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Okay, so what just happened? Listen, here's the thing. No matter how well you're doing right now in the AI boom , we're dealing with a pretty big backlog. And there is one thing I can tell you. The more companies suck capital out of the stock market, the worse stocks do. We knew this would happen back when Google and SpaceX sucked in about a hundred billion dollars each in late May and early June.
We warned of the approaching great recession. And what happened? We had a six-week stock market crash, and it ultimately led to the liquidation and destruction of people. What is happening now? And now, the strangest thing is that you suck again. Broadcom with two massive funding rounds for OpenAI and Anthropic, Oracle, SpaceX need forty billion dollars, which is actually about one- tenth of what they need.
Meta is doing a stock split to create a dual class of shares to raise more funds and to allow Zach to sell non-voting shares so he can pay California taxes if California takes money out of him . You know, there's a lot of crap going on . And they managed to raise more money. And Meta just went into negative cash flow.
That's a lot. You put it all together, and suddenly people are like: You know what? Maybe I'll just go buy bonds. Maybe Kevin is right and the peak in bond yields was around 5.27 and I'm going to go buy bonds now because if that peak falls, the value of my bonds will go up. And if you look here, if you bought at about 5.27, look where the peak was, right here.
If you had bought around 5.27, you would now be significantly more expensive on these bonds because the yield immediately fell. And they have an inverse relationship. Yields are down 17.2 basis points today, which is just crazy. Oh look, OpenAI is approaching $30 billion in funding at a $1.25 trillion valuation led by the UAE.
Oh, even they're sucking us out now. So, even more sucking . Now it's OpenAI. Apparently, it wasn't enough for them that there was a spy inside, hiding hidden cameras and microphones, well, you know, behind the TVs. It's actually cool how OpenAI eventually figured out that it was there, but, you know, it's still like, "Oh man, this shows that this boom is getting a little bit embarrassing." Eh, but nevertheless, the decline in Treasury yields indicates a flight to safety.
We do n't see this flight to gold. We already know why. We know...We talked about it this morning. We've talked about gold ad nauseam, my thoughts on the matter. So we won't focus on that. But you see that even though companies are going through better times now, companies are selling shares, which is a little strange, but it's normal when you're in big trouble.
Here, for example, is Bloom Energy. Bloom Energy comes out with a pretty big margin. Their adjusted earnings per share (EPS) beat expectations by about 50%, 94 cents vs. 68. Their adjusted EBITDA is $299.5 million vs. $241.2, which is excellent. And yet their shares fell. Western Digital also had outperformed and increased profits.
They see their second-quarter EPS nearly a dollar higher, at around 580 cents, with second-quarter EPS forecasted compared to the expected 4.82. And their first- quarter revenue also beat expectations – $4.38 billion compared to $4.15 – and also beat adjusted EPS for the first quarter. So you get these over-the-top raises and now you barely see any reward for these companies.
Because people are nervous. Like, “Oh, the trend is declining. The momentum is waning. "Let's just sell shares in AI companies ." This creates a great opportunity. This aid, “Don’t bother buying stocks between 707 and 715. That’s not the area to buy. You buy when we break through the price and you are between 700 and 707.
This is the buy zone right here, this little box right here. This square is the shopping area. It was here in September that we had the peak of fear, and you know what? Now we have even more of a peak of fear of delicious "sucking" . And who doesn't want a good "sucking"? Well, AI companies love it, and even though they're winning and driving up prices and their valuations are falling to the lowest levels we've seen historically, we're actually seeing these stocks underperform in the near term, which is a little crazy to say, because people say, "Oh, what do you mean when you say their valuations are low?" " Here's what I mean.
Look at this particular graph. Sam Bro posted this graph to Yardeni, I think. Yes, this is Yardeni's schedule. Forward P/E ratios for companies in the S&P 500 are falling, while forward earnings are rising rapidly. So, profits are rising rapidly, but the forward P/E, the price that people are willing to pay for these companies, and those profits are falling rapidly.
Uh, this is a strange wedge that's happening in the stock market. Uh, anyway, you obviously remember that you can see everything we're doing in terms of the portfolio and where we're allocating funds or what we like or don't like if you join us at reinvest1.com. Pay once, you get lifetime access. Many of you have joined.
