Is the AI Bubble Popping?

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Travis Hoium, Lou Whiteman, and Jason Hall discuss:

• AI bubble fears.
• SpaceX's spending ambitions.
• Consumer spending weakness.
• Netflix's growth challenges.
• Stocks on our radar.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Oct. 23, 2026.

Travis Hoium: Is the AI bubble popping? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Jason Hall. Guys, we've got to start with the big topic of the week. We had something of a mini meltdown yesterday with tech stocks, with AI-related stocks. Jason, are we starting to ask questions about, is there actually going return on this investment? Is this just the market taking a breather? How do you interpret this when you have one of these days where it seems like there's a lot of things that are down and a lot of conflicting reactions from the market and its participants?

Jason Hall: I think most investors have probably been asking for the past three years, is there going to be a real return on investment? But a lot of us, whether it's indexing or just by owning the biggest companies already, have been tied to AI, whether we necessarily wanted to be or not. I think Muse is actually a perfect case study of winning leading to losing, but then eventually maybe winning again.

Travis Hoium: Explain that because I think this is really interesting that this was a hip product. But it may actually mean that Meta's financials get worse before they get better.

Jason Hall: Yeah, especially for something like Muse, because one of the things we've heard a lot about, and we talk a lot about, it's actually one of the things that makes the Neoclouds compelling is because they've built infrastructure for this high intensive compute to make it work better and more efficient. A product like Muse as an AI agent, every instance has to have a virtual machine, like a computer, with a CPU and memory, and storage to be able to do the stuff. For us that a really good AI agent should be able to do. You give it access to your email, you give it access to calendar, other things you wanted to do, it has to be a computer to do that. That's just higher-intensity computing. By the way, Meta is not making a dime off of users at all. As the product becomes more popular.

Travis Hoium: Well, you can pay for it.

Jason Hall: That's true. The highest-end users, they do have some tiers. But the vast majority of people aren't touching that. What do we know 10 million downloads, so fast to reach 10 million downloads. I think we're making too big of a deal about that, saying it was so much faster than OpenAI was, and so much faster than Claude was. But yeah, those were years ago when people didn't even know what those things did, we're at the 0.3 years later, where this is more mainstream. You've got 2.5 million active users. If they 10X that number over the next year, and they could, and they're still not really monetizing it, it's going to take a heck of a lot of all this capex money that they're spending for infrastructure and then OpEx costs to run that infrastructure for the monetization model really, really kicks in.

Travis Hoium: Yeah, and we're not going to know for quite a while. It's going to be a little bit like Reality Labs. Great story. We're going to have to invest a ton of money. You're not going to know if it actually pays off until maybe 2030, maybe even 2035. Lou, it is interesting to me that so much of the discussion today was about, Hey, is there really an ROI on this investment? It seems like a question we should have been asking ourselves quite a while ago.

Lou Whiteman: That's the funny thing about the markets. We have been asking that question. It's so often it's not something new or novel that moves the stock market. I mean, sometimes it is, like, say, a pandemic comes out of nowhere, but a lot of times it's just things that we know suddenly matter to the collective, I don't know, the investor base. I would note you said a day, we're not closed Friday, as we tape yet, but we are heading for the NASDAQ down over 5% in two weeks. This is more than just a few bad days. This is turning into a trend. The one thing I'd say is we just had our fun with Meta. I think we need to wait because, with all respect to Meta and with all respect to even SpaceX and what they're doing with the Neo Cloud, we've only heard from the kids' table. We haven't heard from the adult table yet. [OVERLAPPING]

Travis Hoium: You're talking about Alphabet, AlphaSoft.

Lou Whiteman: Amazon, even Microsoft. I think that we will get a better read on sentiment on how this is going next week when the adults report. There's a lot of room for the alphabets of the world and all these guys to both recommit to AI to say, AI, we see the long-term ROI, but also we don't need to just boost our capex to the roof. We're steady as she goes, it's working, guys, just give us time. I don't know if it'll be enough to say stocks go higher, but it could calm the room. Now, we could have a disaster next week. I can't predict a future. We could have Alphabet going, Oh my God, we have to spend this, that, and the other. But look.

