400 Million Shares and 38 Years Later…

Coca-Cola KO ( ▼ 0.43% ) has been around for 140 years.

Which makes its latest numbers rather impressive.

→ Last quarter, organic sales grew 6%.
→ Case volumes rose 5%.
→ And the stock has been trading near record highs.

Not bad for a company whose flagship product was invented in 1886.

But perhaps the more remarkable number is 400 million Coca-Cola shares Berkshire Hathaway still owns.

Warren Buffett started buying Coke in 1988, and over the decades since, Berkshire has watched the stock climb, fall more than 50%, recover, and eventually become one of its most famous investments.

It also kept collecting the dividends.

And the checks have become so large that even Elon Musk couldn’t resist commenting.

“Berkshire Hathaway [is] high on Coke.”

So what exactly has kept this 140-year-old company working?

And at today’s price, does the formula still work for investors?

Let’s see.⇩

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Still Growing at 140…

Coca-Cola has been selling drinks since 1886, and somehow there are still more drinks to sell.

Organic sales grew 6% last quarter, more than twice Pepsi’s pace, while case volumes rose 5%.

That volume figure is worth paying attention to.

Coca-Cola has spent the inflationary years raising prices, so sales growth alone doesn’t tell us whether people are actually drinking more Coke or simply paying more for it.

→ But last quarter, they were buying more.

That’s particularly impressive for a company already operating across more than 200 countries and territories.

Coke also benefits from being a habit that doesn’t cost very much to maintain.
Its drinks are bought frequently, widely available, and familiar enough that choosing one rarely requires much consideration.

At Coca-Cola’s scale, it doesn’t take spectacular growth to move the numbers.↓

SPONSOR BREAK presented by Brownstone*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

The $848 Million Check!!!

Buffett’s Coke investment pays Berkshire an enormous amount of cash every year.

Coca-Cola’s annual dividend is now $2.12 per share.

Multiply that by Berkshire’s 400 million shares and you get:

→ $848 million a year.

Without selling a single share.

Source: PYMNTS, Globe and Mail · 2025–2026

Back in 1994, Berkshire collected just $75 million in annual dividends from Coke.

By 2022?

→ $704 million.

Buffett summed it up rather simply:

“Growth occurred every year, just as certain as birthdays.”

Coca-Cola has now raised its dividend for 64 consecutive years.

Which means Berkshire hasn’t needed to sell Coke to make money from Coke.↓

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And guards your savings from the falling dollar like gold.

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CNBC’s “The Prophet” says it’s the single most important retirement stock in America right now.

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Holding Was the Hard Part.

Buying Coke in 1988 was one decision.

Holding it for the next 38 years meant repeatedly deciding not to sell.

That became especially difficult in the late 1990s.

After peaking in July 1998, Coca-Cola fell 55.29% before finally bottoming in March 2003.

Nearly five years. More than half its value gone.

→ Buffett didn’t sell.

And, crucially, he had no way of knowing how the story would eventually end. There was no +9,234% sitting at the end of the chart telling him to be patient.

And…at times, Pepsi was doing considerably better.↓

The 38-Year Scoreboard.

So, was all that patience worth it?

Had you invested $10,000 in Coca-Cola at the end of 1987 and reinvested the dividends, it would have grown to $933,432 by September 2026.

The same $10,000 invested in Pepsi PEP ( ▼ 0.12% )? $634,211.

The annual difference was just 1.12 percentage points.

Over 38 years, that became nearly $300,000.

But even this scoreboard makes the story look cleaner than it was.

There were entire stretches when Pepsi looked like the better stock.

✱ These are hypothetical total returns for $10,000 invested at the end of 1987 with dividends reinvested. They illustrate the stocks’ performance, not Buffett’s actual return.

The Gap Got Wider…

The long-term scoreboard favors Coke.

Recently, the difference has become much more pronounced.

Over the past five years, Coca-Cola has returned 87.25%.

Pepsi?

→ Just 1.98%.

The difference is visible in where the two stocks sit today. Coca-Cola is just 3.7% below the record high it set in August. Pepsi remains roughly 23% below its May 2023 peak.

There is an interesting trade-off.

Pepsi now offers a 4.22% dividend yield, compared with roughly 2.4% for Coke.

That makes Pepsi the higher-yielding stock today, but the past five years are a useful reminder that dividend yield is only one piece of an investor’s total return.

The Price of Quality…

Coca-Cola’s business still looks healthy.

The company expects roughly $12.4 billion in free cash flow this year — the cash left after operating expenses and capital spending — against about $9.1 billion going toward dividends.

That leaves some room between the cash coming in and the checks going out.

But there’s another number investors have to consider:

The price of the stock itself.

→ Coca-Cola’s price-to-sales ratio is above its five-year average, while
→ its price-to-earnings ratio is roughly in line with its longer-term norm.
→ Its price-to-book ratio sits slightly below average.

So while Coca-Cola’s business remains strong, the stock isn’t particularly cheap at today’s valuation.

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The Usual Suspects?

→ Canada wants in.
→  Germany wants in.
→ The company behind Lidl and Kaufland has already committed hundreds of millions.

And Nvidia?

It was there before most of them.

The company bringing this rather unusual group together is Cohere, a Toronto-based AI firm.

Cohere is reportedly in talks to raise as much as $3 billion at a $20 billion valuation — nearly 3x the roughly $7 billion valuation it reached last year.

That’s a lot of money chasing a company with a fraction of the name recognition of AI’s biggest players.

Which raises a pretty obvious question:

What exactly does everyone see in Cohere?

Because once you look at what the company is building — and who it’s building it for — Nvidia’s early interest starts to make a lot more sense.

And it tells us something interesting about where Jensen Huang thinks the next wave of AI spending may come from.

Let’s see.⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

Zero to $20 Billion!

→ Aug. 2025 – $6.8B — $500M raised
→ Sept. 2025 – $7B — another $100M raised
→ Now – $20B — $2B to $3B raise in talks

Source: PYMNTS, Globe and Mail · 2025–2026

That’s quite the repricing.

In barely a year, Cohere could go from a $6.8 billion valuation to $20 billion — nearly 3x.

And if the current round closes at the reported terms, it would become the largest funding round ever for a private Canadian startup.

Two sources told The Globe and Mail the deal could close as soon as next week, although the timing and terms aren’t final.

Apparently, $7 billion didn’t last long.↓

SPONSOR BREAK presented by Brownstone*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

AI That Stays Put.

Cohere has picked a very specific corner of the AI market.

→ Instead of chasing consumers with another chatbot, it sells AI to organizations where data leaving the building can be a problem.

… banks. Governments. Healthcare.