Many existing course participants are also being updated, which is really exciting. I think that's probably one of the best testaments to what we're doing is when existing course participants say, "Yeah, I want to upgrade and get even more access." “It’s just pretty cool. But, if you go to reinvest1.com now, remember that we have a coupon that expires in about 8 days.
alerts, a stock reinvestment terminal , a real estate terminal, a research terminal, all nine courses, live streaming of every course participant, a consumer AI plan, and a business AI plan, which is honestly pretty incredible. This is a really good offer. Check it out at reinvest1.com. Now let's focus on these revenues for a moment, because Bloom, you know, I looked at their revenues.
I'm like, "Hey, you know, it seems okay, right?" "I mean, there's a reason for some people to be nervous. This may be a bit of an exaggeration, because year over year, this company, you know, increased its revenue by 2.38 times. And year after year, its expenses increased 2.23 times. This is 2.3, yes, x.
This means that their price position has increased year on year. But part of this PP started to decrease slightly compared to the previous quarter . So, consistently they increased total revenue by 16%, but total expenses increased by 27%. It makes people a little nervous, at the same time Iran makes people nervous, the election situation makes people nervous, and of course all this news about Anthropic makes people nervous.
Remember, Anthropic's price just dropped from an estimated $2 trillion to current expectations that they will eventually IPO for just $1.5 trillion . Well, that's a 25% reduction. Essentially, 1/4 of the business was just cut. So, you know, a lot of people are like, "Oh, damn. What happened here? This is really terrible." “And so, of course, what do we have?
The market is falling. Let's look at this in more detail. So if we look at this in more detail, we see that, you know, I think they're going to do an IPO between the midterm elections and Christmas. The reason I believe they are going to IPO between the midterm elections and Christmas is because I think the market will go up after the midterm elections and that would be the perfect time for them to IPO.
And they don't want to do an IPO after the first quarter because that's when they had a lot of growth in the first quarter, and they want that annual growth to be in their projections, not in the past. When you actually look at the annual growth chart and you have a big moment like in the first quarter with Claude Cowork, you want to do an IPO before that happens, not after.
Because growth just won't look as good after that as it does when compared. Because as of now, if you compare the annual figure from December to December to their big moment..." In the first quarter of 2026, from December to December, they're going to look great. It will be something like, "Oh, yeah, our revenue has increased 10 times." “From June to June it will be something like, ‘Oh, yeah, our revenue is up 80%.’” “Yeah , it will still be good, but it won’t be as multiplicative as it was if you did the IPO earlier.
So I think they really need to do an IPO as soon as possible. Uh, I think one of the problems you're finding is that the company is really in a tough spot because they have a lot of competition. Okay, so is this the best time to go public now, with the volatility and concerns about AI? No. Do they need it?
Yes, because, firstly, they will no longer be able to raise funds well privately at such valuations. And secondly, they need to go public to suck money out of the market. And secondly, they don't want to restore this annual growth or face this annual growth problem. Now they're also very critical , and that's why I can't wait for them to go public, because they have $518 billion in computing commitments, which is...'' really, really big, right?
That's a lot of expenses. Uh, and they need to raise money for it. So this is, in essence, much more lousy. Let me write this down here. Much more sucks, and the publicity, uh, helps them. Uh, plus, we'll note that. Uh, plus, the publicity before the first quarter will allow them to brag about fourth-quarter earnings at their first, uh, earnings session after the IPO, probably in January or February.
That would be a nice compliment. This will help them extract even more money, uh, from the markets. And that's the whole point of the game now. It's like, "This is a really big funding problem." That's what it really is. I mean, look at this. Okay, these graphs are right here. So, we've already talked about this on the channel.
Uh, the problem with these charts is that they're really telling us, "Hey, like this S&P 500, you know, group of companies right now, uh, they're kind of backed by artificial intelligence, and if there's some kind of nastiness inside...Artificial intelligence is going to cause some serious problems." And I understand.
And that's why when people worry, "Oh, you know, will AI really be productive?" Will it really lead to deflation? And, uh, you know, cost of goods sold or services...A lot...There's a lot of doubt. I understand. I am very optimistic. Uh, but that's okay, you know, I don't necessarily have to be right either.
I think so, but you know, I have this crazy, maybe delusional view that in the 2030s we're going to see this crazy confluence of things that no one will believe. OK? I think, and I don't know if we even need all of these things to happen, but I think, and I tweeted this on Real Meet Kevin, but I think the rates will go back to zero by 2032.