Travis Hoium: What do you think would be a positive reaction or get a positive reaction from the market, and what would get a if Alphabet says, we're increasing our spending, are we at the point where that's going to get a negative reaction, or is it the opposite?

Lou Whiteman: I think a huge increase in spending is going to get a negative reaction. I think the best-case scenario for next week is a calming of the markets because, look, some of these companies, they are now spending all of their cash flow, but Alphabet really isn't topsy-turvy yet. They are pretty close to just spending the cash that's coming in and augmenting it with some pretty good bond deals. They are fine right now. If they say, again, steady as she goes, we don't have to boost things to the moon. We don't have to, both SpaceX and Meta talked about, we're borrowing more, baby. I don't care what it costs. Meta even came up with a new version of stock just to raise money, among other things. This is silly season for these companies. There is a real chance to just get stability. We'll see if it happens. But I think there's at least a chance that this turns out to be a blip and not just the beginning of the end, depending on the vibes from next week.

Travis Hoium: Jason, I do want to touch on one of the companies that Lou mentioned that is SpaceX. Such an interesting position for SpaceX because they have a ton of growth in their AI business. They're effectively a Neocloud at this point, I think, maybe the largest Neocloud. But if you listen to that conference call, Elon Musk is talking about building potentially 20 gigawatts next year, in 2027. Ballpark, we're talking about somewhere around 500 billion to $1 trillion, and he says that the payback is a year, you're looking at potentially 500 billion to $1 trillion of new revenue. How do you interpret that? Because Musk has a history of these audacious statements. But we're now talking about even if that isn't hit, and it's $250 billion in new revenue and spending, these numbers are getting astronomical, and it seems like at least for now, for a day, the market said, Hey, awesome. This is great. I think the stock was up 10% the day after earnings came out, and then suddenly it dropped because the market's going. Wait, is this really good? Is this compute shortage going to last if we're going to spend $1 trillion on capex next year, just from one company?

Jason Hall: The Musk commentary is easy; you mostly answer the question yourself. How many Tesla semis are in operation? We've been hearing about that for a decade. The new Roadster, we've been hearing about that for more than a decade.

Travis Hoium: The cars that are appreciating assets.

Jason Hall: Exactly. Yeah, we know Musk, and I don't think he exaggerates. I think he sets wildly ambitious and unrealistic goals with intent, and that intent because even when the company falls short of its goals, it's often still wildly disruptive what it does and still the first mover in a lot of cases. There have been failures too. We've talked about the solar business and how that just hasn't panned out how it was expected to. But I think the directionality of Musk's comments are probably the most important thing, and this is a very real priority. We know let's look beyond SpaceX at Tesla with the Optimus robotics business and so many real-world things that I think this is all tied together. I think that's the real core. Here's the big thing. Even if SpaceX somehow managed to drop 500 billion in capex next year, let's assume that that's 500 billion combined between Tesla and SpaceX because they're going to be a year from now, they're going to be one company. I'm convinced that that's going to happen. Is there going to be enough investment in the grid to power them?

Travis Hoium: Well, they may just do it themselves. They said they're going to be effectively building gas turbines or some of the critical components themselves. I think SCA probably a piece of that. They're going to stays up in less than a year or two.

Jason Hall: Wait, directionality. Go ahead, Lou.

Lou Whiteman: Well, there is something interesting here, though, I think of these comments, and it feels like, again, it's so hard to nail down timelines with Elon sometimes. But we talked about this during the week, but there are two very different visions of the future, and someone's going to be wrong here. Elon is talking about how the price of compute is just going to keep going up and up and up, so that SpaceX is intentionally signing short-term deals to take advantage of the pricing power that they expect to have six months a year down the line. If you look at Amazon, Amazon is saying, we want to extend these deals out as long as we can. We have Meta still saying, like, look, if we build too much, we have excess capacity, we'll just lease it out because we think there's going to be a lot of excess capacity we can wiggle. Somebody's wrong here. Either the price of compute goes up from here, or it doesn't, SpaceX is making a big bet in one direction. Others are making another. I'm fascinated by I'm not smart enough to know who's right. I don't honestly think they do either. But it's really interesting to see one big company zig while others are zagging. We'll see how it works out.

