In the last 3 days, when stock prices plunged Retail investors sold $1 Billion. Institutional investors bought +$14 Billion. This is Market manipulation at its finest.
I believe every Investor should start with ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850K.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? I'm in dire need of proper portfolio allocation.
Strong BUY. Still early innings. NVIDIA is the dominant leader in AI and the preferred technology partner globally. Even w new competition on the horizon, NVIDIA is far ahead of the competition. 85% market share. 76% margin. Unrivaled demand for new Blackwell chip. Demand far exceeds production for Blackwell through to 2025 and beyond. No competitor has anything close to Blackwell. And forward P/E is about 33 (cheap for a high growth stock). Buy this stock and wait. You will be rewarded.
This is Interesting because i bought NVIDIA around September last year. The company is selling shovels in a gold rush. It accounted for almost 80% of my market return last year, and I'm sure this year will present other interesting stocks.
When it comes to investment, diversification is key. That is why I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech and Health (AMD) alongside coins, and gold. I'm also working on an investment plan that includes AI looking into Nvidia, MSFT, Alphabet stocks among others with my Fin. Advisor, . It's been a year and half of steady growth.
I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
Finding financial advisors like Marisa Breton Dollard who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I greatly appreciate it. I'm fortunate to have come upon your message because investing greatly fascinates me. I'll look Marisa Breton Dollard up and send her a message. You've truly motivated me. God's blessings on you.
AI stocks will dominate 2024. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
I think the next big thing will be A.I. For enduring growth akin to META, it's vital to avoid impulsive decisions driven by short-term fluctuations. Prioritize patience and a long-term perspective consider financial advisory for informed buying and selling decisions.
Facing a similar situation, I sought advice from an invęstment advisęr. Through portfolio restructuring and diversification with good ETFs, S&P 500 and growth stocks, I've turned my portfolio around from $200k to over $800k in a few years.
Your invt-adviser must be really good, I hope it's okay to inquire if you're still collaborating with the same invt-adviser and how I can get in touch with them?
Amber Dawn Brummit is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
*Thank you Angela Christine Derle for $60,000👍🏻. So many opportunity to make money here on UA-cam but most people don’t know. Thank you for continuing updates I'm favoured, $60,000 every two weeks ! I can now give back to the locals in my community and also support God's work and the church. God bless America*
After I raised up to 325k trading with her I bought a new House and a car here in the states 🇺🇸🇺🇸 also paid for my son's surgery (Andy). Glory to God.shalom.
Wow that's nice She makes you that much!! please is there a way to reach her services, I work 3 jobs and trying to pay off my debts for a while now!! Please help me.
Hey Joseph when you get time, can you do a quick update on your earned dividends and how much they've gone up over time? I remember a few years back you joked about how you were excited about earning a 40 cent dividend and you're wife was like "Ohhhhh how exciting" lol. I'm curious what it looks like now.
yeah, honestly i don't mind him not caring about dividends but if that's the case he really shouldn't be calling it a passive income portfolio. he doesn't focus on the income bit at all.
Just got done reading the Costco Connection. On page 12, there is a paragraph about the rotisserie chicken that now comes in a bag. Based on projected sales, ≈ 17 million lbs. of plastic will be saved per year. 5 pallets of the old packaging is now 1 pallet of the new packaging. Costco will remove 1000 of it's freight trucks from the road each year. Now, fewer trucks will eliminate 4000 metric tons of CO².
Joseph, I first came across you channel a few years ago. I thought you were pessimistic. But in realty you being realistic with no hype, something I wasn't accustomed to when I began my investment journey. Thank all your work and for being transparent (pretty much no one shares their portfolio and stands by it).
I was very disappointed that Joseph didn't read out loud every single Costco quarterly membership renewal rate. He missed 88.6%, 88.7%, 88.8%, and my all time favorite, 89.7%. Oh the humanity.
@Joseph: you quote Chuck Akre and say that COST is a long term compounder so you refuse to sell. However, the compounding in share price is primarily due to multiple expansion and is NOT reflected in the business fundamentals. In 2011, the PE was about 23. In 2015, the PE was about 26. In 2019, the PE was about 34. Today, the PE is 50! The only way for your COST shares to continue compounding like they did in the past is if the PE continues to expand up to 60, 70, or 80! This does not seem like a sensible investment thesis. If you want a compounder, V, MA, SPGI, etc all grow and compound their eps at a much faster rate
Hi Joseph, I think you are a good analyst and you provide lots of great content. If I may make a humble suggestion. I think your channel would do better breaking up many of these longer videos into shorter videos. For instance, I think this 20min video could have been two 10 min videos; one on Sales Force, one on Costco. And if I’m only interested in one of the companies I can just watch that one and not have to try and scrub through a longer video to find the content I’m interested in. This also gives you more opportunities for search keywords. And in this modern age people’s attention spans are short and people prefer shorter content. Keep up the good work!