Maybe 2033, somewhere in that range. 2032, 2033, somewhere in that range. The rates will return to zero. We will have the lowest rates ever . Real estate prices will skyrocket in the 2030s. I think we're going to end this nonsense about the Middle East and Russia. We will return to $40 per barrel of oil.
And I think that all this buildup of artificial intelligence that we're seeing now will eventually lead to a serious deflation of goods and services. The concern is , will the job market hold up? And here the answer is probably no. So they're going to have to print money so the Democrats can give out more stimulus and socialism, which will keep rates low, because they're trying to create inflation, oddly enough, but we're going to be fighting so much deflation that we won't see it.
And so, it keeps rates at zero and the money printing continues , which is great for real estate, and it's almost like someone has been positioning themselves for this for the last 4 years and is still positioning themselves with their little startup called Reinvest, where when people sign up for Reinvest One, we take that money and go buy more real estate or other assets, mostly real estate.
I would say about 90% of real estate. Uh, we just bought, we just closed another deal on...What did we close? We closed on...This is a deal for 800...This is about $890,000. I don't even think it would take $80,000 to fix it. It might take a little more, but it's probably somewhere in the 1.2-1.3 range.
So, you know, we're going to win less than a million, and I think we're going to win by two or three dollars, up to $300,000, which is great. And I think there will be more such opportunities. So we are very happy about this. But in any case, you can consider me delusional about this. This is normal.
I understand. And I understand the uncertainty, because it's crazy right now , okay? I mean , look at some of them. And I'm writing this here. The biggest problems arise when we reach maximum negative cash flow. We're not there yet, okay? We're just now moving into negative cash flow, uh, at Meta and others.
So, the problems are really just starting to happen. Uh, you know, capital spending on hyperscale and neocloud is expected to be $1.58 trillion in 2027. This is 60% more than in 2026. You need to raise that damn money somewhere. And we literally doubled. We doubled, going to 798. Now we're going to go up to 158, and then we're expected to go up to 1.18.
What kind of finance is this? What is funding this? Many promotions. And this creates more volatility in the market. And that's why companies are getting cheaper every day. From an evaluation perspective. I know that this is my opinion on this matter. Of course, you also have these leases, these hidden leases that make people very nervous.
And I understand. You know, Meta also has these leases for data centers. I think they do this because they think they will make a lot of money from their Muse models and selling those models to businesses, advertising, or something else. But it will take time to prove it. And I don't think they'll see any real revenue from their models until early 2028.
So, you know, that gives you a headwind for Meta from now on and then. I am optimistic about Meta. I also, you know, believe in the fall of Meta, man. Eh, you want to see the full fall. By the way, when did we buy the dip today? You know, this morning on the Alpha report I said, and we were somewhere around five, 7:15 in the morning.
And I'm like: no , don't buy on the dip. No, that's not the point . Someone literally asked me this morning during a live broadcast . They said, "Oh, should we buy on the dip?" I said, " No. You should," and then , obviously, I don't give personalized financial advice. But they said, "Oh, Kevin, what do you think about buying on the dip?" I replied, " No.
It should reach 700-707." And that's what happened with Qs. Well, and then, you know, we picked a few stocks and went to buy on the dip. Well, you can see what it is. Join us at reinvest1.com. If you are a current course participant and want to upgrade to the terminal, by the way, the first upgrade window is already closed, but you can send us an email at [eh], remember, I want to continue reading this post, but if you can't afford to join, I understand.
One thing I would encourage you to do for free, [eh] obviously very different, but you can get this daily wealth review and daily digest and some mailing lists on target price at meetkevin.com/digest. meetkevin.com/digest But let's think about this for a minute. So if we go back to that now, it's understandable that people are nervous about AI, because look at how much of the AI capex is contributing to the S&P 500 sales growth.
The S&P 500 sales growth , that is, the growth that exists in the S&P 500, 15% this year was driven by AI capex . Next year, it is expected to be 24%. This is a huge amount. And you know where most of that damn money will go? Nvidia. Nvidia is getting $690 billion from this capital expenditure. By the way, this is a very optimistic forecast from Nvidia.
Nvidia's optimistic forecast. Nvidia is very cheap right now . Very cheap. I mean, they're probably trading at around 0.58 PEG or something like that. Very, very cheap now. And of course, you see a lot of ASICs, which are specialized accelerators, which are, you know, educational components built on 75- and 3- nanometer nodes, if I remember correctly.