Travis Hoium: If you want to know what's been going on in the market over the past week, this is the debate. This is the debate that the market is having with itself. Is who is right? Is this a short-term profitability play? Is this something that we can invest in AI at a scale of trillions of dollars for many, many, many years to come? We're having that debate with ourselves, so we'll see where things end up over the next couple of quarters.

Jason Hall: Final thought that I think people need to have in their heads about this. Name a single disruptive technology ever that's remained inflationary for the long term.

Travis Hoium: I mean, energy, maybe?

Jason Hall: No.

Travis Hoium: Put me on the spot. I can't think of it off the top of my head.

Jason Hall: That's my point. There really aren't any. I think betting that this is going to be different is risky.

Travis Hoium: Yeah, he's also predicted that some of these assets are going to be more valuable in the future in the past, and that hasn't worked out either. We'll see how things play out. When we come back, we're going to get to the state of the consumer. You're listening to Motley Fool Hidden Gems Investing.

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ADVERTISEMENT: Every Sunday, we cover the week's tech news on this week in Tech. Hi, this is Leo Laporte from the Twit Podcast Network, inviting you to join me this week for a Doozy. Jason Calcans and Gina Smith join me. We're going to talk about so many things. The flying car from Tesla, the guy who bugged the OpenAI conference room, wrapped it in toilet paper, and the new Surface laptop. It's all coming up on Twit. You'll find it at Twit.TV, and wherever you get your podcasts.

Travis Hoium: Welcome back to Motley Fool Hidden Gems Investing. We are early in earnings season, but a couple of companies caught my eye this week. Decker's Outdoor said that their sales are stalling out low single-digit growth for Hoka in particular, which has long been their big growth brand. GM's results were pretty meh. Sales volume is declining. Some of those bigger vehicles which really drive their profitability, not selling nearly as well as they were a year ago, and home sales plunged to a low for this century since some of these numbers were being recorded. Lou, is this a sign that consumers are weaker? Is there anything new here, or did we see this coming?

Lou Whiteman: It's very hard to read micro and macro, and I would just caution against that. I mean, partially because I think we're seeing what we want to see. Yeah, I think that things are harder than they were. When we tend to clamp on to data points in individual earnings reports that confirmation bias. I could paint a picture the other way that GM reported stable sales at a time when auto prices have never been higher and feel good enough about themselves to announce a massive buyback, even though their business is one of the most capital-intensive on Earth. That's not the sign of a bottom. Decker's one company stalling, sure.

But here, this is what I also know. Consumer retail sales grew by 4.9% in September. There is a micro-macro thing going on here where individual brands are saying we are not so sure about our future. But for now, the consumer is holding up. I do think things are going getting harder, not easier. If nothing else, I think the easy growth has gone for these companies. But that doesn't necessarily one-to-one equal that we are headed for a recession or a huge consumer slowdown. Bottom line is, I think as investors in individual companies, we have to watch these things, but it's dangerous to read really, like, broad macro trends into any one earnings report.

Travis Hoium: Jason, what do you think of what we've learned in the past couple of weeks?

Jason Hall: I mean, I think we're seeing continuation of a trend that for some time, we've seen in other consumer discretionary categories. The restaurant industry has taken it on the chin for multiple quarters at this point. A lot of retail. [OVERLAPPING]

Travis Hoium: If you on any restaurant stocks, it's been a really tough year or two for a lot of those companies.

Jason Hall: It really has. But that's carried over to other categories, too. You talked about one shoe company, we've talked a lot about Nike on this show and the challenges that they've had. We know there's business challenges there, but then there's also industry challenges. I've talked a lot about TJX Companies, for example, they highlighted last quarter that traffic was flat. That's a business that almost always reports growing traffic. Now, it's the outlier. It's outperforming most of its peers. To lose point, it's human nature like we gravitate towards where our biases, but also we're wired to find risk in the patterns. That's how we've evolved as a species. With that innate wiring, it doesn't really service as well in the modern world because we see noise where we might think that there's signal.