@@jaxteller6433 Even if you sell, long-term capital gains tax is only 15%, so you still come out ahead. COST's EPS TTM is ~$15.50. This is expected to grow at about 10% CAGR for the foreseeable future so in 5 years, this would give EPS of about $24.96. These estimates already include an increase in membership fees. What multiple will COST trade at in the future? No one knows for sure so let's run a few scenarios • PE 30 gives $748 estimated price target and total CAGR of -1.2%. Yes. Negative total returns. You'd be better off buying a 10y T-bill. It seems unlikely for COST to have this much multiple contraction, but at the same time, V consistently trades at PE of 27-30 so is COST really better than V? • PE 40 gives $999 estimated price target and total CAGR of just 4.6%. This is also not impressive. You'd be better off buying SP500. • PE 50 gives $1250 estimated price target and total CAGR of 9.4%. SP500 has averaged 10.6% CAGR since 1994 and 12.5% for the past decade. So again, you'd be better off buying SP500 than holding or buying COST today. So compared to these scenarios, it's much better to lock in the gains and just buy SP500 or even just be bonds
Are you trying to convince yourself or us. CRM is too expensive to only grow return by 8-9%. I can just buy VOO and get that return. Let’s that sink in.
It makes no difference to me whether or not anyone else buys salesforce. You won’t determine whether the stock goes up or not. CRM has projected growth of 20% EPS and 20% fcf / share growth. S&P 500 expects 8% free cash flow per share growth this year. Judging investments by revenue is incomplete analysis.
I work as a business consultant and have seen clients after clients drop salesforce for the same reason ... Its VERY expensive and the UX very average at best. In this period of uncertainty, considering the amount of upcoming alternative (at a much lower cost sometimes), the businesses I deal with, mid-market for the most part, were easily convinced to switch to platforms.
I was very disappointed that Joseph didn't read out loud every single Costco quarterly membership renewal rate. He missed 88.6%, 88.7%, 88.8%, and my all time favorite, 89.7%. Oh the humanity.
I just own the igv. Look at the holdings. Gives me exposure to cyber security as well. What I like is it's overweight msft, CRM, intuit, now, oracle, etc. selling otm calls and selling otm puts. Generates income as well
Gemini 1.5 Pro: This video is about the impact of AI on software companies and Bill Amman taking his hedge fund public. The speaker, Joseph Carlson, discusses the recent sell-off in the software sector, particularly mentioning Salesforce, Adobe, Intuit, ServiceNow, and Workday. He argues that the narrative has shifted around these companies from being beneficiaries of AI to being victims of AI. Investors are concerned that AI will make these companies’ business models obsolete by reducing the need for human employees and software licenses. Carlson disagrees with this narrative. He points out that technological advancements have always led to greater efficiency, and AI is no different. He argues that AI will likely be a complimentary tool that enhances the capabilities of existing software, rather than a complete replacement. Carlson also discusses Costco, a company he has long been invested in. He highlights Costco’s recent earnings report, which he believes was positive despite the stock price going down slightly. He attributes Costco’s success to factors such as their high customer renewal rates, excellent customer service, and commitment to lowering prices. Finally, the video talks about Bill Amman’s decision to take his hedge fund Pershing Square public. Carlson acknowledges Amman’s impressive track record but ultimately decides not to invest due to the high fees associated with hedge funds. He believes that investors are better off controlling their own money and avoiding the guaranteed fees of hedge funds.
I love your show, top class, there is one company mentioned in the interview SNOW (Snowflake), I've seen lots of news about this company, since you have a background working in tech would it be possible you analyze it so we could learn your thought process around these types of companies. Thank you in advance Joseph =)
Thanks for sharing your take but I don't agree with your explanation. Your logic behind why technology advancement shouldn't replace employment doesn't hold water. Yes, there are tons of examples of technological advancement that results in efficiency and more employment. But there are also examples of the opposite narrative. For example, self-checkouts. I worked in retail, and I've seen the reduced workforce after self-checkout systems were implemented. At first, it wasn't drastically changing the environment, but after the self-checkout became more efficient with all bugs removed and customers could easily checkout on their own, the number of cashiers was heavily reduced. We had 10 before a day and that was reduced to 3 on cashier with 1 extra watching the self-checkouts. We are literally witnessing the process of the narrative that many people have worried about, namely robots replacing jobs. They aren't humanlike bots with a square head and a metallic body, but they are fulfilling a need. Great for businesses at reducing costs and increasing their profit margins. Subscriptions are blood leeching models that are excellent for the beneficiary but not for the clients. Now I am not siding for either salesforce or AI. Simply put, just because employment wasn't affected after HTML, notepad etc, were replaced by a better alternative, doesn't mean AI companies will not replace SAS companies. It could; it might not. We don't know. Either narrative is still possible.
AI is not going to be eating Adobe's share as Adobe is actually in position to be a leader in the AI generation market, they just need to keep pushing on the AI generation plugins in their product suite. AI is not going to be eating Salesforce as it's not in the same sector, actually Salesforce has one of the best image-text embedding model out there (BLiP) as well as a solid AI platform (Einstein-1). If the stocks of these companies are falling, then it means it's on discount because they are going to be surfing the AI waves. Contrary to the hype of OpenAI and others, Adobe and Salesforce know how to integrate AI in the already in-place software suites at big corporate institutions. Not even Microsoft or Google can do it as well as them. Microsoft is releasing good products (Copilot, Bing, Office 365 Copilot, etc...) however they are largely ignored by workers. Google is shoving AI down our throats wherever it can but is struggling with censoring issues and data privacy concerns. Microsoft and Google are crushing the research field compared to Adobe and Salesforce but in the corporate world they are being outplayed.
