The AI Theme Isn’t Dead, Apple and Palantir Report, Alphabet’s Very Bad Day, HALO Is Back

Josh says Toast’s earnings were strong even though the stock initially fell about $1.50 after hours. Toast now serves 189,000 global locations, including restaurants, takeout businesses, retail stores, and newly gas stations, and cross-sells operational software after winning customers through payments. Josh highlights nearly doubled year-over-year GAAP earnings per share, roughly $2.5 billion in quarterly annual recurring revenue, a potential $10 billion annualized ARR run rate, and improving free cash flow. He remains long, arguing that the market capitalization is too small for the scale of a company that increasingly dominates vertical hospitality software.

The hosts decline to analyze the midterms in depth until their Thursday episode, arguing that affordability—not data centers—is driving most voting. Josh cites Alex Altman’s Barclays note, which found no meaningful relationship between Democratic or Republican surges and Nasdaq-100 relative performance. The note says the key equity drivers remain AI revenue versus AI financing, and that the election is unlikely to affect AI capital expenditure unless there is an extreme, unexpected Democratic sweep. Josh and Michael conclude that the election is outside their usual beat and would leave them with little to say about its market implications.

AMD reports third-quarter revenue growth of 45% year over year, with data-center revenue rising to $8.5 billion from roughly $4 billion. The hosts call the result welcome news because semiconductors had been under pressure: the DRAM ETF had fallen about 40% from its high, while the SMH was down roughly 24% and ended its unusually long streak above the 200-day moving average. They treat AMD’s report as evidence that the AI trade still has strong operating results, even though recent positioning and valuation concerns have made investors much less forgiving.

Michael calls Apple’s earnings good but not great and says the roughly 5% gap-down that became a 2% decline was an “adult reaction.” Services growth slowed, gross-margin guidance fell, and Apple discussed sharply higher memory costs, but record iPhone demand showed consumers can still absorb higher prices. The hosts argue buyers are seeking earnings stability and a product cycle under John Ternus rather than betting on one quarter. Apple also stands apart from data-center-driven technology stocks, with much lower capital spending; Josh cites data showing Apple rose on 65% of days when the Philadelphia Semiconductor Index fell at least 2%.

Palantir’s rule-of-40 performance continues to accelerate, and its commercial revenue has become larger than its U.S. government business. Commercial revenue rose from $397 million a year earlier to $984 million, up 148% year over year, while government revenue was $953 million. Josh and Michael say this undermines the old description of Palantir as essentially a technology defense contractor. The stock initially fell about 9% after hours before ending the following session down only 1.5%, prompting Josh to suggest it could follow Amazon’s pattern and recover most of the earnings loss once investors process the results.

Josh says Uber has declined after six of its last seven earnings reports, even when the reported results were good, because the company is “narratively challenged.” Investors hear repeated announcements about autonomous-taxi partnerships but do not see Uber operating those vehicles on the streets, while Waymo appears to be moving ahead. Josh thinks any post-earnings pop could be brief and argues that CEO Dara Khosrowshahi should change his communication strategy: instead of another calm interview with Andrew Ross Sorkin, he should discuss autonomous taxis where the public is paying attention, such as Joe Rogan’s show.

Josh presents data showing that two-thirds of S&P 500 stocks experienced a 20% drawdown during the year, roughly in line with historical norms, while 93% of technology stocks did so. The hosts stress that this feels catastrophic because recognizable names such as Intel, Reddit, and Amazon fell sharply, but the equal-weight S&P 500 outperformed the top 20 stocks by the widest margin since 2009. A bearish outside month in the Nasdaq also has limited historical force: when it occurred from a new high, the index never closed lower seven months later in the cited sample.

Alphabet has fallen about 30% from its high after a day that erased roughly $500 billion in market value. Josh notes that Google search had its strongest first nine months since 2021, but Michael says the important issue is weaker monetization of AI-generated answers and AI Mode, where users receive results without clicking links. They worry that OpenAI already handles a search volume equivalent to roughly 20% of Google’s, and that even a small loss of Google’s former 95% share could severely damage the stock. YouTube also missed expectations as short-form video from Instagram Reels and TikTok takes attention.

The hosts discuss Tony Pasquarello’s view that earnings growth may have peaked and estimate upgrades have slowed, even as Goldman’s S&P ex-AI basket reaches record highs. Josh calls this the return of the HALO trade: money is moving into stocks outside the mega-cap AI complex as technology results disappoint. Michael sees the rotation as bullish because forward earnings estimates continue rising, multiples are falling, and investors remain worried. Josh adds that public hostility toward AI has become unusually intense, with viewers treating it as a symbol of job losses, high costs, and broader economic anxiety rather than merely an investment theme.

The hosts debate whether interest rates are reaching the “cracks” of the AI boom through financing costs, equity issuance, and dilution rather than directly hurting hyperscalers. Amazon, Meta, Alphabet, and Microsoft now devote about 43% of revenue in aggregate to capital expenditure, while Apple expects to spend $25 billion on flash storage versus $6 billion a year earlier. Investors are responding by buying insurance: CoreWeave put-option volume surged, and the hosts say this is not typical of a market at the top of a bubble. They also discuss prediction-market estimates near $1.77 trillion for Anthropic and $1.4 trillion for OpenAI.

Josh argues that people who confidently call AI a Ponzi scheme should turn their opinions into a position rather than venting online. He points to Roundhill’s NeoCloud ETF, ticker NCLD, which is already down 44% from its high and has about $84 million in assets. The fund uses Treasury holdings and swaps to obtain exposure to private and public NeoCloud businesses, including Nebius and CoreWeave, and owns companies such as IREN, Hut 8, Galaxy, Riot, Cipher, WhiteFiber, and CleanSpark. Josh says a successful AI collapse would make these holdings worth dramatically less, creating the opportunity bearish commentators claim to want.