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Okay, everyone. I am Kevin. Listen, I was wrong. I was wrong about some recent bullish optimism, and I want to be frank about where we are headed now, because the market is moving in a very interesting direction, and I think that creates opportunities for us . But to really understand what this opportunity might be , we should just sit down together and talk about what went wrong, what went right, and which of the theses are still in play.
Er , because a lot of them actually stay in the game. We just want to make sure we got the timing right. And there's a new sector that's getting a lot of attention right now, but I actually think there's a caveat to this particular sector. So we'll do some analysis. I am going to give you my full opinion on this matter.
Uh, but first, I'm just going to be very open and straightforward with you about where I was wrong. I think the biggest mistake I've made in the last week, year and a half, is that I was too optimistic about Kevin Warsh becoming a dove. He essentially chose violence by choosing silence. He chose silence as a way to signal the independence of the Federal Reserve and his commitment to the left of the decimal point of inflation, which sounds like long-term dovish to me, but to the markets it sounded like short-term hawkish.
And, of course, that's why the markets reacted the way they did. Uh, and it was also accelerated by some other issues in the market that we really should discuss. Uh, and, uh, I think when we put all of this together , we can really understand why the market leadership is shifting, uh, from where it was really attractive, you know, to some extent Nvidia, uh, AMD, even the memory chip stocks, which are giving away even more of their earnings today, which means we're not back to the levels that we were at before Micron came out, and now we're even lower, uh, than, uh, than where we were during the last, you know, uh, post- report rally, if you will.
Well , let's figure this out . The first problem we had was Kevin Warsh. There is no doubt about that . I want to be very clear. I'm not changing my opinion about Kevin Warsh. I think he's the guy who's going to bring down interest rates. The biggest concern I have about Kevin Warsh is based on his past.
He's not going to print money, which means that when we have, uh , you know, a dramatic recession or depression, because the AI hardware burns out and everyone loses all their money because the growth rate flips over, and people say, "Oh God, please start printing money and save us ." I actually think he's not going to start printing money, which creates a real risk factor in how quickly we'll have a V-shaped recovery, like the bottom we saw, uh, you know, in September- March 2002-2003; The V- shaped recovery we saw in February 2009; The V- shaped recovery we saw in January 2019 after the December bond market crisis and the Fed's turnaround; and then, of course, the Fed's March turnaround due to COVID.
You could even add something like a massive banking crisis, you know, an ambulance if you want , or a bailout. All of this was tied to previous generations of the Fed, that we were going to start printing money. I don't think Warsh will be that kind of guy. This worries me, but I also argue that I think he is right, we are moving into a disinflationary regime, perhaps even a deflationary one.
Okay, this is Warsh. You probably already know this opinion about me. I just want to make it clear that even though he was speaking hawkishly, I still consider him a deflationary dove. I don't think any of this has changed. It was just a difficult time. That's why. Right after Walsh spoke dovishly, we get the Japanese yen breaking through some pretty bad technical levels, signaling a possible intervention.
When the US dollar is trading, you know, when one US dollar to one yen is above 160, now it's kind of drifting away from 162, people are afraid that, oh no, the Bank of Japan is going to intervene. We can pay off the debt just as quickly. You know , US hedge funds can pay off debt just as quickly. So what do they do?
They are selling high-performing technology companies in the United States because it is cheaper to do so now before potential intervention. I didn't explain this as clearly as I should have in my video two, two or three days ago. There was this suggestion that people were somehow liquidating their Japanese yen debt positions because the yen was weakening, which actually made it cheaper to repay that debt.
This is true, but it is a perfect opportunity that people are using to pay off their Japanese debt before the potential risk of intervention. So I just wanted to clarify that. Ignoring the complexity of this for a moment, Kevin Warsh becomes sarcastic when Kevin thought of " pigeon." I'm still thinking long-term " dove", but this is clearly a bearish trend for tech stocks.
The Japanese "carry trade," which becomes cheaper to settle, is bearish for technology stocks. Third, we all knew, and we talked about it ad nauseam. We knew SpaceX would mean a rally because they only had 4.2% of their shares outstanding. We knew this would happen. We knew it would peak. The only problem is that we don't know when.
I get asked, " Kevin, when should we buy SpaceX puts?" I'm like, "It's really hard to say for sure." I think it's early July. I didn't buy any short positions, puts or anything like that. It's just not my style of trading. Uh, and unfortunately, the peak wasn't at the beginning of July. The peak wasn't until three full trading days later, around June 16th, when Jim Cramer really blew it up.