If I were ADBE, CRM and so on I would simply change payment method from „per User“ to „per action taken“. Workflow vs user charging should work for all partners
@Joseph your argument is very convincing, I was of the opinion companies like Adobe and Salesforce will fall but your argument is making me shift from my position. Yet there is one question unanswered, however small why did the Salesforce miss the expectation (which it never did in past)? Timing of it is suggesting something to do with AI. Please share your opinion. Thanks.
Definitely the blue chip tech stocks like Salesforce still hold sway however if you do research in to the future capability of AI, its naive to believe their business model won't be affected and, downstream, the impact to the bottom line. Salesforce, at its core, is a pure CRM play with an extensive ecosystem. However, in the future, this ecosystem will likely be more fragmented as AI fit for solution tools will become more accessible, cheaper and drive a lower TCO. I see Salesforce becoming more of a Palantir, a high end specialised platform. Less for the SMB and midmarket in the next 5 years
Awesome video! I appreciated your sensible look at AI and INTU, ADBE and other companies. I also appreciate you level head when others are in freak out mode. I feel like one of the worse things about investing are the analysts. They guess what might happen, and then people freak out when companies don't meet their projections. Why do we need them? Why not just have companies report how they are doing every quarter and let us decide if the company is using our money responsibly.
the narrative around AI is hilarious. people fear what they dont understand. people are so desperate to disparage anything to do with AI..they're missing out
When you invest in Bill Ackman’s company you make money if they make more money on fees but you aren’t directly investing as an LP in his hedge fund right?
I think even if the workforce is reduced due to AI. Still the value of sales force product would relatively speak increase. Thus they would be able to raise their prices and clients would happily pay since they already minimised their wages bill
Same😂 it physically hurt to look at the position at market close this week😂 but hey we‘re here for the long term, so no worries, just wait it out and maybe even add to it during the dip
Well done in clarifying the logical fallacy of the claim against these SAAS companies, I wish the MSM (only because so many retail investors still rely on it) were forced to be more long form in their takes on stocks and have to go into detail about precisely why their point makes sense!
Now that I know you were a software engineer for ten years, I now see, through your professional experience, why you don't invest in Palantir. Thank you.
Hey Joseph, I’m one of your patreon subscriber and I’m just trying to understand how the software works. I see here for your COST position it says nearly $69,000 and it’s up nearly $34,000 which would make it about a 100% return. However, under Gain / Return it says 300% return. Why is that?
In short. AI has started taking jobs. And the market reflects it. I read some dumb A investor saying that AI is gonna replace 50% of white collar. Probably right. Then he added, AI will solve poverty. Yeah right, by taking jobs. Explain to me how that work.
I agree with your analysis that AI is not going to replace salesforce or adobe. The real reason is all enterprises who uses CRM/Adobe are tightening their belt by firing employees because of coming recession, hence less subscription. AI has nothing to with what CRM does as of today. When economy recovers after recession there will be need for more employees and more subscription. CNBC cannot say enterprises are firing employees due to political reason, so for them it is easy to blame on AI.
These SAS companies were already expensive and went up big on the promise of AI. Those narratives are crumbling. These are relatively weak companies (no strong moat) that use AI as a marketing slogan. Sure they’re not bad businesses. But you have to understand their growth is limited and they don’t have strong innovation. So valuing these companies you need to be conservative. That’s the weakness of this channel: the focus on good businesses is fine, but the valuations are based on perfection (or Joseph even buys in blindly). Even after the big drop, Salesforce is still expensive. Fair value is $150.
Global edge computing spend is estimated to rise nearly 16% this year to $232B, according to IDC, with hardware driving a majority of the spend at 40% share
Salesforce is up 70 or 80% in a year in a bit, so being down 20-30% on it isn't great, but Joseph doesn't seem too interested in buying stocks at good prices, he just buys good companies as long as prices aren't really crazy high, he'll hold long enough for Salesforce to bounce back I imagine
I’d buy into Pershing Square if Ackman takes the firm public. I could easily see him becoming a Warren Buffett type money manager in the next 20 to 30 years.
My CRM position ended up at -23% on Thursday so I did the logical thing and bought more. After it rebounded Friday by 7.5%, my initial shares were only down 15% and my new shares were up 7.5% which updated my position to only be down 7%. Winning! 😎
Joseph, i think you mistaken about pershing square ipo. Its not the investment fund itself, but the company's ipo. So the revenue/cash flow will be the company's management fees and performance fees.
On the topic of AI making companies leaner, I believe this to be true, at least in the short term. In my own company, Klarna, we have reduced the number of employees by almost half. Other companies in the industry seem to be doing the same. This is only one example, but it illustrates the SaaS sell-off. Most of the R&D budget is going into AI, which leaves less money for other IT initiatives. Moreover, as AI investment increases, management comes under pressure to justify their investment, which pushes teams to be more efficient (reduce headcount) and reduce other expenses like Salesforce and similar services, either by reducing subscriptions or switching to lower-cost competitors.
I think you are too diversified. you should hold no more than 5 companies in your portfolio, the highest conviction ones, like: TXRH, CMG, MSFT, COSTCO, AAPL , and no more
Not true i would say like 10-15 max its a good way for security but its also goood when one is overpriced to trim and put it in one of ur other stocks that is down but shouldnt be down
AI wil disrupt so many companies and industries but it can't access what's behind the firewall, unless AI is integrated in that environment. The moat is the petabytes of private data. Salesforce does have that advantage and can leverage so much more data than anyone else in the enterprise world. As for Adobe, I'm not sure. They can leverage their Adobe Stock and Behance for generative AI and can tout they can use generative AI in a licensed way. I love and use all Adobe tools (as I also do Affinity, which just got acquired by Canva - an AI play). I don't understand what to do with Adobe - would be good to get a deeper dive from you on that.
