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- Tesla disappointed.

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Google parent Alphabet disappointed.

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It's been a wild morning in
the market. What's your take?

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- Yeah, I think, I think
Tesla was definitely amis,

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there was disappointment
in multiple segments.

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I mean, the delay of
the Robo taxii, the fact

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that if there hadn't been
credits, the EV credits,

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the margins would've been
lower, revenue missed.

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There were misses across the board.

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Alphabet not so much
decent print, decent guide,

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somewhat disappointing on YouTube revenues

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and the fact that the
company on the call mentioned

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that they weren't seeing the return

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that they were making
in investments in ai.

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So that's what led alphabet lower.

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- Yeah. You said recently

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that there may be some
AI fatigue in the market.

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Is that what you're seeing
here in these earnings?

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- I, I think you're seeing
it. It's, it's, it's too early

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to say just yet.

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We'll know when the other
hyperscalers report later this

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week or next week.

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But I think there may be
a little bit of that just

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because of Google's alphabet's
admission last night in, in,

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in, in terms of the fact

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that they aren't seeing
the kind of return.

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So you may be in an environment
where folks are going, Hey,

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is this AI cycle probably
overdone for now?

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- Yeah, there's been billions
of investment in AI in the

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last couple years,

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and I think now we're seeing
the market kind of wake up

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and like, let's see the money.

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Where are the returns
that, can you predict

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or forecast when investors
might see those profits?

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- Yeah, look, we're looking longer term.

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So the way we look at the
world is looking out four

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to five years over a business cycle.

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But I think any which way you
look at what had built up up

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until this point, there
was certainly a crowding

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that was taking place in the,
in the top heavy Mag seven.

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There was a perceived
safety play over there.

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I think you're seeing
that unwind to some extent

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and you're seeing money
move out of big tech.

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You're seeing it move into small caps

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and you're seeing it move into other parts

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of the market like industrials,
healthcare cyclicals.

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- Gotcha. I wanna talk about
Tesla for a second. Sure.

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There's been a number of
promises about like the, the taxi

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and the self-driving service

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and they, they've kind of
kicked the can down the road.

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Yeah. Do you think that they have

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to deliver in the fall in order to,

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to save their stock price?

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- Well, I think the, the pricey action

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after he made those comments

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after Musk made those comments
is telling, I mean, the fact

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that the Roboto TAXII gets pushed out

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is clearly disappointing if,

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if you're looking at it
from Tesla's standpoint,

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they want more EVs on the road

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and the ROBOTAXIS is an extension of that.

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So at some point they do have to deliver.

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- We've been talking about
the Mag seven a little bit.

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They've been lagging while the rest

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of the market kind of is taking off.

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And you've mentioned that
AI fatigue is one of the,

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are there any other
reasons you're seeing I I,

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- I think valuation and expectations.

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I mean, I think if you look
at valuations in the Mag seven

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and the growth expectations relative

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to the other 493 stocks,
there's quite a disparity.

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I mean, you look at the cap weighted s

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and p that's trading at about
22 times, primarily driven

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by these seven names equal weighted

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as about 15 times a 25% discount
to the cap weighted index.

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And in large part, that growth
was div was driven by those,

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those Mag seven names.

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I think now you're starting
to see investors question

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how much incremental growth
is in those stocks given

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where valuations are today.

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- So if you're an investor,

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what stocks would you be buying
right now as the market kind

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of like shifts out of tech

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or Mag seven related stocks? Yeah, Andy,

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- I think there's a lot of
value in some of these sectors.

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We talked about industrials, healthcare.

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I mean, you've got some,
some great names outside

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of the Mag seven that have
typically traded at premiums

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or at market multiples that are
trading at a discount today.

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I mean, union Pacific is one of those,

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it's a great railroad, got a
phenomenal management team.

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They've invested heavily in the network.

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It's, it's starting to pay off.

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Jim Vena, who's the CEO,
is sort of the protege

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of precision scheduling railroading.

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And so, you know, they're,

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they're using more efficiencies
across the network.

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Longer cars productivity's
up, margins are up.

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They've started a share
Buyback stocks growing at about

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11, 12%.

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Bottom line trades at a
15% discount to the market.

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So that's one name we

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- Like.

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And you're also a fan
of UPS as well, right?

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- UPS look, lots of good
stuff happening there.

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They're investing in what
they call the network

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of the future Frankfurt,

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which is becoming their big hub in Europe

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to tie Europe and China.

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They've monetized their
brokerage business.

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They've started a share
buyback re purchase,

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and they're going to exit
the, the US margin business

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with 10% margins at the end of the year.

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And that's only gonna trend higher

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as they absorb the costs
from the labor union

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and the labor agreement
that they signed last year.

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- Any other picks for our watchers today?

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- We, we like UnitedHealth.

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That's, that's another company
typically, you know, one

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of the best in the, in
the healthcare space

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that's traded at a,

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at a premium historically got
beat down a little bit post

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pandemic because seniors were going in

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and you know, they were
driving up the cost.

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So the cost had gone up.

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They had a hack which impacted
their, their Optum business.

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They've gotten past that.

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They get new clients in,
they had a great quarter.

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They raise guidance stocks.

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Trading at about a 20%
discount is growing at about

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13 to 15%.

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Bottom line. Incredible
opportunity right now.

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- Well, thanks a lot.
- Thanks Andy.

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- Thanks for watching.
Check out more@qz.com.