Its platform, North, can be deployed inside a company’s own infrastructure, allowing employees to use AI agents while keeping sensitive information under the organization’s control.

The industry has a name for this: sovereign AI.

And Cohere has already found some pretty serious customers.

→ Royal Bank of Canada.
→ Oracle.
→ Bell Canada.

That customer list also gives us our first clue as to why Nvidia might be interested.

SPONSOR BREAK presented by MarketWise*

One stock to buy before midterms get here

In less than 100 days, Americans will head to the polls once again. But this time, I believe something much bigger may be happening beneath the surface. I believe the 2026 midterm elections could create a major wealth-creation opportunity for investors who position themselves early enough. That’s why I’m giving away one free stock idea to buy (and one to sell) before election day gets here.
For the full presentation, go here.

Then The Revenue Took Off.

The valuation isn’t climbing on hype alone.

Cohere’s annual recurring revenue went from roughly $62 million to $240 million in about a year.↓

That’s nearly 4x.

And apparently, much of the growth came late.

Cohere was reportedly at roughly $100 million in ARR just six months before reaching $240 million.

So the interesting part isn’t simply that Cohere is growing.

It appears to be speeding up.

Who’s Actually Writing the Checks…

1  🇨🇦 Canada
Ottawa committed up to C$240 million to help Cohere expand its AI computing capacity under Canada’s Sovereign AI Compute Strategy.

2  🇩🇪 Germany
The German government is reportedly in talks to participate in Cohere’s latest financing, following the company’s combination with German AI firm Aleph Alpha.

3 The company behind Lidl
Germany’s Schwarz Group, which owns Lidl and Kaufland, committed roughly $600 million earlier this year. Its technology arm, Schwarz Digits, also operates data centers and cloud infrastructure.

4 And Nvidia was already there.
Nvidia has backed Cohere for years, alongside investors including Radical Ventures, Inovia Capital, PSP Investments and the Business Development Bank of Canada.

✱ Jensen Huang has spent years encouraging countries to build their own sovereign AI capabilities.

Cohere is building for exactly that world.

Its models can be deployed privately, and the company has worked closely with Nvidia to optimize them for Nvidia hardware.

Which creates a rather nice setup for Nvidia.

→ If Cohere becomes more valuable, Nvidia owns a piece of it.
→ If Cohere helps more governments and companies build AI infrastructure, that can create more demand for the computing hardware Nvidia sells.

So Nvidia is investing in companies that could help make the AI market itself bigger.

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All In The Family?

Jim Cramer was asked about Tesla this week.

His answer:

“My only solution to it is that SpaceX has to buy it, period, end of story.”

Then he added:

“But maybe they will.”

That would normally be easy enough to file under Cramer being Cramer.

Except he isn’t the only one thinking about it.

This week, another argument surfaced for eventually putting Elon Musk’s two biggest companies under the same roof — with SpaceX buying Tesla.

And there is at least some logic behind the thought.

Tesla is increasingly betting its future on AI, robotaxis and humanoid robots. SpaceX now spans satellites, rockets and AI compute. Both are controlled by Musk, and both are spending heavily on technologies that are starting to overlap in interesting ways.

There’s just one rather important detail:

→ Musk hasn’t said he’s doing it.

So why does the idea keep coming up?

Why would SpaceX want Tesla in the first place?

Let’s see.⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

Earth vs. Space:

So, which Musk company actually has the stronger hand?

For Tesla  TSLA ( ▼ 0.53% ) , the old business is showing life.

→ Automotive revenue climbed 23% last quarter as deliveries jumped 25%.

But increasingly, that’s not where the big expectations are.

→ Tesla is betting on FSD, Cybercab and Optimus — businesses that could push it well beyond selling cars. Musk says Optimus could begin shipping to customers next year, while Cybercab is already moving Tesla further into the robotaxi market.

SpaceX  SPCX ( ▼ 1.36% ) has a different problem.

→ Starlink already works.

It’s growing quickly, generates recurring revenue and could eventually expand further into communications.

The more ambitious pieces are less settled.

✱ Starship still has major technical hurdles to clear before rapid reuse becomes routine. And SpaceX’s fastest-growing business — AI compute — is currently benefiting from something that may not last forever:

There simply isn’t enough compute to go around.

That scarcity has created some extraordinary economics, including a recently signed deal worth $1.1 billion per month.

Let’s see…↓

SPONSOR BREAK presented by Brownstone*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

The $1.1 Billion Question.

SpaceX’s fastest-growing business is bringing in some serious money.

Its AI segment just signed a deal worth $1.1 billion per month.

That’s a remarkable number.

But there’s an important question hiding underneath it:

How much of that opportunity exists because AI computing power is unusually scarce right now?

Demand for compute has raced ahead of available capacity, creating an opportunity for companies that can get their hands on it.

In other words, the shortage is part of the business model.

More data centers, more chips and more available capacity could gradually make compute easier to find — and harder to sell at today’s economics.

That doesn’t make the revenue any less real.

It just makes the $1.1 billion-a-month question a little more interesting:

Could those economics fade as more capacity comes online?

SPONSOR BREAK presented by MarketWise*

One stock to buy before midterms get here

In less than 100 days, Americans will head to the polls once again. But this time, I believe something much bigger may be happening beneath the surface. I believe the 2026 midterm elections could create a major wealth-creation opportunity for investors who position themselves early enough. That’s why I’m giving away one free stock idea to buy (and one to sell) before election day gets here.
For the full presentation, go here.

Tesla’s $28 Billion Quarter.

Tesla had a strong quarter.

Revenue climbed 26%, deliveries reached 480,126, and energy storage deployments jumped 41%.↓

Then you move a little further down the income statement.

→ Operating income fell 57% to $398 million.
→ Free cash flow came in at negative $1.09 billion.
→ And capital spending doubled to $5.79 billion, as Tesla poured money into AI infrastructure and its next generation of manufacturing.

Tesla is selling more cars, generating more revenue and spending considerably more on what comes next.

! But much of the spending — and much of the excitement around the company’s future — is increasingly tied to businesses that are still being built:

Self-driving cars and robots.

For now, though, very little of that growth is making its way to operating profit.

Not Much Of A Short…

There has been some cooling.

The number of hedge funds in Insider Monkey’s database holding Tesla slipped from 123 to 116 during Q2.

But outright bearish positioning remains relatively small.

Only 2.10% of Tesla’s float was sold short at the end of August.

And among the holders that remain, some positions are substantial. BAMCO held roughly 12.5 million Tesla shares at the end of Q2.

So while Tesla’s margins, spending and future bets are giving investors plenty to argue about…

very few are expressing that skepticism by shorting the stock.

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Burry Isn’t Buying It…

AI’s biggest names spent the past week talking about: Slowing down.