Okay, maybe that was our real warning sign. But in any case, this peak came much sooner than expected for SpaceX. And you know, maybe I need to get used to the fact that everything here happens faster than expected. But this is another bearish move for the tech sector because it contributed to insiders at Open AI saying, "Hey, we're going to delay our IPO until 2027." Three insiders, anonymous insiders, uh , said that volatility in SpaceX and tech stocks, uh, recently, uh, contributed to the decision, uh, probably to delay Open AI's IPO.
It's not official yet, but that's the expectation. Then, number four, you know, this is obviously number three...Bear attack, um-um. But fourthly , you had the SpaceX bond sale. The SpaceX bond sale was sold at a significantly higher spread than it should have been. A 50 basis point premium over Intel is not good.
That's how the bond market went , you know, we don't like it . We will have to get compensation for this. And they were. You know, obviously bondholders have priority over all shareholders, so they already have it in the event of bankruptcy. Not that anyone actually thought SpaceX was going to go bankrupt, but you know, there was a very clear desire for more protection from the bond market.
These were bearish technologies. Then, of course, we had the earnings sell-off to Micron. A rebound after Micron, which was not covered by the sell-off. And now we have an even bigger sell-off after Micron earnings. Even though the profits were fantastic. This is a sign of lack of liquidity, right ?
So, in other words, we know Kevin Warsh was supposed to be lenient, but he wasn't fast enough. This caused...problems with the yen. We knew SpaceX would peak, but it peaked by the end of the month. Earlier than expected. We knew that Micron would be very sensitive at the time of reporting. But instead of selling off the stock right after the earnings release , they sold off right before the earnings release, and then the day after the earnings release , 2 days after the earnings release , right?
Furthermore, we also anticipated this as we are subscribed to Alpha Wire, which is available absolutely free in the Meet Kevin app on the Apple Android App Store. We saw rumors that Apple would raise the prices of its devices by 16-20%, and they did. Unfortunately, this dragged Apple down. So now you have six bearish points happening inside the tech stack .
And where do people flock? That's what we'll talk about next, but all of this is putting pressure on the bullish month-end targets for the Nasdaq 100 as tech stocks are actually falling, especially hardware, compared to expectations. And that's a shame. And that means that in the short term we...had oops-oops-oops.
And I apologize for that. It's impossible to be perfect all the time. I know people who regularly say, " Kevin, how do you achieve all these goals in the Alpha report or, you know, something like that?" And it's like, "Well, we don't always achieve that." “And unfortunately, that's what I mean, one of the first things that's come to mind in a while, where, you know, we're just not going to hit our QQQ price target at the end of the month.
And I am disappointed by this. And I'm not trying to make excuses, because I still think I 'm right about Warf. I'm right about SpaceX. I still think I'm right about the port loop still having resistance. AVGO, you know, Broadcom and Micron are still so incredibly good. We still have support for this movement.
But unfortunately, when you put all these things together, it means that we can be right about the long term, but wrong about the timing in the near term. And I think it's worth being transparent about that. Of course, then you can add to number seven that Kevin is still somehow on vacation. I'll be back on Sunday.
So maybe this is the real catalyst. With that in mind, let's move on to where the markets are actually headed right now, and that's cybersecurity to some extent, but also..." software. Now I want to warn you about something. Sorry, we've seen this game before. So I really want to be careful here. First of all, I want to look at what some software developers have done today.
Axon shares rose 4.5% (great). Then they grew by almost 5%. Palantir, which has fallen sharply, is close to my $89 price target or moving in that direction, up 5% today. Cloudflare grew by 4.6%, CrowdStrike by three, Meta by 1.3, and Microsoft by almost 6%. In my opinion, this is a company worth $2.7 trillion .
In my opinion, this is partly a short squeeze. I think a lot of stocks like Microsoft and Meta, Intuit, Axon were sold short. And as a result, we get days of relief when short positions lock in profits. They have to cover, they have to buy shares. These don't necessarily have to be long movements. I can't call the software rock bottom yet.
I still argue that the bottom of software will come in the third or fourth quarter, but I don't know exactly where . And I think there are opportunities to buy software, and although I haven't bought Palantir yet, I'm tempted to buy it because it's getting cheap. I want to make it clear that I am not tempted to buy Bitcoin.
I don't have Bitcoin, I don't have Ethereum, I don't have cryptocurrency. I think that except for maybe a short week, like a week or a few weeks of trading. I have never held cryptocurrency. Eh, I'm not promoting this or trying to claim that cryptocurrency is bad, stay away. I'm just saying that this is not what I think is the next step.
I really think software is the next step. I just don't know when. So I'm just being very open about it. You know, some idiot left a comment yesterday, like Cad, complaining that the market is only down 4% from all-time highs. But the whole point of these videos is to help you understand the direction.
trends that are happening so you can see these things before they happen. For example, when we started to establish a trend around April 4th, and I think that's really worth mentioning. We started to establish a trend around April 4th, the NASDAQ 100 was trading at about $590 a share , you know, through QQQ.