Companies have limited resources, and when every company increases AI expenditure, it might squeeze the spending on SaaS services. Consequently, the profits of these companies providing SaaS services decrease. SaaS companies, realizing this situation, also start to transition towards AI. This transition requires substantial investment, causing their earnings to decrease further, and the benefits are not immediately visible, nor is success guaranteed. This may be one of the reasons for the recent overall decline in the stock prices of SaaS software companies. The above is my humble opinion.
I was very disappointed that Joseph didn't read out loud every single Costco quarterly membership renewal rate. He missed 88.6%, 88.7%, 88.8%, and my all time favorite, 89.7%. Oh the humanity.
What most people don’t get is that salesforce is pretty deeply embedded in a lot of companies and gathers a lot of valuable customer data, that data will only get more valuable with AI and gives small companies an easy entry into AI without the need for hiring data scientists.. the only thing i’m not thrilled about is the low roic, with that fcf you’d like to see it higher imo
Inverse Deidre Bosa. She's almost spreading FUD in her segments and was a regular in the Dan Nathan and Guy's podcast. The biggest bears the past few years.
There are always "new found fears", a.k.a. excuses. The only thing I see are idiotik multiples. Assuming sustained 10% revenue growth going forward, 15% (resp. 20%) profit margin, 25% dividend distribution and 1% buyback yield, you needed Salesforce shares to continue trading at 52x (resp. 39x) earnings 5 years down the road in order to earn a 10% return from $300. I call this gambling.
Salesforce’s sell off wasn’t irrational. You can’t trade at a valuation like that in an industry with fierce competition, in a market that’s hot on tech revenue beats and guide for single digit sales growth lol It’s a repricing. If Salesforce can actually innovate, get some organic growth going and they double top revenues then you’ll see the company shoot up 20-30% on another earnings call.
Yep, literally commented about AI as the reason why. Don't need people to sell salesforce or any CRM. AI automates it all - glad, there's a video made after that
So we have these seemingly contradictory ideas of a gain in developer efficiency and an increasing developer workforce. I think another factor that helps explain this is that expectations/demands also readjust and grow - more, better, faster. It's a sort of feedback loop.
I think the market under the believe of technology that reduces the marginal cost of creating code to almost zero isn’t great for SaSS companies, amazing break down as usual.
In the last 3 days, when stock prices plunged Retail investors sold $1 Billion. Institutional investors bought +$14 Billion. This is Market manipulation at its finest.
I believe every Investor should start with ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850K.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? I'm in dire need of proper portfolio allocation.
Sharon Ann Meny, is respected in her field. I suggest delving deeper into her credentials, as she possesses experience and serves as a valuable asset.
She looks to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
Strong BUY. Still early innings. NVIDIA is the dominant leader in AI and the preferred technology partner globally. Even w new competition on the horizon, NVIDIA is far ahead of the competition. 85% market share. 76% margin. Unrivaled demand for new Blackwell chip. Demand far exceeds production for Blackwell through to 2025 and beyond. No competitor has anything close to Blackwell. And forward P/E is about 33 (cheap for a high growth stock). Buy this stock and wait. You will be rewarded.
This is Interesting because i bought NVIDIA around September last year. The company is selling shovels in a gold rush. It accounted for almost 80% of my market return last year, and I'm sure this year will present other interesting stocks.
When it comes to investment, diversification is key. That is why I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech and Health (AMD) alongside coins, and gold. I'm also working on an investment plan that includes AI looking into Nvidia, MSFT, Alphabet stocks among others with my Fin. Advisor, . It's been a year and half of steady growth.
I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
Finding financial advisors like Marisa Breton Dollard who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I greatly appreciate it. I'm fortunate to have come upon your message because investing greatly fascinates me. I'll look Marisa Breton Dollard up and send her a message. You've truly motivated me. God's blessings on you.
AI stocks will dominate 2024. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
I think the next big thing will be A.I. For enduring growth akin to META, it's vital to avoid impulsive decisions driven by short-term fluctuations. Prioritize patience and a long-term perspective consider financial advisory for informed buying and selling decisions.
Facing a similar situation, I sought advice from an invęstment advisęr. Through portfolio restructuring and diversification with good ETFs, S&P 500 and growth stocks, I've turned my portfolio around from $200k to over $800k in a few years.
Your invt-adviser must be really good, I hope it's okay to inquire if you're still collaborating with the same invt-adviser and how I can get in touch with them?
Amber Dawn Brummit is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
I looked up her name online and found her page. I emailed and made an appointment to talk with her. Thanks for the tip
*Thank you Angela Christine Derle for $60,000👍🏻. So many opportunity to make money here on UA-cam but most people don’t know. Thank you for continuing updates I'm favoured, $60,000 every two weeks ! I can now give back to the locals in my community and also support God's work and the church. God bless America*
Hello how do you make such monthly ?? I'm a born Christian and sometimes I feel so down 🤦 of myself because of low finance but I still believe in God.
Thanks to my co-worker (Alex) who suggested Ms Angela Christine Derle.
She's a licensed broker in the states 🇺🇸
After I raised up to 325k trading with her I bought a new House and a car here in the states 🇺🇸🇺🇸 also paid for my son's surgery (Andy). Glory to God.shalom.