Dario Amodei wants frontier labs to give safety work more time to catch up.
Sam Altman agrees that increasingly capable AI needs stronger safeguards.
Elon Musk has backed the broader concern.

Michael Burry?

→ He thinks they’re selling something.

His argument, essentially: If you tell the world your technology is almost too powerful to control, you’re also telling investors it’s extraordinarily valuable.

Then there’s the timing.

OpenAI and Anthropic are both moving toward eventual public listings.

To Burry, that makes all this talk about slowing down worth looking at from another angle.

Not just who AI needs protecting from…

but who benefits when everyone believes it needs protecting.

Very Burry. ⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

Four Problems With The AI Slowdown…

Burry doesn’t just think the push to slow AI is “self-serving.”

He has four reasons why.

1| There’s nothing to slow down.
In Burry’s view, today’s large language models aren’t true artificial intelligence and won’t lead to AGI. So the premise that we’re racing toward something uncontrollable starts on shaky ground.

2| A slowdown helps whoever is ahead.
Competitors are catching up quickly. Hit the brakes now, Burry argues, and the current leaders get something rather convenient:

More time in the lead.

3| The warning is also pretty good advertising.
Tell the world your technology is becoming so powerful that it might need to be slowed down…

and you’ve also told the world just how powerful your technology is.

4| Then there’s the timing.
This is Burry’s biggest accusation.

He argues the safety push could help distract from slowing growth as the companies behind it move closer to potential public listings.

✱ Put all four together and Burry’s argument becomes pretty simple:

Don’t just ask why they want AI to slow down. Ask who benefits if it does.

SPONSOR BREAK presented by MarketWise*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

And Then There’s The IPO.

Burry’s fourth point comes down to one thing:

→ Timing.

Neither OpenAI nor Anthropic is profitable today.

OpenAI isn’t planning to go public in 2026. Anthropic, meanwhile, is preparing for a potential listing this fall.

And that matters to Burry’s argument because an IPO does something private companies can largely avoid:

→ It opens the books.

Revenue growth, losses, cash burn and the path to profitability suddenly become much harder for investors to ignore.

That’s why Burry keeps coming back to the timing of the safety warnings.

His argument isn’t simply that the warnings are wrong.

He’s asking why they’re getting louder now.

SPONSOR BREAK presented by Brownstone*

Anthropic could go public as early as October 1

It’s part of a $4 trillion wave of tech IPOs Harvard calls “the AI IPO Tsunami.”

Former IPO insider, Jason Bodner, has uncovered three companies primed to soar as AI companies start going public.

Click here to find out how to get their names.

A Quick Update From August.

Two weeks ago, we covered Burry buying December Nvidia calls to hedge his existing short position — a trade he specifically said wasn’t about making money on the calls themselves.

Now the December puts are gone.↓

But the longer-dated bets aren’t.

Burry kept his 2027 Palantir and QQQ puts, which makes this look less like a complete reversal of his bearish thesis and more like a change in when he expects it to play out.

Same concern. Longer clock.↓

And…Burry’s Wine Cellar 🍷!

Burry’s new way to bet against the dollar: Fine wine.

His thesis centers on professionally stored cases of high-end wine sitting in London bonded warehouses. Burry argues they can effectively function as “a short position on the dollar.”

And unlike most Burry ideas, this one gets better after opening the bottle.

The Scarcity Part

Every time someone drinks a bottle from a particular vintage, there is permanently one fewer bottle left.

No new supply can be created.

Burry is pairing that scarcity with a much bigger thesis: that the dollar could gradually lose some of its dominance in the global financial system.

And he says this isn’t just a thought experiment.

He’s already made the trades.

There is, however, some fine print with the fine wine.

Storage, insurance and transaction costs all eat into returns, while improper storage can damage the asset you’re counting on appreciating.

Still, after falling roughly 25–30% from its peak, Burry appears to see something other investors might call a beaten-down collectible.

He sees a shrinking supply of bottles priced in dollars.

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Also, help your friends blossom this spring! Share us with them.

💬 We Want To Hear Your Story:

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Just drop your request in the comments here.

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Burry Isn’t Buying It…

AI’s biggest names spent the past week talking about: Slowing down.

Dario Amodei wants frontier labs to give safety work more time to catch up.
Sam Altman agrees that increasingly capable AI needs stronger safeguards.
Elon Musk has backed the broader concern.

Michael Burry?

→ He thinks they’re selling something.

His argument, essentially: If you tell the world your technology is almost too powerful to control, you’re also telling investors it’s extraordinarily valuable.

Then there’s the timing.

OpenAI and Anthropic are both moving toward eventual public listings.

To Burry, that makes all this talk about slowing down worth looking at from another angle.

Not just who AI needs protecting from…

but who benefits when everyone believes it needs protecting.

Very Burry. ⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

Four Problems With The AI Slowdown…

Burry doesn’t just think the push to slow AI is “self-serving.”

He has four reasons why.

1| There’s nothing to slow down.
In Burry’s view, today’s large language models aren’t true artificial intelligence and won’t lead to AGI. So the premise that we’re racing toward something uncontrollable starts on shaky ground.

2| A slowdown helps whoever is ahead.
Competitors are catching up quickly. Hit the brakes now, Burry argues, and the current leaders get something rather convenient:

More time in the lead.

3| The warning is also pretty good advertising.
Tell the world your technology is becoming so powerful that it might need to be slowed down…

and you’ve also told the world just how powerful your technology is.

4| Then there’s the timing.
This is Burry’s biggest accusation.

He argues the safety push could help distract from slowing growth as the companies behind it move closer to potential public listings.

✱ Put all four together and Burry’s argument becomes pretty simple:

Don’t just ask why they want AI to slow down. Ask who benefits if it does.

SPONSOR BREAK presented by MarketWise*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

And Then There’s The IPO.

Burry’s fourth point comes down to one thing:

→ Timing.

Neither OpenAI nor Anthropic is profitable today.

OpenAI isn’t planning to go public in 2026. Anthropic, meanwhile, is preparing for a potential listing this fall.

And that matters to Burry’s argument because an IPO does something private companies can largely avoid:

→ It opens the books.

Revenue growth, losses, cash burn and the path to profitability suddenly become much harder for investors to ignore.

That’s why Burry keeps coming back to the timing of the safety warnings.

His argument isn’t simply that the warnings are wrong.

He’s asking why they’re getting louder now.

SPONSOR BREAK presented by Brownstone*

Anthropic could go public as early as October 1

It’s part of a $4 trillion wave of tech IPOs Harvard calls “the AI IPO Tsunami.”

Former IPO insider, Jason Bodner, has uncovered three companies primed to soar as AI companies start going public.

Click here to find out how to get their names.