Uh, and now we're at 706. So yeah, we didn't hit the growth target price, but we've had so much growth between then and now, and we were right about the direction when we had a lot of doubts. Now people, you know, people like Katie Wood, tell us to buy then. “I did it, and they’re all documented on video, right?
That's the beauty of this channel is that we're going to be transparent about the winnings and also about L. So the next phase that I see right now is not about software, although IGV is moving, I'll tell you why I think IGV is moving. IGV is the iShares Expanded Software Tech ETF. It is showing good results, today it has grown by 4 %.
So you look at IGV, it's up 4% today, and the NASDAQ is down 1.38%. This is a 5% difference between them, which suggests that hardware is being sold and software is being purchased . But that's too simplistic. You know, Nvidia fell another 1.6%, which is a big deal for such a big company. But that's too simplistic to say.
I think Microsoft and Meta, Intuit, XON, I think there was a little bit of a brief... » coverage of what's going on in these . And what's really been driving IGV up lately are companies like Palo Alto Networks, cybersecurity companies. PANW has recently skyrocketed in price. You know, I wish their growth was a little stronger.
And while their growth is good, I wish it was a little stronger. You know, about a month ago they were trading at around $130, $140, $150. And their stock price growth has been phenomenal, but I'll tell you where I see some skeletons in the closet. The stock price growth doubled during this period. Cybersecurity stocks have performed exceptionally well , and they started out expensive, and now they're even more expensive .
Okay, here's the problem. Let's look at a company like Palo Alto. Now you'll just have to rely on me , uh, telling you about it verbally. This will be posted on the promotions tab in the Meet Kevin app for all of you who are members, so you can see the analysis. You can also use our, uh, new... stock tools, uh, and do the analysis yourself.
All of this is obviously included in your subscription when you join meetkevin.com. We have a price increase on, uh, the 30th, which is Monday, uh, the last day of the month. And this is also the time when we release our valuation reinvestment product, uh, valuation feature is coming out on schedule.
But let's look at PANW for a moment. So, if I look at PANW's cash flow statement for the last 9 months, I actually have net income, but I have a decline in net income, which I find very interesting. The company's net profit has decreased by 33% over the last 9 months. A little strange. At the same time their net income fell by about 30 percent, we saw stock compensation increase by 39%.
So I guess they're paying more for AI talent while at the same time the company's net profit is going down, which suggests their pricing position may not be as great as people think. Now, to be fair , their operating cash flow is great. The stock is up about 18.5%, and they spend very little on capital expenditures.
This is very different from companies like Microsoft or Meta, which spend money on capital expenditures. Just like Google, you know, Alphabet. And as a result, they can actually buy back shares, which, for example, Meta and Google have not done recently. By buying back shares, they have bought back about a billion dollars worth of shares in the last 9 months.
Uh, they, uh, you know, I think they've recently gone through this transition, oh, AI–this is a threat to AI, this is an opportunity. I think this will happen with software as well , and then we will see the same or similar movements in some software stocks. I personally don't like IGV because I don't like many of their assets.
You know , for example, they own Adobe and ServiceNow. Now I apologize to Salesforce or even Salesforce. Now, I apologize to the people who own these three stocks, Salesforce, ServiceNow, and Adobe, but I think these are... the three stocks that are most likely to be replaced by AI. While companies using government data, like Axon, or business data, like Intuit, are among the least replaceable stocks.
Yes, it's true that at Intuit their usage is decreasing somewhat because the free tiers are, as some would say, unemployed , no offense intended , that's what some analysts are actually saying , they're not using the product because they could be using other free services, artificial intelligence or something.
But people with more complex businesses actually spend more money on AI-enhanced features at Intuit. And you see a similar thing at Axon, where more revenue is coming in because of their platform, augmented with artificial intelligence. I mean, people don't even talk about the D drone and how valuable it is to the police.
People don't even talk about how their AI dispatching software that they bought and now they're integrating even more AI into it. Axon is a moat that, in my opinion, doesn't exist anywhere else. But anyway, I like Axon and Intuit, and they... I have experience with Intuit, but personally I think Adobe, ServiceNow, and Salesforce are more replaceable AIs.
I also don't like Oracle's costs. I think they spend like drunken sailors. These are all great assets. All of them are among the top 20 assets of IGV. So I don't really like IGV because of that. I would rather choose names that I like, for example, right now I like their second largest asset, Microsoft.
I almost like Palantir, their third largest asset. I like AppLovin, which is about their seventh largest asset. Uh , I also like Intuit, which is about their 14th largest asset, and so on, right? So I don't like the entire IGV ticker, I like its components. As for their biggest asset, Palo Alto Networks, I expect that over time, the cybersecurity momentum and high valuation will translate into software that survives.