Wow that's nice She makes you that much!! please is there a way to reach her services, I work 3 jobs and trying to pay off my debts for a while now!! Please help me.
Hey Joseph when you get time, can you do a quick update on your earned dividends and how much they've gone up over time? I remember a few years back you joked about how you were excited about earning a 40 cent dividend and you're wife was like "Ohhhhh how exciting" lol. I'm curious what it looks like now.
His focus is probably more on buybacks than dividends
yeah, honestly i don't mind him not caring about dividends but if that's the case he really shouldn't be calling it a passive income portfolio. he doesn't focus on the income bit at all.
@@leesmith9299 I'm mostly interested just on the compounding aspect of the dividends over time. Not looking for a full video just a quick segment.
It said on his screen $2,246.43 + in dividends at 4:19 in the video.
@@JoeSchmo70 that div amt is the accumulated total earned until now.
Just got done reading the Costco Connection. On page 12, there is a paragraph about the rotisserie chicken that now comes in a bag. Based on projected sales, ≈ 17 million lbs. of plastic will be saved per year. 5 pallets of the old packaging is now 1 pallet of the new packaging. Costco will remove 1000 of it's freight trucks from the road each year. Now, fewer trucks will eliminate 4000 metric tons of CO².
Joseph, I first came across you channel a few years ago. I thought you were pessimistic. But in realty you being realistic with no hype, something I wasn't accustomed to when I began my investment journey. Thank all your work and for being transparent (pretty much no one shares their portfolio and stands by it).
New financial advice just dropped
lol
This is not financial advice.
Do your own due diligence.
I was very disappointed that Joseph didn't read out loud every single Costco quarterly membership renewal rate. He missed 88.6%, 88.7%, 88.8%, and my all time favorite, 89.7%. Oh the humanity.
@Joseph: you quote Chuck Akre and say that COST is a long term compounder so you refuse to sell. However, the compounding in share price is primarily due to multiple expansion and is NOT reflected in the business fundamentals.
In 2011, the PE was about 23.
In 2015, the PE was about 26.
In 2019, the PE was about 34.
Today, the PE is 50!
The only way for your COST shares to continue compounding like they did in the past is if the PE continues to expand up to 60, 70, or 80! This does not seem like a sensible investment thesis. If you want a compounder, V, MA, SPGI, etc all grow and compound their eps at a much faster rate
Hi Joseph, I think you are a good analyst and you provide lots of great content. If I may make a humble suggestion. I think your channel would do better breaking up many of these longer videos into shorter videos. For instance, I think this 20min video could have been two 10 min videos; one on Sales Force, one on Costco. And if I’m only interested in one of the companies I can just watch that one and not have to try and scrub through a longer video to find the content I’m interested in. This also gives you more opportunities for search keywords. And in this modern age people’s attention spans are short and people prefer shorter content. Keep up the good work!
Sass companies can, many already do, have pricing tiers based on usage. Their logic is crap
Never fall in love with the stocks you own.
Investing 101.
I think people are confusing buying an expensive stock (COST) vs already owning an expensive stock.
Technically if you account for opportunity cost these are the same thing
@@AdamBeyondnot exactly because selling, would have Tax disadvantages
@@jaxteller6433 for taxable accounts that's very true (assuming you have profits) fair point.
Theoretically there is no difference
@@jaxteller6433 Even if you sell, long-term capital gains tax is only 15%, so you still come out ahead. COST's EPS TTM is ~$15.50. This is expected to grow at about 10% CAGR for the foreseeable future so in 5 years, this would give EPS of about $24.96. These estimates already include an increase in membership fees. What multiple will COST trade at in the future? No one knows for sure so let's run a few scenarios
• PE 30 gives $748 estimated price target and total CAGR of -1.2%. Yes. Negative total returns. You'd be better off buying a 10y T-bill. It seems unlikely for COST to have this much multiple contraction, but at the same time, V consistently trades at PE of 27-30 so is COST really better than V?
• PE 40 gives $999 estimated price target and total CAGR of just 4.6%. This is also not impressive. You'd be better off buying SP500.
• PE 50 gives $1250 estimated price target and total CAGR of 9.4%. SP500 has averaged 10.6% CAGR since 1994 and 12.5% for the past decade. So again, you'd be better off buying SP500 than holding or buying COST today.
So compared to these scenarios, it's much better to lock in the gains and just buy SP500 or even just be bonds
AI isn’t a threat to SaaS companies. It’s their licensing models.
Are you trying to convince yourself or us. CRM is too expensive to only grow return by 8-9%. I can just buy VOO and get that return. Let’s that sink in.
This, he bought it high as well. Not a Buffet move.
It makes no difference to me whether or not anyone else buys salesforce. You won’t determine whether the stock goes up or not.
CRM has projected growth of 20% EPS and 20% fcf / share growth.
S&P 500 expects 8% free cash flow per share growth this year.
Judging investments by revenue is incomplete analysis.
@@JosephCarlsonAfterHours time Will tell…
Also ceo sounded like a car salesman on Cramer.
Ever since Salesforce replaced ExxonMobil in the Dow Jones index back in 2020, CRM returned close to 0%, while XOM quadrupled, or 300%.
Oil vs. SAAS.