A Quick Update From August.

Two weeks ago, we covered Burry buying December Nvidia calls to hedge his existing short position — a trade he specifically said wasn’t about making money on the calls themselves.

Now the December puts are gone.↓

But the longer-dated bets aren’t.

Burry kept his 2027 Palantir and QQQ puts, which makes this look less like a complete reversal of his bearish thesis and more like a change in when he expects it to play out.

Same concern. Longer clock.↓

And…Burry’s Wine Cellar 🍷!

Burry’s new way to bet against the dollar: Fine wine.

His thesis centers on professionally stored cases of high-end wine sitting in London bonded warehouses. Burry argues they can effectively function as “a short position on the dollar.”

And unlike most Burry ideas, this one gets better after opening the bottle.

The Scarcity Part

Every time someone drinks a bottle from a particular vintage, there is permanently one fewer bottle left.

No new supply can be created.

Burry is pairing that scarcity with a much bigger thesis: that the dollar could gradually lose some of its dominance in the global financial system.

And he says this isn’t just a thought experiment.

He’s already made the trades.

There is, however, some fine print with the fine wine.

Storage, insurance and transaction costs all eat into returns, while improper storage can damage the asset you’re counting on appreciating.

Still, after falling roughly 25–30% from its peak, Burry appears to see something other investors might call a beaten-down collectible.

He sees a shrinking supply of bottles priced in dollars.

Was this email forwarded to you? Don’t miss out on future stories — subscribe using the button below.

Also, help your friends blossom this spring! Share us with them.

💬 We Want To Hear Your Story:

Got a market or stock you want us to analyze next?

Just drop your request in the comments here.

P.S. – If you no longer want to receive occasional emails from us and you want to unsubscribe, click here 👉 “Unsubscribe” . Thank you!

Too far, too fast?

Palantir PLTR ( ▲ 0.05% ) entered August with plenty of believers, plenty of skeptics, and a valuation that gave both sides something to talk about.

Then the stock jumped 51%.

Case closed? Not quite.

→ Revenue accelerated from 48% → 85% → 93%.
→ U.S. commercial revenue surged 149%.
→ And Palantir logged its ninth consecutive quarterly EPS beat.

And somehow, after another enormous rally, the argument over whether Palantir is too expensive has become more complicated, not less.

So we went through the growth, the valuation, and one increasingly important bet Alex Karp is making about AI…

…to see what keeps moving the goalposts.⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

Picking Up Speed.

Palantir’s growth is actually accelerating. ↓

Revenue growth went from 48% a year ago, to 85% in Q1, to 93% in Q2.

And it isn’t taking an equally large increase in spending to get there.

→ Sales and marketing expenses rose 39%.
→ Total operating expenses rose 34%.
→ Revenue rose 93%.

Meanwhile, adjusted free cash flow reached $1.22 billion, with the margin expanding from 57% to 63%.

That’s the part worth paying attention to:

Palantir isn’t just getting bigger. It’s getting more profitable as it gets bigger.↓

SPONSOR BREAK presented by MarketWise*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

Your Data, Your Rules!

There are plenty of companies trying to build the best AI model.

Palantir would rather help decide what those models are allowed to see.

OpenAI, Anthropic and the rest of the frontier labs are building increasingly powerful models. But inside a large company, plugging a model into the business isn’t quite as simple as opening ChatGPT and asking it to look at a spreadsheet.

There are customer records. Supply chains. Internal forecasts. Proprietary processes. Government data.

And Alex Karp argues that companies plugging frontier models into their businesses risk giving away the very data, workflows and institutional knowledge that make them valuable.

His version was considerably more direct:
“Their competitive advantage should never become the training data for future models.” — Alex Karp, CEO, Palantir

That’s the idea behind what Palantir calls AI sovereignty: use powerful models, but keep control of the underlying data, permissions and operations. Karp made that argument alongside Palantir’s Q2 results, when revenue grew 93% and U.S. commercial revenue jumped 149%.

→ That could leave Palantir in a useful position — sitting between companies, their data, and whichever AI models they choose to use.

SPONSOR BREAK presented by Brownstone*

Anthropic could go public as early as October 1

It’s part of a $4 trillion wave of tech IPOs Harvard calls “the AI IPO Tsunami.”

Former IPO insider, Jason Bodner, has uncovered three companies primed to soar as AI companies start going public.

Click here to find out how to get their names.

A Rather Timely Example…

Less than two months later, the issue Karp was talking about started appearing elsewhere.

Reuters reported this week that Palantir, Nvidia and Booz Allen Hamilton have been reconsidering some uses of advanced OpenAI and Anthropic models over protections for proprietary data and intellectual property.

Palantir has reportedly pushed for zero-data-retention commitments from Anthropic, while Nvidia has restricted Anthropic models from certain sensitive work.

And then Nvidia went one step further.

Last week, it announced a new “sovereign AI” supply-chain system with Palantir, combining Nvidia’s Nemotron models with Palantir’s software.

The first customer?

Nvidia itself.

✱ If more companies decide they want to use the best AI models without giving up control of their data, Palantir has a clear role to play.

!!! And if that demand keeps growing, so does the case that Palantir’s growth has further to run.

Pick A Number.

If Palantir’s business is unusual, Wall Street’s attempts to value it might be even more so.

The current analyst range stretches from roughly $80 to $255.

✱ Analyst targets are opinions, not Trading Lessons recommendations.

At around $173, Palantir sits almost exactly where you’d expect a stock like this to sit: in the middle of an argument.

→ The bulls see revenue accelerating to 93%, U.S. commercial growth at 149%, expanding margins, and a company finding an increasingly valuable role in enterprise AI.

→ The bears see the same growth — and a valuation that leaves very little room for it to slow down.

The disagreement isn’t really over whether Palantir is growing.

It’s over how long it can keep growing like this.

A League of Its Own?

This is what makes Palantir difficult to compare.

Snowflake SNOW ( ▲ 3.17% ) is growing quickly, but still posting a negative operating margin. Salesforce is profitable, but growing much more slowly.
C3ai  AI ( ▼ 1.48% ) is shrinking while losses remain substantial.

Palantir is sitting in the unusual corner of the table:

93% growth. 32% operating margin. At the same time.

And that brings us to the part Wall Street can’t agree on:

What do you pay for that?

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Too far, too fast?

Palantir PLTR ( ▲ 0.05% ) entered August with plenty of believers, plenty of skeptics, and a valuation that gave both sides something to talk about.

Then the stock jumped 51%.

Case closed? Not quite.

→ Revenue accelerated from 48% → 85% → 93%.
→ U.S. commercial revenue surged 149%.
→ And Palantir logged its ninth consecutive quarterly EPS beat.

