Microsoft (MSFT) and MasterCard (MA) are presented as core long-term holdings due to their incredible performance and predictable growth. For new investment dollars, consider Google (GOOGL) over Meta (META), as it trades at a more attractive valuation with a PE ratio around 18-19. A potential buying opportunity in Spotify (SPOT) may emerge if the stock price falls below $500 per share. Investors should avoid FICO (FICO) for now, as regulatory pressures create too much uncertainty for the business. Finally, S&P Global (SPGI) is another high-quality, long-term holding that offers steady compounding and a potential boost from future interest rate cuts.

Microsoft (MSFT)

• The host described the latest earnings report as "incredible" and a "step change" in the direction of the business, believing it deserves to be more expensive than its current 35 Forward PE ratio.
• The company is growing revenue at 15% year-over-year, which is exceptional for a company of its size (nearly $4 trillion market cap).
• The growth is being driven by its Cloud and AI divisions.
  • Microsoft Cloud revenue surpassed $168 billion annually, up 23%.
  • Azure, Microsoft's direct cloud competitor to AWS and Google Cloud, has an annual revenue run rate exceeding $75 billion and grew at an astonishing 34%.
  • This means Azure is both larger and growing faster than its competitor, Google Cloud ($50B run rate, 32% growth).
• The host highlighted that Microsoft is a leader in the AI revolution, transforming into the "toolbox for artificial intelligence for the rest of the world."
  • Azure AI Foundry now has 14,000 customers, including 80% of the Fortune 500.
  • Copilot has over 100 million monthly active users.
  • GitHub Copilot has 20 million users and is used by 90% of the Fortune 100 companies.
• Other business segments like LinkedIn and Xbox (specifically Game Pass subscriptions) are also showing strong growth.

Takeaways

• Sentiment: Extremely Bullish.
• The host believes Microsoft is a fundamentally strong company that will continue to generate enormous wealth for a long time.
• Despite its large size and high valuation, the host refuses to trim his position due to the incredible performance and acceleration in its cloud and AI businesses. This suggests a strong conviction for holding the stock for the long term, even at all-time highs.

Meta Platforms (META)

• Meta delivered another "astronomical" earnings report, beating analyst expectations on both revenue and profit, and raising its guidance for the next quarter. The stock was up 12% following the report.
• Revenue grew 22% year-over-year to $47.5 billion, with a very high operating margin of 43%.
• User engagement continues to grow across its family of apps (Facebook, Instagram, WhatsApp), reaching over 3.4 billion daily active users.
• Time spent on the platforms is increasing, with video time on both Facebook and Instagram up 20% year-over-year.
• Meta is heavily investing in AI research, with Mark Zuckerberg noting the company is getting closer to "superintelligence" to improve its products.
• The company is beginning to monetize new platforms, with ad placements being introduced in Threads and WhatsApp.

Takeaways

• Sentiment: Bullish on the business, but cautious on the valuation compared to peers.
• Meta is executing incredibly well, consistently beating expectations and growing its user base and revenue at a rapid pace.
• However, the host prefers Google (GOOGL) as an investment opportunity at current prices. He notes that Meta trades at a 29 PE ratio, while Google trades at a much lower 18-19 PE ratio, making Google seem like a better value for new investment dollars.

S&P Global (SPGI)

• This is one of the host's largest holdings. The company reported another strong quarter, beating expectations and raising its full-year guidance.
• The host describes the company's performance as "business as usual," indicating consistent and predictable growth.
• A potential future catalyst for the stock is a drop in interest rates, which would provide a tailwind to all of its business segments (Ratings, Indices, Market Intelligence).
• The company is expected to perform well even if interest rates do not drop.

Takeaways

• Sentiment: Bullish.
• S&P Global is presented as a steady, high-quality compounding company.
• It's a long-term hold for the host, who values its consistency and the potential added benefit from a future change in the interest rate environment.

FICO (FICO)

• The stock is under significant pressure, falling to $1,400 per share after trading as high as $2,200 earlier in the year.
• The primary reason for the decline is a regulatory change. The FHFA announced that Fannie Mae and Freddie Mac will now allow lenders to use the Vantage 4.0 score, creating direct competition for FICO's previously dominant credit score.
• The host believes this situation is a "strategic perception PR mistake" by FICO's leadership. They raised prices too aggressively in a short period, which attracted negative attention from regulators and forced them to open the market to competition.
• The CEO's defense is that the price is still a small fraction of total closing costs, but the host argues that the perception of a massive percentage increase is what caused the damage.

Takeaways

• Sentiment: Bearish / Cautious.
• The host views the current situation as "dicey" and "too difficult right now."
• The regulatory pressure creates significant uncertainty for the company's future. The host is staying on the sidelines and waiting for the situation to stabilize before considering an investment.

MasterCard (MA)

• The host describes MasterCard as a "steady," "predictable," and "easy investment."
• The company reported another strong quarter of "business as usual," with revenue growing 15% and earnings per share growing in the 13-15% range.
• Management noted that they are not seeing signs of consumer weakness or a looming recession.
• MasterCard is actively embracing financial technology, including working with stablecoins.

Takeaways

• Sentiment: Very Bullish.
• MasterCard is a high-quality, high-margin business that consistently compounds shareholder wealth.
• It's a core long-term holding for the host due to its reliability and strong, consistent growth.

Spotify (SPOT)

• Spotify reported strong earnings and user growth, but the stock fell from $700 to $630 post-report. This is because at its high valuation (54 PE ratio), any perceived weakness in guidance can cause investors to sell.
• The business fundamentals remain strong. The platform is approaching 700 million monthly active users and is on a clear path to 1 billion users.
• The company is growing its free cash flow and earnings and is successfully expanding into video content.
• The host is very bullish on the long-term prospects of the business, comparing its durability to that of Netflix.

Takeaways

• Sentiment: Bullish on the business, but cautious on the current stock price.
• The host wants to own Spotify but is struggling to find a good entry point due to its high valuation.
• He has set a potential entry point for himself, stating he would "start looking if the stock gets below $500 per share." For now, he prefers cheaper alternatives like Google.