For example, educational component No. 3 seems to be built on 3- nanometer. Google is working on TPU. The training component is obviously handled by Amazon, and they do it in partnership, typically with companies like Marvell and Broadcom. So, the ASIC market will grow rapidly. I really see this continuing into 2027 and 2028.
You can see the prediction that ASICs will take an increasing share of the computing power market. So, additional computing power is not just graphics or central processors , it's also these special accelerators, specialized integrated circuits, ASICs . But then of course you have the capacity, I mean, we just talked about Bloom Energy, how you can outperform, raise the price and still lower its cost.
Then look at the gas turbines at GE Vernova. The turbines are expected to cost $3,000 per kilowatt, and they are expected to sell out by the end of the decade. Dude, this isn't a boom, some kind of : here today, gone tomorrow. All these rich hyperscalers are investing money in this AI cycle . I think people are just outraged right now because the election is coming up.
There are threats against Iran, you know, oh, Iran says seven warships were attacked. Tehran says the US encouraged the ships to cross the border, so we mined them . Donald Trump says it's fake news. Uh, the New York Times says attack plans are being prepared. CENTCOM says our blockade is working. Iran is holding Donald Trump's clown in prison.
You know, the whole world is on fire. You have a Fed meeting, you know , in a week. Uh, you have a Fed meeting next Wednesday. Oh, they're going to raise the stakes? There is so much nonsense now. This is the time when you usually shop. This is the time when the VIX is rising rapidly. You look and say, don't worry about it.
You can escape to safety here and buy bonds. Which you can buy directly. You can also buy TLT. You can buy stocks that are highly exposed to bankruptcy risk here. LDI. But this is a stock worth 57 cents that I don't think will go bankrupt for at least a year. I think they have a year to do it. I have some experience in this , so I don't want to worry, I like ...I always want to be clear.
OK? I'm the last person to try to make money off of something like, "Oh, I'm trying to, you know, pump something up in the short term and then get rid of it or something." Well, I'd rather lose the money. But, uh, but I think it's an interesting option because I think they can survive for at least a year, and I think we've just reached peak yield, which means that, I think this stock at $57, A is probably going to reverse split.
But before the reverse split, I think they'll probably get back to two- or three-dollar stocks pretty quickly if yields continue to fall like this. Hashtag: no guarantees, no personalized financial advice, but it's a much more rate- sensitive stock than something like TLT. But if you don't have the courage to take the risk of bankruptcy, you can choose Rocket Mortgage or Lennar.
You know, Lennar is the one that Berkshire Hathaway is picking up. I have no contact with Lennar , again, full transparency. But, uh, you know, their pricing power has faded. Not that Schluter Bathrooms, more like butchered, butchered. Uh , look at Lennar. I have Lennar here. Look at Lennar. So, the margin has halved, man.
Their margin increased from 9% to 4.8%. Their margins are falling. So it's not just a big drop, it's a drop in Lennar's margins because the stakes are so high . You know, their incomes in apartment buildings are falling. They actually stopped building apartment buildings. Their incomes in apartment buildings fell sharply.
Their, uh, headline rates here have also dropped. 7759 billion divided by 8253.6. I'm down 6 % on the income headlines because now is just not the best time to buy real estate , you know? Someone in the chat asks me, " Kevin, are you going to miss tomorrow's live stream because you're going to be in line to get an iPhone, so what ?" No.
No. No. And like "no". And I'm not going to go to the Apple Store, at least that's what I tell myself. Um, I'm really disappointed in Apple just because they said they would fulfill my order, but I don't care about this flying hoodie. I have so much work to do with Reinvest. I don't give a damn about the phone.
I spend a lot of time sitting in this damn office anyway. Um, so it doesn't matter. For example, if I had a Duo, and it was sitting here on the table... Okay, I have probably 10 Apple computers that I run agents on . I have an iPad that I use to conduct research . Sometimes I type because I think my eyesight will get worse if I stare at screens all day.
You know, that's nice to have. This is not necessary. Honestly, I thought to myself that I would probably destroy the Duo if I went skiing with it this season, because I don't think it's a very comfortable device for skiing. At least the iPhone, you know, you can throw it away, it's a bit durable. And I'm running with this puppy too.