And somehow, after another enormous rally, the argument over whether Palantir is too expensive has become more complicated, not less.

So we went through the growth, the valuation, and one increasingly important bet Alex Karp is making about AI…

…to see what keeps moving the goalposts.⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

Picking Up Speed.

Palantir’s growth is actually accelerating. ↓

Revenue growth went from 48% a year ago, to 85% in Q1, to 93% in Q2.

And it isn’t taking an equally large increase in spending to get there.

→ Sales and marketing expenses rose 39%.
→ Total operating expenses rose 34%.
→ Revenue rose 93%.

Meanwhile, adjusted free cash flow reached $1.22 billion, with the margin expanding from 57% to 63%.

That’s the part worth paying attention to:

Palantir isn’t just getting bigger. It’s getting more profitable as it gets bigger.↓

SPONSOR BREAK presented by MarketWise*

“Elon Musk’s One Stock Retirement Plan”

Legendary investor Stanley Druckenmiller once said:

“You don’t get rich by diversifying into 50 mediocre assets. You get rich by finding two or three asymmetric home runs.”

Jeff Brown just found this NEW asymmetric home run he calls “
Elon Musk’s One Stock Retirement Plan.” (Click here for details.)

Your Data, Your Rules!

There are plenty of companies trying to build the best AI model.

Palantir would rather help decide what those models are allowed to see.

OpenAI, Anthropic and the rest of the frontier labs are building increasingly powerful models. But inside a large company, plugging a model into the business isn’t quite as simple as opening ChatGPT and asking it to look at a spreadsheet.

There are customer records. Supply chains. Internal forecasts. Proprietary processes. Government data.

And Alex Karp argues that companies plugging frontier models into their businesses risk giving away the very data, workflows and institutional knowledge that make them valuable.

His version was considerably more direct:
“Their competitive advantage should never become the training data for future models.” — Alex Karp, CEO, Palantir

That’s the idea behind what Palantir calls AI sovereignty: use powerful models, but keep control of the underlying data, permissions and operations. Karp made that argument alongside Palantir’s Q2 results, when revenue grew 93% and U.S. commercial revenue jumped 149%.

→ That could leave Palantir in a useful position — sitting between companies, their data, and whichever AI models they choose to use.

SPONSOR BREAK presented by Brownstone*

Anthropic could go public as early as October 1

It’s part of a $4 trillion wave of tech IPOs Harvard calls “the AI IPO Tsunami.”

Former IPO insider, Jason Bodner, has uncovered three companies primed to soar as AI companies start going public.

Click here to find out how to get their names.

A Rather Timely Example…

Less than two months later, the issue Karp was talking about started appearing elsewhere.

Reuters reported this week that Palantir, Nvidia and Booz Allen Hamilton have been reconsidering some uses of advanced OpenAI and Anthropic models over protections for proprietary data and intellectual property.

Palantir has reportedly pushed for zero-data-retention commitments from Anthropic, while Nvidia has restricted Anthropic models from certain sensitive work.

And then Nvidia went one step further.

Last week, it announced a new “sovereign AI” supply-chain system with Palantir, combining Nvidia’s Nemotron models with Palantir’s software.

The first customer?

Nvidia itself.

✱ If more companies decide they want to use the best AI models without giving up control of their data, Palantir has a clear role to play.

!!! And if that demand keeps growing, so does the case that Palantir’s growth has further to run.

Pick A Number.

If Palantir’s business is unusual, Wall Street’s attempts to value it might be even more so.

The current analyst range stretches from roughly $80 to $255.

✱ Analyst targets are opinions, not Trading Lessons recommendations.

At around $173, Palantir sits almost exactly where you’d expect a stock like this to sit: in the middle of an argument.

→ The bulls see revenue accelerating to 93%, U.S. commercial growth at 149%, expanding margins, and a company finding an increasingly valuable role in enterprise AI.

→ The bears see the same growth — and a valuation that leaves very little room for it to slow down.

The disagreement isn’t really over whether Palantir is growing.

It’s over how long it can keep growing like this.

A League of Its Own?

This is what makes Palantir difficult to compare.

Snowflake SNOW ( ▲ 3.17% ) is growing quickly, but still posting a negative operating margin. Salesforce is profitable, but growing much more slowly.
C3ai  AI ( ▼ 1.48% ) is shrinking while losses remain substantial.

Palantir is sitting in the unusual corner of the table:

93% growth. 32% operating margin. At the same time.

And that brings us to the part Wall Street can’t agree on:

What do you pay for that?

Was this email forwarded to you? Don’t miss out on future stories — subscribe using the button below.

Also, help your friends blossom this spring! Share us with them.

💬 We Want To Hear Your Story:

Got a market or stock you want us to analyze next?

Just drop your request in the comments here.

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Can We Grow Out of This?

Imagine you’re in charge of America’s money. Now What?

You just became U.S. Treasury Secretary. The Fed isn’t lowering rates for you. The government spends more than it collects, debt keeps growing, and borrowing is expensive.

Your job: make the math work.

So, what do you do?

Raise taxes? Cut spending? Change how the government borrows?
Hope inflation cools? Or simply wait …?

There are plenty of levers to pull.

But underneath almost all of them sits one surprisingly simple piece of math.

So, let’s see .⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

The Formula for Trouble.

The debt sustainability formula ↓

It looks intimidating. It really comes down to three things:

r → What does the debt cost?
The average interest rate the government pays.

g → How fast is the economy growing?
Nominal GDP growth — real economic growth plus inflation.

Primary Balance → Are we adding to the tab?
Government revenue minus spending, before interest payments.

Strip away the notation and you get a pretty simple race:

g > r → 👍 Debt gets easier to carry

r > g → 😬 Debt gets harder to carry

There is one important catch: r > g does not mean debt automatically rises even if the government spends nothing extra. The primary balance still matters. A sufficiently large primary surplus can offset the unfavorable r − g effect; a primary deficit makes it worse.

So the real assignment isn’t simply “get g above r.”

It’s: Grow faster. Borrow cheaper. Run a smaller primary deficit.

Preferably, all three. ↓

SPONSOR BREAK presented by Brownstone*

Anthropic could go public as early as October 1

It’s part of a $4 trillion wave of tech IPOs Harvard calls “the AI IPO Tsunami.”

Former IPO insider, Jason Bodner, has uncovered three companies primed to soar as AI companies start going public.

Click here to find out how to get their names.

Now, Let’s Run the Numbers.

One caveat before the arithmetic. These are rounded, illustrative estimates based on the figures we’ve covered — not an official CBO or Treasury forecast.

Step 1 — Start With the Scoreboard

→ Debt held by the public: ~$32T
→ Nominal GDP: ~$30T
→ Debt-to-GDP: ~107%

In other words, for every $1 the U.S. economy produces in a year, there’s roughly $1.07 of publicly held federal debt.