I work as a business consultant and have seen clients after clients drop salesforce for the same reason ... Its VERY expensive and the UX very average at best. In this period of uncertainty, considering the amount of upcoming alternative (at a much lower cost sometimes), the businesses I deal with, mid-market for the most part, were easily convinced to switch to platforms.
CRM buy the dip activated
DELL will follow same path
I thought the same, then i realized even with the dip its still very richly valued
You will be holding the bag after their next earnings.
I was very disappointed that Joseph didn't read out loud every single Costco quarterly membership renewal rate. He missed 88.6%, 88.7%, 88.8%, and my all time favorite, 89.7%. Oh the humanity.
anyone seeing CRM go crazy right now ! 🚀🚀
Wish I had more money to buy yesterday dip
I got in, already up by 7.5 percent )
It’s not ai it’s overpriced saas and a saturated market.
I just own the igv. Look at the holdings. Gives me exposure to cyber security as well. What I like is it's overweight msft, CRM, intuit, now, oracle, etc. selling otm calls and selling otm puts. Generates income as well
Palantir up still lol lfg 😂🎉
Gemini 1.5 Pro: This video is about the impact of AI on software companies and Bill Amman taking his hedge fund public.
The speaker, Joseph Carlson, discusses the recent sell-off in the software sector, particularly mentioning Salesforce, Adobe, Intuit, ServiceNow, and Workday. He argues that the narrative has shifted around these companies from being beneficiaries of AI to being victims of AI. Investors are concerned that AI will make these companies’ business models obsolete by reducing the need for human employees and software licenses.
Carlson disagrees with this narrative. He points out that technological advancements have always led to greater efficiency, and AI is no different. He argues that AI will likely be a complimentary tool that enhances the capabilities of existing software, rather than a complete replacement.
Carlson also discusses Costco, a company he has long been invested in. He highlights Costco’s recent earnings report, which he believes was positive despite the stock price going down slightly. He attributes Costco’s success to factors such as their high customer renewal rates, excellent customer service, and commitment to lowering prices.
Finally, the video talks about Bill Amman’s decision to take his hedge fund Pershing Square public. Carlson acknowledges Amman’s impressive track record but ultimately decides not to invest due to the high fees associated with hedge funds. He believes that investors are better off controlling their own money and avoiding the guaranteed fees of hedge funds.
I love your show, top class, there is one company mentioned in the interview SNOW (Snowflake), I've seen lots of news about this company, since you have a background working in tech would it be possible you analyze it so we could learn your thought process around these types of companies. Thank you in advance Joseph =)
AI's main selling point is replacing employees.
Didn't realize i would be watching a programming 101 class 10 years out of school on a finance youtube channel lol.
This is how valuation works. They ran too close to the sun
You got shoutout on a seeking alpha earlier today lol
Thanks for sharing your take but I don't agree with your explanation.
Your logic behind why technology advancement shouldn't replace employment doesn't hold water.
Yes, there are tons of examples of technological advancement that results in efficiency and more employment.
But there are also examples of the opposite narrative.
For example, self-checkouts. I worked in retail, and I've seen the reduced workforce after self-checkout systems were implemented.
At first, it wasn't drastically changing the environment, but after the self-checkout became more efficient with all bugs removed and customers could easily checkout on their own, the number of cashiers was heavily reduced. We had 10 before a day and that was reduced to 3 on cashier with 1 extra watching the self-checkouts.
We are literally witnessing the process of the narrative that many people have worried about, namely robots replacing jobs.
They aren't humanlike bots with a square head and a metallic body, but they are fulfilling a need.
Great for businesses at reducing costs and increasing their profit margins.
Subscriptions are blood leeching models that are excellent for the beneficiary but not for the clients.
Now I am not siding for either salesforce or AI.
Simply put, just because employment wasn't affected after HTML, notepad etc, were replaced by a better alternative, doesn't mean AI companies will not replace SAS companies. It could; it might not. We don't know.
Either narrative is still possible.
AI is not going to be eating Adobe's share as Adobe is actually in position to be a leader in the AI generation market, they just need to keep pushing on the AI generation plugins in their product suite. AI is not going to be eating Salesforce as it's not in the same sector, actually Salesforce has one of the best image-text embedding model out there (BLiP) as well as a solid AI platform (Einstein-1). If the stocks of these companies are falling, then it means it's on discount because they are going to be surfing the AI waves.
Contrary to the hype of OpenAI and others, Adobe and Salesforce know how to integrate AI in the already in-place software suites at big corporate institutions. Not even Microsoft or Google can do it as well as them. Microsoft is releasing good products (Copilot, Bing, Office 365 Copilot, etc...) however they are largely ignored by workers. Google is shoving AI down our throats wherever it can but is struggling with censoring issues and data privacy concerns. Microsoft and Google are crushing the research field compared to Adobe and Salesforce but in the corporate world they are being outplayed.
If I were ADBE, CRM and so on I would simply change payment method from „per User“ to „per action taken“.
Workflow vs user charging should work for all partners
@Joseph your argument is very convincing, I was of the opinion companies like Adobe and Salesforce will fall but your argument is making me shift from my position. Yet there is one question unanswered, however small why did the Salesforce miss the expectation (which it never did in past)? Timing of it is suggesting something to do with AI. Please share your opinion. Thanks.
