This article covers a range of recent events, including the escalating feud between Elon Musk and Donald Trump, Amazon's plans for package-delivering robots, MercadoLibre's CEO transition, Brookfield's data center investments, a potentially undervalued stock, and insights from Warren Buffett.
Elon Musk vs. Donald Trump: A Social Media Feud
The Origin of the Conflict
The feud began with Elon Musk criticizing the U.S. government's continued spending and expanding deficit. Musk, who previously supported Trump and his Department of Government Efficiency (DOGE) initiative, now feels betrayed by the administration's fiscal policies.
Elon Musk's Accusations
Musk has been vocal on social media, accusing the Trump administration of not adhering to its promise of fiscal responsibility and continuing to print money. He claims the current administration's "big, beautiful bill" undermines the cost savings achieved by DOGE. Musk also asserts that Trump would have lost the election without his support.
Donald Trump's Response
Trump responded by suggesting that Musk's change of heart stemmed from the cutting of EV mandates that benefited Tesla. He stated that Musk was well-aware of the details of the bill and only raised concerns after the EV mandates were targeted. Trump also expressed disappointment in Musk, whom he claimed to have helped.
Escalation and Personal Attacks
The conflict intensified when Musk tweeted that Donald Trump is in the Epstein files, suggesting this is the reason they haven't been made public. The feud's impact on Tesla stock is also being discussed online.
Amazon's Robotic Delivery System
Humanoid Robots Delivering Packages
Amazon is reportedly developing humanoid robots to deliver packages. These robots would ride in Rivian vans and then disembark to deliver packages to customers' doors. This initiative could potentially impact delivery drivers and expand Amazon's profit margins.
Competition in the Humanoid Robot Market
This development positions Amazon as a competitor to Tesla in the humanoid robot market. While Elon Musk envisions a $25 trillion market for Tesla's Optimus robots, the reality may involve more competition than some investors anticipate. Other companies, including those in China and Boston Dynamics, are also developing humanoid robots.
Amazon's AI Cloud Sales and Infrastructure Investment
Amazon's AWS CEO stated that AI cloud sales have reached multiple billions of dollars annually due to surging enterprise demand. To meet this demand, Amazon is investing over $100 billion in capital expenditures. This investment is expected to yield high returns on capital in the long term and contribute to future profit potential.
Expanding Profit Margins
Amazon's profit margins are expected to continue expanding due to the growth of highly profitable segments like AWS and advertising. The company's gross margin has more than doubled since 2011, and its operating margin is at an all-time high. Amazon is considered a business with many levers of growth and a strong moat, making it a potentially durable investment.
Brookfield's Strategic Investments
Partnership with Barclays
Brookfield Asset Management is partnering with Barclays to enhance its payment acceptance business. Barclays will invest approximately 400 million euros, while Brookfield will provide expertise and may acquire up to 80% ownership in the business over time.
Data Center Investment in Sweden
Brookfield is investing $10 billion in a Swedish data center to develop artificial intelligence infrastructure. This investment aligns with Brookfield's strategy of providing infrastructure and financing for AI development globally. They are one of the largest data center builders across Europe.
Brookfield's Investment Thesis
Brookfield's strategy is to build the backbone of the global economy and futurize it. The company has high insider ownership, aligning management's interests with shareholders. The presenter owns shares of Brookfield and believes they are undervalued.
MercadoLibre's Leadership Transition and Growth
CEO Stepping Down
MercadoLibre's CEO and founder is stepping down from the CEO position but will remain closely involved as executive chairman. The new CEO will assume the role on January 1, 2026.
Continued Involvement
The outgoing CEO will remain focused on strategy, product development, culture, capital allocation, and the application of artificial intelligence.
Business Expansion
MercadoLibre is a diversified business with accelerating growth across various segments, including e-commerce, advertising, digital payments, and digital banking. They are expanding across Latin America and have applied to become a 100% digital bank in Argentina. The Argentina revenue has increased significantly since 2020, and the fintech business is also growing rapidly. MercadoLibre's market cap is around $130 billion and trades for around 26 times profit potential, suggesting it's fairly valued.
A Potentially Undervalued Stock: Halozyme Therapeutics Inc.
Financial Metrics
Halozyme Therapeutics Inc. (HALO) is trading at a 13 price-to-free cash flow. Its revenues have been compounding at roughly 30% annually, and it has high gross and free cash flow margins. The company expects continued revenue and earnings growth in the coming years.
Why the Presenter Isn't Buying
Despite the strong financial metrics, the presenter is not buying Halozyme because it is a biotech company, and the business operations are outside of his circle of competence. He doesn't understand the company's technology or its future prospects with enough certainty.
Warren Buffett's Investment Philosophy
Circle of Competence
A Warren Buffett clip highlights the importance of understanding the economics of a business and its future prospects 10 or 20 years down the line. Buffett emphasizes investing only in companies within one's "circle of competence." Understanding the moat of the business and its ability to generate long-term profits is crucial.
Avoiding Speculation
The presenter emulates Buffett's approach, avoiding investments in new technologies or companies where the future is highly uncertain. He prioritizes businesses with a clear moat and predictable long-term prospects. Investing in businesses just for their financials or cheap multiples isn't sufficient. Understanding the business, its competitive advantage, and its future potential are necessary.