the permanent underclass. Let's do it. >> Yes, sir. Thank you. Looking forward to the next time we get to have you on. >> Appreciate everyone that watched. Give the video a like, little thumbs up down there. Drop a comment. Let us know your favorite parts, any questions you have. We'll try to answer them. We'll see you on the next one. Take care, everybody. Thank you, Michael. >> Oh, and follow Michael, Michael Sakant. Thanks for watching today's video. If you enjoyed it, go check out the Wool Financial Newsletter. Did you know that we make a ton of content? We host 60 plus hours of Twitter spaces and live streams every single week. We're posting on the timeline over and over and over. We put up YouTube videos and one of our prime gems is our newsletter. and it's free into your inbox multiple times a week. We mix it up. 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