The problem I have with Palo Alto Networks is not their balance sheet. The balance is...Great. I have about 5.2 billion in cash and accounts receivable . We have about 2 billion in current liabilities, so there will be no liquidity problems next year . And even if you take into account long-term debt, we do n't really have any liquidity problems.
Long-term debt is approximately 1.9 + 1.2 convertible bonds. Convertible bonds convert because they are growing and the long-term debt is more than offset by the cash they have at their disposal even after deducting current liabilities. So, balance is good. What about the income statement? Well, this is where things get a little more interesting.
So, their total income increased by 31.1%. But their overall gross profit only increased by about 21.4%. So, pricing power is decreasing, which is surprising. Why is their gross profit decreasing? Well, I mean, I shouldn't say it's going down, it's just going up 21% when their revenue is going up 31%.
At the same time, their sales and marketing increased by 46%. So, your revenue is growing. 31%, but your sales and marketing increased by 46 %. So, do you have to spend more on sales and marketing to attract more customers? Pricing is also, you know, being reduced. So, it's kind of like hmm. Their total expenses doubled.
To be fair , this may be partly due to recent acquisitions. Uh, they've recently made a few, uh, acquisitions. Uh, they acquired Chronosphere and CyberArk. Uh, and uh, their revenue was 388 million and 391 million, uh, for these companies combined. Uh, these companies also posted operating losses of 523 and 524 million for the 3 and 9 months ended April 20, 2026.
This is a kind of total income and loss of both these companies. So, they acquired some unprofitable businesses. This could be one of the reasons for their shrinking margins. But it's also possible that cybersecurity stocks are a very competitive group. Cloudflare is losing money, but their revenues are growing rapidly.
And CrowdStrike is barely... making money. Which is strange. How do these companies, which have been around for so long , barely make money? And that's the biggest problem I have with these cybersecurity plays, which is that their price/ earnings ratios look very high because their earnings per share are very low.
This annoys me about cybersecurity, because I actually agree that cybersecurity is a big beneficiary of artificial intelligence. A huge beneficiary. Just not at the price I like. I'm very, um, picky. For example, I want a Palantir for $89, and I'm going to wait until I get my Palantir for $89. Now, if this turns out to be the bottom of the software, and Palantir grows exponentially from there, well, I guess I've lost my opportunity.
But, I think this recent push into software that we've seen is the same as about 4 weeks ago and even a couple of weeks before that, where stocks like Microsoft go up for a day or two and then they go down even more. That's why the allocation that we invest in stocks, while we allocate to stocks, is relatively low to cash or...other assets, because some valuations, or, you know, some stocks are still falling pretty well, and you'll be able to get them cheaper.
Other stocks simply have ridiculous valuations. All of this goes hand in hand with the fact that I am still generally and economically optimistic about Train America. So that's a lot of information to absorb. And I personally think, and maybe I'm wrong about this, maybe leave me a comment, although I don't think that if I'm wrong about this, the people who would tell me I'm wrong about this are actually watching it.
But, you know, for the 10 of you who watched it to the end, first of all, I'm so grateful to you. My goal is to provide perspective, and many perspectives, on what is really going on. And my goal is to hopefully have you say, "Ah, I didn't think about this merger of Apple, SpaceX bonds, SpaceX, the Japanese yen, Kevin O'Leary, and Micron, all happening at the same time, lowering Qs , disrupting time so quickly." “Oh, I didn’t think about how expensive cybersecurity looks because they barely make a damn penny, and they can be a competitive, very competitive business because any Joe Blow can start a cybersecurity startup.
Well, okay, I'm not trying to make fun of these companies, but there are a lot of cybersecurity companies, okay? You ask: " Hey, I need to register a power of attorney, say, for House Hack." Dude, there are about 50 companies I can call. And you know, we talked to many of them. We're like, "Dude, how are you even different?" Oh my God.
Hmm, a little wild. Well, but anyway, in putting all of this together , my goal is to provide unique insights based on what we see as business operators, as well as as financial analysts, what I see in real documents. Well, and then , of course, just be transparent about where things are going well and right , and where they are going wrong.
Well, I hope this transparency is useful to you. If you want more of this kind of analysis or transparency, join us. Go to meetkevin.com, pay once, and you will get lifetime access to all your wealth creation courses, the Alpha Report, live broadcasts of course participants – all of this will always be included with your lifetime membership.
And we want to continue to provide more value to these participants. So consider joining. Thank you very much for being here. And that's it , friends, see you in the next video. Oh, look at this. I can zoom in and out. O. O. Like and subscribe.
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