Now our three variables:

1) r ≈ 5% — our illustrative borrowing-cost assumption, roughly in line with current long-term Treasury yields.
2) g ≈ 5% — roughly 2% real growth + 3% inflation.
3) Primary deficit ≈ 3% of GDP — Washington is spending more than it collects even before interest enters the bill.

Which gives us an unusually neat starting point:

r ≈ g

The interest-growth part of the equation is basically a draw.

Unfortunately, the budget isn’t.

SPONSOR BREAK presented by MarketWise*

He Put Half His $9 Billion Into One Unusual AI Stock

One billionaire put over half his $9 billion fund into one unusual AI stock — then bought more shares nearly every day for 61 straight trading days.

It’s not Nvidia… a chipmaker… or a cloud giant.

Instead, it owns the assets the entire AI boom depends on…

And Trump signed emergency executive orders to protect them.

Right now it’s trading at a rare discount…

The same kind that’s previously turned $10,000 into $55,000. In just over 12 months

>>>Whitney Tilson reveals the name, completely free<<<

Step 2 — Which One Is Winning: r or g?

Using our illustrative 5% assumptions:

r (5%) − g (5%) ≈ 0%

That little zero does a lot of work.

If r − g ≈ 0, then: (r − g) × Debt-to-GDP ≈ 0

In plain English, the debt burden isn’t getting meaningfully heavier or lighter from the interest-vs.-growth relationship alone.

So what determines which way the debt ratio moves?

The other half of the equation: the primary balance.

And unfortunately, that number isn’t zero.

Step 3 — Now Add the Deficit.

With r − g ≈ 0, that whole side of the equation essentially cancels out.

What’s left?

Change in Debt-to-GDP ≈ Primary Deficit

Using our illustrative 3% primary deficit:

0% + 3% ≈ +3 percentage points

So debt-to-GDP would rise by roughly 3 percentage points per year simply because the government is spending more than it collects before interest.

✱ Put differently: even if r and g behave perfectly, the debt ratio can still keep climbing.

Step 4 — Now Turn Up the Interest Rate.

Now let’s make borrowing more expensive.

If r rises from 5% to 6%, while g stays at 5%:

r − g = +1%

Apply that gap to our illustrative 107% debt-to-GDP ratio:

1% × 107% ≈ +1.1 percentage points

Then add the 3-point primary deficit from Step 3:

+1.1 + 3.0 = +4.1 percentage points

So instead of debt-to-GDP rising roughly 3 points a year, it rises about 4.1 points — nearly 40% faster in this simplified example.

✱ And that’s the uncomfortable part about higher rates:
A one-point move in r doesn’t sound like much. On a debt pile this large, it is.

Step 5 — What If Growth Wins Instead?

Now flip the experiment.

If g rises to 6% while r stays at 5%:

r − g = −1%

Apply that to our illustrative 107% debt-to-GDP ratio:

−1% × 107% ≈ −1.1 percentage points

This time, the math is working for the government.

Add the 3-point primary deficit:

−1.1 + 3.0 = +1.9 percentage points

Debt-to-GDP is still rising — but by roughly 1.9 points instead of 3.

Just one extra point of nominal growth.

✱ That’s the arithmetic behind all those productivity stories about AI, automation and investment. Faster sustainable economic growth doesn’t magically erase the debt.

But it makes the denominator considerably bigger.

Step 6 — The Lever Washington Actually Controls.

There’s another way to change the equation without hoping for faster growth or waiting for markets to lower borrowing costs:

Change the primary balance.

Suppose the primary deficit falls from 3% of GDP to 1%.

If r ≈ g, our simplified math becomes:

0 + 1% ≈ +1 percentage point

Instead of debt-to-GDP rising roughly 3 points per year, it rises about 1 point.

That’s a 2-percentage-point improvement without requiring r or g to move at all.

And unlike Treasury yields or economic growth, the primary balance is the part policymakers can influence most directly — through spending and taxes.

✱ The problem?

Those are also the two buttons everyone notices when you press them.

Three Ways Out.

At this point, the equation leaves you with three basic options.

1 Lower r — make the debt cheaper.
Lower borrowing costs make the math easier. That’s why lower rates are so attractive when the government is carrying trillions in debt. The catch: the Fed’s job is inflation and employment, not making Treasury’s interest bill smaller. And Treasury buybacks can improve liquidity in the bond market, but they don’t set the interest rate on new debt.

2 Raise g — make the economy bigger.
This is the nicest answer on paper. Faster real economic growth raises nominal GDP without requiring spending cuts or tax increases. It’s also the math underneath all those AI-productivity forecasts: if technology can sustainably make the economy grow faster, g gets a boost — and the debt gets a bigger denominator.

3 Improve the primary balance — spend less, collect more, or both.
This is the lever policymakers control most directly. Shrinking the primary deficit reduces the amount being added to the debt equation. Unlike hoping for lower yields or a productivity boom, Congress can legislate changes to spending and revenue.

Unfortunately, it’s also the option that requires someone to actually give something up.

Cheaper money. Faster growth. Smaller deficits.

Was this email forwarded to you? Don’t miss out on future stories — subscribe using the button below.

Also, help your friends blossom this spring! Share us with them.

💬 We Want To Hear Your Story:

Got a market or stock you want us to analyze next?

Just drop your request in the comments here.

P.S. – If you no longer want to receive occasional emails from us and you want to unsubscribe, click here 👉 “Unsubscribe” . Thank you!

Can We Grow Out of This?

Imagine you’re in charge of America’s money. Now What?

You just became U.S. Treasury Secretary. The Fed isn’t lowering rates for you. The government spends more than it collects, debt keeps growing, and borrowing is expensive.

Your job: make the math work.

So, what do you do?

Raise taxes? Cut spending? Change how the government borrows?
Hope inflation cools? Or simply wait …?

There are plenty of levers to pull.

But underneath almost all of them sits one surprisingly simple piece of math.

So, let’s see .⇩

SPONSOR BREAK presented by Brownstone*

Trump Takes on Foreign “Cartel” (and You Could Profit)

Trump is finishing a 25-year battle against a foreign “cartel.” And a single ticker is handing investors the chance at payouts like $8,704 in six days from the fallout. Click here to watch the full story now.
 

The Formula for Trouble.

The debt sustainability formula ↓

It looks intimidating. It really comes down to three things:

r → What does the debt cost?
The average interest rate the government pays.

g → How fast is the economy growing?
Nominal GDP growth — real economic growth plus inflation.

Primary Balance → Are we adding to the tab?
Government revenue minus spending, before interest payments.