Although I don't know how I'm going to run with the iPhone Duo. But no, I'm not going to stand in line for him. I will say that Apple is an anti- AI stock. You should know this. So, to be fair , I bought Apple stock when they announced Duo because I thought the puppy would sell out. I'm still angry that Apple let me down, but I've come to terms with it.
No, I have not resigned. I did not resign. I need it, like I don't need it, but I'm still mad at them. So I'm not mad at them. But Apple... So we bought Apple for about $315 and sent out a notification that we were buying this for about $315. And my notification was: “I think this iPhone Duo will sell out.
It's like this is the next big update cycle for Apple." And, you know, obviously not personalized financial advice. You can join us at reinvest1.com if you want. But I sent this out because I think Duo should have sold out. I believe the next update cycle is already here. But one of the reasons Apple is also doing really well right now is because Apple doesn't suck.
They seem like they suck, but they do n't suck. They're like, "They suck at business because it's ruining their business," but they're not sucking money out of it because they don't have to raise funds like, you know, Meta or Elon Musk or someone else with that big suck, right ? Kevin, these are small things.
No, I think you could justify it as, you know, a business expense. I do n't think you should necessarily call it trivia. But what is it ? Uh, Ray is signaling more AI-based events, because I see Bloom stock is down 5.8% right now, and I see a memo coming through the wires about it right now. Let me take a look at this right here.
Okay, let's go. Uh, this is Bloom. Okay, let's begin. Er, the forecast for Q3 2026 continues to see AI revenue growth and shifts focus to cash conversion. The average revenue figure has been rising since July after third- quarter sales grew 16% sequentially, which is incredible. The non- GAAP revenue forecast also rose, uh, year-over-year to $995 million from $850.
The stronger earnings trajectory should now be reflected in cash after operating cash flow turned negative. Uh, here he is. Operating cash flow will become negative. It's literally...now everyone only cares about cash flow. And I understand. You know, that's one of the reasons I like to diversify my real estate investments.
As you know, my opinion is, brother, that 90% of our capital is simply real estate. Real estate. Buy real estate. Buy real estate. Eh, I still like stocks. Don't get me wrong. It's like I'm fascinated by stocks. I always thought that, you know, it was weird for me to look at financial statements when I was 18, 19, 20 years old.
I'm 34 now. Uh , and I always thought, "Oh, everyone does that. I guess I don't understand anything about stocks." And then you find out that, no, actually, very rarely do people look at financial statements. Uh, luckily, you can just listen to me look at the financial statements. Let's take a look at their actual cash flow statement .
So, cash flow, let's look here. Here is their net profit, which was very positive. I literally think he's circumcised. I think it should be right here. That's why I don't see him. This is normal. I'll go to their website soon. Let's take a look at their cash flow. Yes, let's begin. So , cash flow is in order, let 's get started.
Cash from operating activities. Oh, yes, that's it. So, take a look at their equipment, property, and inventory right here. -153 minus another 27, so we have 180 -180 in cash flow. Uh, and they have a lot of deposits. So, deposit growth has increased by about 50 %, which is really great. And in the last 3 months, their deposits have grown by 50 %.
But they spent more money on contract assets. Uh , let's see . They brought back the stock-based compensation they added. It was pretty stable. Accounts receivable, I understand. Er, that's an abbreviation. Okay, long-term assets , accounts payable actually increased. So they still have more bills to pay.
So, you know, the bottom line is that, ultimately, yes, these companies have negative cash flow. The market is simply punishing them now. Uh, any potential combination of SpaceX and Tesla would be subject to further approval by our special committee. Nobody believes the special committee, okay? The special committee is made up of people like Brad Gerstner or someone else.
And this jerk is just going to do whatever Elon wants, because, you know, he'll bend his own, he'll bend his own, he'll kneel for Elon. Hey, you know, maybe this isn't so bad. I mean, Jensen basically does that. This is how this [ __ ] goes on, man . But oh well. For this [ __ ] to continue, people need to get on their knees.
With that in mind , it's worth remembering that, um, Donald Trump is probably preparing for the most glorious taco ever right now , okay? I, for one, and I tweeted this earlier, I, for one, can't wait to see how many thousands of deals Donald Trump's team is currently cooking up regarding the future giant taco, baby.
Mmm. But in the meantime , let's go. Come on. Squeeze. Buy sauce. Buy sauce. If you like this video, watch i.
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