As investors, that's really dangerous. I just try to fall to just basic principles of trying to find opportunity inside these pools of risk because often there is there are great businesses that the cycle is not favorable or the macro is not favorable, instead of trying to precisely predict what's going to happen with the macro or the near-term cycle, getting it directionally right by buying those great companies like TJX or homebuilding. It's an ugly time in homebuilding. Meritage Homes has long outperformed the industry. They're just a better operator. They're in the right markets. You find those businesses when everything's beaten down, you buy the ones that are built to do fine when things aren't great. Then when things get better, which they eventually will, they're going to outperform again. As an investor, I think that's probably the better focus than living too deep in the macro, where we're just going to be so based on finding whatever supports our bias anyway.

Travis Hoium: Lou, one of the things that I always think about, too, is that we've been talking a lot about inflation and interest rates, those two things are related, but they're also headwinds for consumers. What is interesting with some of the data that's coming out now, particularly in autos and homes. The reason that those are so interesting is they drive a lot more than just the initial sales. There's a lot of employment that's involved. There's raw materials that are involved. But there's a lag between interest rates going up and home sales falling off a cliff. It seems like we've seen that over the past few months. But that is something that was in the works six months ago, a year ago. Are we just seeing kind of the fruits, the negative fruit from some of these pressures that have been building for quite a while now?

Lou Whiteman: Well, look, again, we talk about this a lot, but the consumer isn't just one person, and for every drip, another household falls into distress or so. I think it does build up over time. The other thing is there's a lag on normalization, too. We don't yet know if housing has fallen off a cliff because there's sticker shock right now and it will continue, or if we will normalize these mortgage rates in 6-8 months. We saw this before when there was an initial uptick hire. Eventually, people just adjusted and housing sales sort of stabilized.

Travis Hoium: Yeah, if you need to sell your house, you have to figure out the market clearing price. You adjust, you lower the price by 10%.

Lou Whiteman: Again, I think it's hard to read. Jason's right. You can find good companies. I think the real hack is find companies that can survive cycles and just ride the cycles, which I know is even harder still. But look, I don't think Things are great. I also don't think the sky is falling. I think we're just in this weird in-between where it's a slog, but especially on the stock market side, I think we can force our way higher from here. It's just not going to be like early days of an upturn, Ga Ga Ga.

Travis Hoium: Yeah, as much as the markets are near all-time highs, a lot of these areas that we're talking about with consumer goods have really struggled. Maybe opportunities there. More from Jason and Lou in a moment. You're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing, in a segment we like to have a little bit of fun with investing. Let's talk about what the future of some of these companies we've talked about looks like. We're going to play a little game called Over/under. Get some predictions from Lou and Jason. Guys, let's start with SpaceX. Lou, over or under $500 billion in capex for SpaceX next year? This number is coming from Elon Musk himself.

Lou Whiteman: What I'm tempted to say over, just because how much of it is just integration expenses, too. Look how broad we go with capex. But look, I think Elon, to the extent that he has the money to spend, will spend it. I think he's proven that. I'm not convinced of where they'll get it from, but I'm not going to bet against Elon Musk's ability to raise money.

Travis Hoium: We can't include the M&A capex of whoever's eating who in that deal, Lou. Nice. Nice try.

Lou Whiteman: I don't really have much to add. Even assuming the merger happens, I think it will. We're talking about a combined capex number. I think it's way under that, but it's directionally, it's still going to be a really big number.

Travis Hoium: You think under 500 billion will get to.

Lou Whiteman: Because that would be right around 10 gigawatts based on the current estimates for what it costs. That was the low end of what he thought that they could build in 2027.

Travis Hoium: Yeah, refer to my prior statements about everything Elon has ever said about when they're going to do great big things. Let's look at the estimates. This is not coming from Elon, but Jason, the market is expecting $290 billion worth of revenue from SpaceX. Do you think that's low or high?

Jason Hall: No, I think it's reasonable.

Travis Hoium: They're going to beat it?

Jason Hall: I think it's a push. It's going to be around there. They'll beat it by $1. How does that sound?

Travis Hoium: Over by $1. Lou, what do you got? Over/under?

Lou Whiteman: I'm going to take the under just to take the other side. Look, so much of it is just what is Neo Cloud pricing? Because so much of their revenue is I keep saying this, but this is a Neo Cloud with a space hobby. That is the one data point. We talked about this earlier, but will pricing a year from now be what it is now? I don't know, but just for fun, I'll say no.