Strip away the notation and you get a pretty simple race:

g > r → 👍 Debt gets easier to carry

r > g → 😬 Debt gets harder to carry

There is one important catch: r > g does not mean debt automatically rises even if the government spends nothing extra. The primary balance still matters. A sufficiently large primary surplus can offset the unfavorable r − g effect; a primary deficit makes it worse.

So the real assignment isn’t simply “get g above r.”

It’s: Grow faster. Borrow cheaper. Run a smaller primary deficit.

Preferably, all three. ↓

SPONSOR BREAK presented by Brownstone*

Anthropic could go public as early as October 1

It’s part of a $4 trillion wave of tech IPOs Harvard calls “the AI IPO Tsunami.”

Former IPO insider, Jason Bodner, has uncovered three companies primed to soar as AI companies start going public.

Click here to find out how to get their names.

Now, Let’s Run the Numbers.

One caveat before the arithmetic. These are rounded, illustrative estimates based on the figures we’ve covered — not an official CBO or Treasury forecast.

Step 1 — Start With the Scoreboard

→ Debt held by the public: ~$32T
→ Nominal GDP: ~$30T
→ Debt-to-GDP: ~107%

In other words, for every $1 the U.S. economy produces in a year, there’s roughly $1.07 of publicly held federal debt.

Now our three variables:

1) r ≈ 5% — our illustrative borrowing-cost assumption, roughly in line with current long-term Treasury yields.
2) g ≈ 5% — roughly 2% real growth + 3% inflation.
3) Primary deficit ≈ 3% of GDP — Washington is spending more than it collects even before interest enters the bill.

Which gives us an unusually neat starting point:

r ≈ g

The interest-growth part of the equation is basically a draw.

Unfortunately, the budget isn’t.

SPONSOR BREAK presented by MarketWise*

He Put Half His $9 Billion Into One Unusual AI Stock

One billionaire put over half his $9 billion fund into one unusual AI stock — then bought more shares nearly every day for 61 straight trading days.

It’s not Nvidia… a chipmaker… or a cloud giant.

Instead, it owns the assets the entire AI boom depends on…

And Trump signed emergency executive orders to protect them.

Right now it’s trading at a rare discount…

The same kind that’s previously turned $10,000 into $55,000. In just over 12 months

>>>Whitney Tilson reveals the name, completely free<<<

Step 2 — Which One Is Winning: r or g?

Using our illustrative 5% assumptions:

r (5%) − g (5%) ≈ 0%

That little zero does a lot of work.

If r − g ≈ 0, then: (r − g) × Debt-to-GDP ≈ 0

In plain English, the debt burden isn’t getting meaningfully heavier or lighter from the interest-vs.-growth relationship alone.

So what determines which way the debt ratio moves?

The other half of the equation: the primary balance.

And unfortunately, that number isn’t zero.

Step 3 — Now Add the Deficit.

With r − g ≈ 0, that whole side of the equation essentially cancels out.

What’s left?

Change in Debt-to-GDP ≈ Primary Deficit

Using our illustrative 3% primary deficit:

0% + 3% ≈ +3 percentage points

So debt-to-GDP would rise by roughly 3 percentage points per year simply because the government is spending more than it collects before interest.

✱ Put differently: even if r and g behave perfectly, the debt ratio can still keep climbing.

Step 4 — Now Turn Up the Interest Rate.

Now let’s make borrowing more expensive.

If r rises from 5% to 6%, while g stays at 5%:

r − g = +1%

Apply that gap to our illustrative 107% debt-to-GDP ratio:

1% × 107% ≈ +1.1 percentage points

Then add the 3-point primary deficit from Step 3:

+1.1 + 3.0 = +4.1 percentage points

So instead of debt-to-GDP rising roughly 3 points a year, it rises about 4.1 points — nearly 40% faster in this simplified example.

✱ And that’s the uncomfortable part about higher rates:
A one-point move in r doesn’t sound like much. On a debt pile this large, it is.

Step 5 — What If Growth Wins Instead?

Now flip the experiment.

If g rises to 6% while r stays at 5%:

r − g = −1%

Apply that to our illustrative 107% debt-to-GDP ratio:

−1% × 107% ≈ −1.1 percentage points

This time, the math is working for the government.

Add the 3-point primary deficit:

−1.1 + 3.0 = +1.9 percentage points

Debt-to-GDP is still rising — but by roughly 1.9 points instead of 3.

Just one extra point of nominal growth.

✱ That’s the arithmetic behind all those productivity stories about AI, automation and investment. Faster sustainable economic growth doesn’t magically erase the debt.

But it makes the denominator considerably bigger.

Step 6 — The Lever Washington Actually Controls.

There’s another way to change the equation without hoping for faster growth or waiting for markets to lower borrowing costs:

Change the primary balance.

Suppose the primary deficit falls from 3% of GDP to 1%.

If r ≈ g, our simplified math becomes:

0 + 1% ≈ +1 percentage point

Instead of debt-to-GDP rising roughly 3 points per year, it rises about 1 point.

That’s a 2-percentage-point improvement without requiring r or g to move at all.

And unlike Treasury yields or economic growth, the primary balance is the part policymakers can influence most directly — through spending and taxes.

✱ The problem?

Those are also the two buttons everyone notices when you press them.

Three Ways Out.

At this point, the equation leaves you with three basic options.

1 Lower r — make the debt cheaper.
Lower borrowing costs make the math easier. That’s why lower rates are so attractive when the government is carrying trillions in debt. The catch: the Fed’s job is inflation and employment, not making Treasury’s interest bill smaller. And Treasury buybacks can improve liquidity in the bond market, but they don’t set the interest rate on new debt.

2 Raise g — make the economy bigger.
This is the nicest answer on paper. Faster real economic growth raises nominal GDP without requiring spending cuts or tax increases. It’s also the math underneath all those AI-productivity forecasts: if technology can sustainably make the economy grow faster, g gets a boost — and the debt gets a bigger denominator.

3 Improve the primary balance — spend less, collect more, or both.
This is the lever policymakers control most directly. Shrinking the primary deficit reduces the amount being added to the debt equation. Unlike hoping for lower yields or a productivity boom, Congress can legislate changes to spending and revenue.

Unfortunately, it’s also the option that requires someone to actually give something up.

Cheaper money. Faster growth. Smaller deficits.

Was this email forwarded to you? Don’t miss out on future stories — subscribe using the button below.

Also, help your friends blossom this spring! Share us with them.

💬 We Want To Hear Your Story:

Got a market or stock you want us to analyze next?

Just drop your request in the comments here.

P.S. – If you no longer want to receive occasional emails from us and you want to unsubscribe, click here 👉 “Unsubscribe” . Thank you!