Definitely the blue chip tech stocks like Salesforce still hold sway however if you do research in to the future capability of AI, its naive to believe their business model won't be affected and, downstream, the impact to the bottom line. Salesforce, at its core, is a pure CRM play with an extensive ecosystem. However, in the future, this ecosystem will likely be more fragmented as AI fit for solution tools will become more accessible, cheaper and drive a lower TCO. I see Salesforce becoming more of a Palantir, a high end specialised platform. Less for the SMB and midmarket in the next 5 years
Awesome video! I appreciated your sensible look at AI and INTU, ADBE and other companies. I also appreciate you level head when others are in freak out mode. I feel like one of the worse things about investing are the analysts. They guess what might happen, and then people freak out when companies don't meet their projections. Why do we need them? Why not just have companies report how they are doing every quarter and let us decide if the company is using our money responsibly.
the narrative around AI is hilarious. people fear what they dont understand. people are so desperate to disparage anything to do with AI..they're missing out
When you invest in Bill Ackman’s company you make money if they make more money on fees but you aren’t directly investing as an LP in his hedge fund right?
I think even if the workforce is reduced due to AI. Still the value of sales force product would relatively speak increase. Thus they would be able to raise their prices and clients would happily pay since they already minimised their wages bill
AI will do to software industry what DEI has done to Boeing - huge loss of competence.
I don't understand why we want to hear anything from Aaron Levie, LMAO. He runs a meme company
Shopify partnership puts Revux on the map. Big boom incoming!
Your previous data did not exponentially improve which AI is doing
Yes but not all technology leaps are the same, ai has massively more implications
Focusing on presales for the best returns. Revux is my top pick!
Betting Revux will pump before XRP does.
Microsoft is the spider in the ai web.
Apple*
企業的資源有限，當每家公司都增加AI支出，就可能擠壓對 SaaS 服務的支出。因此這些提供 SaaS 服務的公司獲利就下降了。SaaS 公司意識到這個情況也開始做 AI 的轉型，轉型需要大量的投資，因此盈餘又更下降了，但效益不會馬上看到，也不一定會成功。
這是近期 SaaS 軟件公司整體，整體下挫的原因。
以上個人淺見。❤
just started a position in adobe recently... oh well 😭
Same😂 it physically hurt to look at the position at market close this week😂 but hey we‘re here for the long term, so no worries, just wait it out and maybe even add to it during the dip
please introducing translate
Joe has a great style. And command of his subject . Easy to listen to .
same sentiment as Paypal and shopify, great companies with lots of money.
Revux is shaping up to be the best ICO this year. Get in early!
Revux is the hot topic in my crypto chats. Rising star for sure!
Qventi is everywhere now, just like Revux was.
Adobe is shit company and tools are overpriced.
Revux tip-off - this token is heading for the moon!
Well done in clarifying the logical fallacy of the claim against these SAAS companies, I wish the MSM (only because so many retail investors still rely on it) were forced to be more long form in their takes on stocks and have to go into detail about precisely why their point makes sense!
Now that I know you were a software engineer for ten years, I now see, through your professional experience, why you don't invest in Palantir. Thank you.
Why?
10 years ago you used notepad++ to program? You re not that old 😅
i will average down on adobe. These selling thesis is stupid
Hey Joseph, I’m one of your patreon subscriber and I’m just trying to understand how the software works. I see here for your COST position it says nearly $69,000 and it’s up nearly $34,000 which would make it about a 100% return. However, under Gain / Return it says 300% return. Why is that?
In short. AI has started taking jobs. And the market reflects it.
I read some dumb A investor saying that AI is gonna replace 50% of white collar. Probably right. Then he added, AI will solve poverty. Yeah right, by taking jobs. Explain to me how that work.
I agree with your analysis that AI is not going to replace salesforce or adobe. The real reason is all enterprises who uses CRM/Adobe are tightening their belt by firing employees because of coming recession, hence less subscription. AI has nothing to with what CRM does as of today. When economy recovers after recession there will be need for more employees and more subscription. CNBC cannot say enterprises are firing employees due to political reason, so for them it is easy to blame on AI.
These SAS companies were already expensive and went up big on the promise of AI. Those narratives are crumbling. These are relatively weak companies (no strong moat) that use AI as a marketing slogan. Sure they’re not bad businesses. But you have to understand their growth is limited and they don’t have strong innovation. So valuing these companies you need to be conservative. That’s the weakness of this channel: the focus on good businesses is fine, but the valuations are based on perfection (or Joseph even buys in blindly). Even after the big drop, Salesforce is still expensive. Fair value is $150.
Global edge computing spend is estimated to rise nearly 16% this year to $232B, according to IDC, with hardware driving a majority of the spend at 40% share
Salesforce is up 70 or 80% in a year in a bit, so being down 20-30% on it isn't great, but Joseph doesn't seem too interested in buying stocks at good prices, he just buys good companies as long as prices aren't really crazy high, he'll hold long enough for Salesforce to bounce back I imagine
might be right. might be copium. time will tell
I’d buy into Pershing Square if Ackman takes the firm public. I could easily see him becoming a Warren Buffett type money manager in the next 20 to 30 years.
My CRM position ended up at -23% on Thursday so I did the logical thing and bought more. After it rebounded Friday by 7.5%, my initial shares were only down 15% and my new shares were up 7.5% which updated my position to only be down 7%. Winning! 😎
Joseph, i think you mistaken about pershing square ipo. Its not the investment fund itself, but the company's ipo. So the revenue/cash flow will be the company's management fees and performance fees.