Travis Hoium: I think we're still going to be constrained with supply, and that's going to push the pricing higher in a year. Two years is a different story. But what's demand? I think it's going to continue to grow.

Jason Hall: Maybe. At what price seems to be a critical question that we always forget to ask, of course, there's more demand. There's infinite demand at $0, but at $60 a megawatt, how much demand is there? I think they have three deals right now. A lot of questions to answer.

Travis Hoium: Let's move on to another full favorite, Rocket Lab, Lou, currently in a 66% drawdown. A lot of that is because of delays with their Neutron rocket. Over or under March 1, 2027, I don't know if that's the appropriate date, but that's where I said it. Over/ under when they're going to actually launch that. Basically, will they get it off by the end of the first quarter?

Lou Whiteman: I'm going to take no, they will not. It will be the second quarter at best.

Travis Hoium: Yeah, I think I agree. Peter Beck, I think maybe some of the perception is that he just allows things to happen on the timeline that makes sense. I promise he is pushing the teams hard to aggressively move forward, but he's also a lot more pragmatic about the realities. We think about what they're dealing with now, pushing the original duct they expected to launch before the end of the year. They pushed that timeline because they had some flaws in the carbon fiber for making the rocket. Well, they were using new equipment that had never existed before. When you solve old problems, you create new problems, and then you solve those new problems, and then you have other new problems to solve. That's very complex. There's so many laws of unintended consequences, things that are going to happen. I think it'll happen before the end of next summer, but I think March 1 is probably too aggressive.

Lou Whiteman: Yeah, I think delays is always the common thing. We've seen the same thing with SpaceX with some of their launches, but the iteration is happening extremely quickly for both of those companies right now.

Travis Hoium: Let's talk about the most popular new product. This one surprised me. I think if you order iPhone Duo right now, you're not going to get it till what? February, March. Jason, over or under 20 million iPhone Duos sold in 2027.

Jason Hall: The first thing that made me want to scream way way under was Dan Ives call for 25 million. He is wildly optimistic and wildly bullish about Apple most of the time.

Lou Whiteman: And about everything.

Jason Hall: That's true. You know, there's parts of that you love, but it's also like, Yeah, come on, Pal. What do we think here? But what do we know? We do know, like you said, they're selling them out as quickly as Apple can get them into stores. I think it's going to be under, but it's going to be close. Honestly, I think probably the thing that's going to limit it is the supply chain. They just can't make them quick enough.

Travis Hoium: Lou, is that the case?

Lou Whiteman: Well, it doesn't seem they want to. The last I saw is that Apple has increased its component in assembly orders by about 44%, but that's about 14 million units. Twenty seems to be a stretch. Like Jason said, I have no idea what the demand is. It's so hard to read early adapters. Well, it's so hard to extrapolate that. Just because, wow, there's a group of people who are willing to pay for it, does that mean all of us normals will? We'll see. But I do think that Apple, in maybe being conservative, they aren't going to go that far out in their supply chain ramp-up, so I wouldn't think they get there.

Travis Hoium: Let’s talk about a company we'll touch on in just a moment, as well. Netflix, expecting a little over $2.5 billion worth of ad revenue in 2026. Lou, are they going to be able to double that in 2027 to over $5 billion?

Lou Whiteman: As a Netflix user, I'm afraid they might. I'm going to take the under just because it's going to have to pump up to the next super-high extra tier. Look, it's going to take all of Ted Sarandos' management skills not to, because we'll talk about this in a second, maybe. But they are just in this mess right now, and the easiest way out of it is assuming that there is demand for ad placements on their platform. I think there is, is just load up with ads and juice. Earnings that way. I hope they don't, but I fear it might be closer to that 5 billion than I'd like as a consumer.

Travis Hoium: I think one of the reasons Reed Hastings never wanted to bring an ad tier is because he understands the incentives. You add the ad tier, and what's happened is that's become the ad-tier users are more valuable because the value of the ads than the premium ad-free tiers, which means that you can push up the price of the premium tiers. Maybe some of those customers will fall into the ad tiers, and they'll become more valuable, even though they're writing a smaller check every month. I think the combination of that messed-up incentives and the fact that they're expanding ad tiers into multiple new markets next year is probably going to result in them being able to hit it.

