PLTR, WRBY, and CHWY: Three Consumer and AI Plays to Watch

the New York Stock Exchange alongside Molly Kaden over in Chicago. Let's discuss a trio of stock picks to consider and welcome in our next guest, Chris Wong, who's the research director over at Runnymede Capital Management. Chris, so nice of you to join us today. Let's start with Palantir. What a week up nearly 40%. It felt like this was the name. That kind of was the catalyst for a little bit more of a rotation into technology. Is that how it felt? What did it say that initiated that move and that feeling in the market? Sure. Thanks for having me back. I mean, definitely Palantir drove a lot of excitement in the software space in terms of AI. It's really been earlier in the year really focused on semiconductors and infrastructure build. And now just in the last couple of weeks, it's really a shift more towards software and Palantir really showing that they can execute and build, build AI into a company's existing data sets and really be really transformative. One example is with city wealth. They they have issues with compliance personnel and cross-checking client records. And sometimes it can take days to bring on new clients once they plugged in Palantir solution, it actually reduced time down from nine days to seconds in a streamlined the process that previously previously required up to 50 people down to one person. So Palantir took a compliance headache. They used to take 50 bankers nine days to resolve and turned it into a single click. So, I mean, it's really profound, profound transformation. And I think that's really what's driving the excitement. And it's going to be the next stage of AI excitement. And I want to take a look at your next pick, Chris, that you brought here. It's Warby Parker, a very interesting one. They have highlighted their square footage growth that they're expanding their stores, but they also have this very important partnership with Google Glasses. How are you looking at both of those things when you look at your thesis for Warby Parker? Yeah, I mean, I think the core business is already pretty exciting because LensCrafters has around 1000 stores. Warby Parker is only at 300, so there's a lot of square footage growth opportunity for Warby Parker. But the more exciting story is obviously the partnership with Google Glasses. That launch is a few weeks away. The first iteration of Google AI glasses will really just be audio centric. So I don't think this is going to be the killer application yet, but people do want to see from the retail side how how AI can be built into their everyday lives. Next year, you're going to have Google AI glasses that have built in display. So I think that's really going to be the next step in transformation because you'll be able to. I think they had one example of real time translation, and it's giving you basically just closed captions in real time of language translation. So you can be traveling the world and you don't have to learn a new language. And this is definitely going to drive traffic into the Warby Parker stores. People are going to want to try on these glasses and test it out for themselves. So even if people don't buy AI glasses, I think they're going to say, oh, maybe I do need a new pair of sunglasses or a new pair of readers. So it'll drive traffic and drive sales growth. And moving on to another one you've got here. Chris is chewy. I mean, this is an interesting one. Admittedly, I don't have a pet. I haven't had one in a long time. Look, a toddler is enough in my life. But having covered this stock for a couple of years now, I mean, it feels like it was kind of this pandemic, pandemic era hype growth stock that now is transitioning more into kind of like a value efficiency play. Is that kind of the story with this one? I mean, what exactly stands out to you about this name? Yeah, I agree with your assessment. I actually have a child and for cats, so I get I get what you're saying, but I also understand pet ownership. But the pet business is a recession proof business for the most part. And chewy is really benefiting because they're an online duopoly primarily with Amazon. They have 35% market share. And the exciting part is 84% of their revenue is from auto ship. So I don't think you can find another story in retail where you're getting basically recurring revenues quarter in and quarter out. And on top of that, they're building a vet in health business, which they've been building out for seven years, doing it very slowly. And now they're planning to kind of ramp that up. And there's big opportunity to expand margins and drive their EBITDA margins from 5 to 10%. So you're getting a steady business, but you're also getting this kicker that can expand margins and also accelerate growth. So I think chewy is a really exciting story in a pretty recession proof business. Chris, you've got me beat. I've got a child and a beagle, but my beagle would probably give your four cats a run for money and energy. So we'll call it a fair trade off there. Really appreciate you joining us today