Hopefully CNBC doesn't have you on, so I'm better able to keep buying! 😅
Predicting 100x gains for Revux post-launch on major exchanges.
On the topic of AI making companies leaner, I believe this to be true, at least in the short term. In my own company, Klarna, we have reduced the number of employees by almost half. Other companies in the industry seem to be doing the same. This is only one example, but it illustrates the SaaS sell-off. Most of the R&D budget is going into AI, which leaves less money for other IT initiatives. Moreover, as AI investment increases, management comes under pressure to justify their investment, which pushes teams to be more efficient (reduce headcount) and reduce other expenses like Salesforce and similar services, either by reducing subscriptions or switching to lower-cost competitors.
Costco products are high quality (unlike Sam's club) and reason to keep membership
JC, Thank you for the update. Could you do a special on Intuit with recent IRS pushing their free tax program? Thank you in advance!
I think you are too diversified.
you should hold no more than 5 companies in your portfolio, the highest conviction ones, like: TXRH, CMG, MSFT, COSTCO, AAPL , and no more
Not true i would say like 10-15 max its a good way for security but its also goood when one is overpriced to trim and put it in one of ur other stocks that is down but shouldnt be down
AI wil disrupt so many companies and industries but it can't access what's behind the firewall, unless AI is integrated in that environment. The moat is the petabytes of private data. Salesforce does have that advantage and can leverage so much more data than anyone else in the enterprise world. As for Adobe, I'm not sure. They can leverage their Adobe Stock and Behance for generative AI and can tout they can use generative AI in a licensed way. I love and use all Adobe tools (as I also do Affinity, which just got acquired by Canva - an AI play). I don't understand what to do with Adobe - would be good to get a deeper dive from you on that.
Maybe it’s just a Salesforce problem. The CEO inspires no confidence that they are on the forefront of AI. Not at all!
While CRM and other sas companies are good and still growing, the question is, are they comparatively overvalued?
All the big multinational companies I worked for rely heavily on SF!
Companies have limited resources, and when every company increases AI expenditure, it might squeeze the spending on SaaS services. Consequently, the profits of these companies providing SaaS services decrease. SaaS companies, realizing this situation, also start to transition towards AI. This transition requires substantial investment, causing their earnings to decrease further, and the benefits are not immediately visible, nor is success guaranteed.
This may be one of the reasons for the recent overall decline in the stock prices of SaaS software companies.
The above is my humble opinion.
Everyone’s talking about Qventi lately. Feels like another Revux situation.
There is no universe where CMG and COST should be trading at 50x eps
Mania
Shopify partnership puts Revux on the map. Big boom incoming!
I was very disappointed that Joseph didn't read out loud every single Costco quarterly membership renewal rate. He missed 88.6%, 88.7%, 88.8%, and my all time favorite, 89.7%. Oh the humanity.
Please dark mode on Qualtrim. My eyes burn watching the vid in the morning.
What most people don’t get is that salesforce is pretty deeply embedded in a lot of companies and gathers a lot of valuable customer data, that data will only get more valuable with AI and gives small companies an easy entry into AI without the need for hiring data scientists.. the only thing i’m not thrilled about is the low roic, with that fcf you’d like to see it higher imo
Inverse Deidre Bosa. She's almost spreading FUD in her segments and was a regular in the Dan Nathan and Guy's podcast. The biggest bears the past few years.
There are always "new found fears", a.k.a. excuses. The only thing I see are idiotik multiples.
Assuming sustained 10% revenue growth going forward, 15% (resp. 20%) profit margin, 25% dividend distribution and 1% buyback yield, you needed Salesforce shares to continue trading at 52x (resp. 39x) earnings 5 years down the road in order to earn a 10% return from $300. I call this gambling.
But is not at $300, it was down to $213 this week.
Finally understand why Warren Buffet said market is irrational
Salesforce’s sell off wasn’t irrational. You can’t trade at a valuation like that in an industry with fierce competition, in a market that’s hot on tech revenue beats and guide for single digit sales growth lol It’s a repricing. If Salesforce can actually innovate, get some organic growth going and they double top revenues then you’ll see the company shoot up 20-30% on another earnings call.
Correct, it was irrational for CRM to be at the price it was at the beginning of the week.
Why arent you in Paypal?
What they do not realize IS that Salesforce also has a consumption model, especially in relation to its Einstein and Data Cloud services
Yep, literally commented about AI as the reason why. Don't need people to sell salesforce or any CRM. AI automates it all - glad, there's a video made after that
Stock picking rarely beats indexing over a very long time horizon.
What do you do if CRM’s ceo is selling millions of dollars of shares day after day? Lol that makes me not wanna invest
Bought crm yesterday and sold late afternoon today. Was too oversold. May consider getting back in if it dips again
Insider tip: Revux is going places. Don’t miss out!
my question is why CRM and not ADBE? Is it the evaluation?
So we have these seemingly contradictory ideas of a gain in developer efficiency and an increasing developer workforce. I think another factor that helps explain this is that expectations/demands also readjust and grow - more, better, faster. It's a sort of feedback loop.
I think the market under the believe of technology that reduces the marginal cost of creating code to almost zero isn’t great for SaSS companies, amazing break down as usual.
When a stock is priced for perfection, it’s no shock to have such a big dip if it’s revenues fall
14:29 Salesforce miss is even smaller than 1.6%, its more like 1,069%.