Lou Whiteman: I was trying to think if this would change our view on Netflix and what we're going to watch in our house, but to be honest, most of the Netflix this watched in our house is late at night when my wife's eyelids are closed. Maybe an ad tier is a great addition.

Travis Hoium: Yeah, because nobody knows if we're really watching them anyways. Let's look at the hyperscalers Meta, Alphabet, Microsoft, and Amazon. Jason, in 2025, they had $200 billion worth of free cash flow coming in the door. Those four companies alone. Next year, 2027, is that going to drop to zero, over, or under?

Jason Hall: If you're saying if the over is that it's going to be less than zero, maybe negative free cash flow.

Travis Hoium: Yeah, under zero would be negative.

Jason Hall: Yeah. I do think that there's a very good chance that they're going to be negative next year. We get to 2028. I'm not so sure. I think we're going to start to see some tapering off, and maybe some.

Travis Hoium: Would that tapering off be because they spend less on capex, or we're starting to see a payoff and there's a growth in revenue and operating cash flow?

Jason Hall: My answer is yes.

Travis Hoium: [LAUGHTER] Both things?

Jason Hall: Maybe I think by 2028, you have to start seeing both. Here's the bigger number I want to put out there. This is big. We're talking about those negative free cash flow numbers. They can afford it because these companies last year generated over $600 billion in operating cash. So far, through the first half of this year, we started to get some third-quarter results, that number is growing. A lot of that capex spend that's bringing free cash down is operating cash they're spending, not just issuing more stock or taking on debt, though both of those things are going to happen.

Lou Whiteman: I'm basically with Jason here. I think it's going to be negative in 2027, much less likely to be negative in 2028. I am more on the spending comes down in 2028. I think we're already seeing signs that you don't have to spend on the latest and greatest to get real productivity. That could actually flip the switch in 2027, but I doubt it. I think that there's going to be a perceived less need to spend by 2028, and that's going to bring down some of the totals.

Travis Hoium: Final question for you guys here. The context here, we've talked a lot about artificial intelligence and all the investments that is going into that. But Dylan Patel, who runs SemiAnalysis, said in a recent interview, as far as AI's impact on the U.S. economy, if AI revenue is only $3 trillion in 2031, then yeah, we'll have big problems. Lou, 2031 over or under $3 trillion in AI revenue in the US.

Lou Whiteman: I was trying to put context into this, and it's hard because everybody's got a different number, but the total annual business and enterprise software sales in the U.S. right now, depending on who you ask, is definitely under $1 trillion, anywhere 700-900 billion. I know this is total, so we could have consumers that's a lot of money for consumers. I just don't think the Pie is that big, even if we can do more with AI, even if, I mean, we're talking about a world where even if we replace all of our workers with AI, so we just, like, transfer utopia. Labor spending to AI spending, it's still hard for me to get the $3 trillion within five years. I am very much of the under and read into that and the prediction that went along with it, as you will.

Travis Hoium: Let's go with a bigger number, Lou. Let's go with U.S. GDP. I'm going to extrapolate a little bit. The most recent data we have is roughly, call it $33 trillion. Let's say we're at $35 trillion in 2031. Actually, let's just start from the 33 trillion we're at now. How much of that 3 trillion in 2031 is revenue that's offsetting something else, like labor costs or other software costs, and how much of it is true just gains in productivity, like net adds to the economy. What is stealing from somewhere else, and what is making the pie bigger?

Jason Hall: Exactly, 100%. I mean, we're talking 8% of the economy, either way, for the entire country, I have to take the under.

Lou Whiteman: Here's the thing. If this happens, holy moly inflation, the Fed did not tame inflation. [LAUGHTER]

Jason Hall: Yeah, if this does happen, this is what I keep coming back to and trying to think through all of these things is, as Patel said, if we don't hit 3 trillion, we got problems. But if we do hit 3 trillion, there are a whole different set of very big problems, Pall Volker. Call your office.

Travis Hoium: For very real people. It means likely that a lot of people have lost their jobs to AI. We'll see how this plays out. But hopefully, that's helpful in putting this into context. If you're an investor today, when we come back, we're going to get to the Stocks Center Radar. You're listening to Motley Fool Hidden Gems Investing.