A Very Good Monday…

Well, That Was An Interesting Monday.

AI spent the weekend talking about the dangers of AI.

By Monday morning, Wall Street had apparently picked a side.

→ CrowdStrike jumped 15%.
→ Palo Alto Networks gained 11%.
→ Okta climbed nearly 10%.

Meanwhile,
→ Nvidia fell 3%, while
→ SanDisk dropped 5% in premarket trading.

The catalyst came over the weekend, when the CEOs of Anthropic and OpenAI separately raised concerns about AI development moving faster than the safeguards around it.

That produced a rather unusual market reaction.

Investors sold some of the companies helping build the AI boom — and piled into companies whose business is, increasingly, protecting everyone from what comes with it.

Of course, there’s more to the story than one nervous Monday.

So, we went through the warnings, the skeptics — and the money that moved.

Let’s see.⇩

SPONSOR BREAK presented by Brownstone*

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While Trump’s approval is plummeting over Iran… hedge fund legend Larry Benedict says it’s a huge opportunity. One ticker has given folks a chance at payouts like $2,482, $7,623, and $8,704… All in under eight days.
Click here to get the ticker for FREE.
 

One Weekend of Warnings…

Cybersecurity — up
→ Qualys QLYS ( ▲ 15.06% )  
→ CrowdStrike CRWD ( ▲ 13.85% )  
→ Zscaler ZS ( ▲ 16.53% )  
→ Palo Alto Networks PANW ( ▲ 13.09% )  
→ Okta OKTA ( ▲ 11.98% )  
→ Fortinet FTNT ( ▲ 9.04% )  

AI & chips — down
→ Nvidia NVDA ( ▼ 3.36% )  
→ AMD AMD ( ▼ 4.4% )  
→ Micron MU ( ▼ 5.25% )  
→ Intel INTC ( ▼ 5.59% )

The thinking behind the cybersecurity rally is fairly straightforward.

If AI becomes more capable, so do the tools available to people trying to break into systems. That gives companies another reason to spend more on protecting them.

And suddenly, the same technology that has spent years driving demand for chips and data centers is creating another potential beneficiary:

the companies trying to keep it secure. ↓

SPONSOR BREAK presented by MarketWise*

He Put Half His $9 Billion Into One Unusual AI Stock

One billionaire put over half his $9 billion fund into one unusual AI stock — then bought more shares nearly every day for 61 straight trading days.

It’s not Nvidia… a chipmaker… or a cloud giant.

Instead, it owns the assets the entire AI boom depends on…

And Trump signed emergency executive orders to protect them.

Right now it’s trading at a rare discount…

The same kind that’s previously turned $10,000 into $55,000. In just over 12 months

>>>Whitney Tilson reveals the name, completely free<<<

What Was Actually Said?↓

1| Last week, Anthropic researcher Jacob Coxon resigned, arguing that neither Anthropic nor OpenAI was acting responsibly enough as AI became more powerful.

2| Then Evan Hubinger, Anthropic’s Alignment Science Lead, responded with an even more striking assessment: he said he believed there was a greater than 10% chance the technology could eventually “kill all humans.”

A few days later, the CEOs entered the conversation.

→ Saturday | Dario Amodei
The Anthropic CEO published a 3,800-word essay arguing that AI capabilities may now be advancing faster than the safeguards around them.

His proposal was unusual coming from someone running one of the companies at the frontier: Slow down.

Amodei argued that labs should deliberately pace improvements to their most powerful models, giving safety research more time to catch up.

He also proposed bringing independent evaluators inside frontier AI companies, with enough access to examine models, training processes and whether companies are actually following their safety commitments.

Then came Monday.
→ Monday | Sam Altman
The OpenAI CEO pointed to two outcomes he believes the industry needs to avoid:

→ Losing control of increasingly capable AI.
→ Concentrating too much AI power in too few hands.

Altman said he agreed with the broader concerns in Amodei’s essay and argued that safety and alignment need to stay ahead of improvements in AI capabilities.

And the conversation picked up one more familiar name.

Elon Musk replied simply: “Dario is right.”

Musk pointed back to warnings he has made for years about advanced AI, including his 2023 argument that AGI could pose a greater risk than nuclear weapons.

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Not Everyone Is Buying It.

There are at least three different reasons for skepticism.

1| The market skeptic: Wedbush’s Dan Ives doesn’t think the warnings change the bigger AI spending story. His expectation: some initial weakness, followed by investors returning their attention to the roughly $5 trillion expected to be spent on AI over the next few years.

2| The consolidation skeptic: D.A. Davidson’s Gil Luria raised a different possibility: tougher safety rules could ultimately favor the biggest AI labs — the companies with enough money, compute and infrastructure to comply with them.

3| The self-interest skeptic: Michael Burry was more pointed, questioning whether the warnings reflect genuine concern for humanity or could also help increase the value of the companies’ AI products.

Then there’s the timing. ↓

The IPO.

✱ Anthropic is reportedly approaching an IPO filing, while Altman has said OpenAI plans to wait until 2027 to go public, citing safety concerns.

✱ And Musk, who has endorsed concerns about AI risk, has built major bets across both SpaceX’s AI/data center division (four compute deals worth roughly $45.7 billion in annual recurring revenue as of December, with CFO Bret Johnsen recently expressing “even more conviction” in a $100 billion ARR target by year-end) and Tesla’s “physical AI” products, including robotaxis and Optimus, both slated for production expansion this year.

! The people warning about the race are, after all, still very much in it.

Global Reaction↓

✱ The United States
President Trump rejected calls for additional AI guardrails, arguing that the U.S. already has sufficient regulatory and criminal authority over AI companies.

His focus was instead on staying ahead in the global AI race:
“Whoever wins AI wins.”

✱ China
China’s Foreign Ministry pushed back on the warnings, saying “fearmongering, confrontation and vicious competition” could undermine global AI cooperation.

Interestingly, China’s State Security Minister issued his own AI warning a day earlier — focused on deepfakes, disinformation and cyberattacks.

What Would A Real Slowdown Mean?

That depends almost entirely on how much slowing we’re talking about.

→ Schwab’s Kevin Gordon put it simply: a gradual pullback in AI spending would be one thing.

A sharp one would be very different.

AI-related investment has become a meaningful contributor to U.S. growth, so a sudden drop in spending could ripple well beyond the companies building chips and data centers.

There’s also a market problem.

Tech already carries some of the most aggressive earnings expectations in the S&P 500.

That leaves less room for disappointment if AI spending slows before those expectations are met.

For now, though, Gordon offered an important caveat: previous worries about an AI capex slowdown haven’t really shown up in the data.

So far, the slowdown is still mostly a scenario — not a statistic.

Lesson Of The Day:

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