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Guys, before we get to the Stocks Center Radar, I wanted to touch on Netflix. Netflix had a bit of a rough week. Jason, not growing as much as they used to. Maybe they need to lean on ads. It seems like engagement in the US is not what they would like. What do you take away from this week?

Jason Hall: The thing I've been thinking about with Netflix for a while now, Travis, is how many times can Netflix just be a winning disruptor? It disrupted traditional video rental. Then it disrupted its own mail-order business with streaming, and a lot of people don't really realize, then it disrupted its own streaming business and a lot of its content providers when it went big on starting to create much of its own content. Now, here in the past year and a half, it's disrupted its paid subscription-only model by adding a more profitable Ad tier. Is it facing death is maybe too strong of a word, but just a steady erosion of consumer appeal.

Over the past decade, look, there's just a lot more ways to consume video content that didn't really exist in the same way. We're talking about formats like Instagram and TikTok, and then production methods like user-created content. That's a huge deal, of course, as we know on YouTube. These things are alien to Netflix. That's before we even talk about mobile gaming. They've tried to get into gaming, and that's just been kind of a middling business, too. I think the big thing I've come to, Travis, is that Netflix doesn't seem to have any clear answers to any of those things.

Lou Whiteman: The problem isn't that it's us. Netflix is what it is.

Jason Hall: They've been treated like a tech company for most of their existence. Turns out they have, and still are a media company. The good news is there's a lot of people who like to invest in the company. The bad news is it isn't necessarily the same people that like investing in tech companies. We are seeing what happens with mature companies that have innovated, that have disrupted, but they're still, at their heart, members of an industry. The shareholder base is turning over. That's choppy. That doesn't mean Netflix is a disaster from here. It's just a different profile of a stock from here, and I think that's going to take time for the markets to get used. We should go through on a future show about where we rank some of these streaming services because now, as we're talking about it and thinking about it, I'm not sure Netflix would even be in my top three at this point in what we're watching in the house. Not where they were even just a few years ago.

Let's get to the Stock Center Radar and bring in Dan Boyd from behind the glass for his thoughts. Jason, you're up first. What do you? Here's a fun one we haven't talked about in a while. Intuitive Surgical ticker ISRG. This, of course, is one of the leaders, a first mover, top dog in robotic surgery. This is maybe really the first time in its history it's faced legitimate competition, but it continues to win. We just got earnings from it recently, mid-teens procedure growth. That drives that recurring consumable sales placed 546 of its DaVinci systems. That's its legacy core thoracic surgery system, 56 of its on systems, which is its do aluminal system. That's 28% more systems installed than it did in the same quarter a year ago. It has 13% more robotic surgery systems operating now than it did a year ago. Procedures growth 15%. The math says that even with competition emerging, surgeons and healthcare systems continue increasing their usage of the company's surgical systems. Trades for about 55 times earnings, 40 times cash flow. It's not cheap. It's never cheap by traditional metrics. This is a classic rule Breaker. But these levels, they still represent some of the most attractive we've ever seen from the company, or at least in the past decade.

Travis Hoium: Dan, what do you think about robots doing surgery?

Dan Boyd: I mean, I like hearing about competition in this space. Like, iron sharpens iron. I don't know. Maybe they got a bright future ahead of them.

Travis Hoium: This is a stock that I wish I would have bought a long time ago when Motley Fool started covering it. Lou, what do you got for us?

Lou Whiteman: Dan, I'm going in a different direction. I'm going with shares, taking a look at financial data firm MSCI. Ticker? You guessed it MSCI. Had a great week. Shares up nearly 10% after the company delivered a solid top and bottom-line beat. What does MSCI do? They run more than 300,000 equity and fixed income indexes. They license them to mutual funds, ETFs, make money off of that. Sort of a publishing business. They also sell a lot of analytics tools for risk managers. Pretty good suite of AI tools for professional investors, kind of to modernize the business. You have this great, stable index business that's generating a lot of cash, and I like the way they're investing in analytics, investing in tech. These tools are going to be table stakes in years to come for our industry as AI plays a more important role. Stock is priced at 30 times earnings. There's some growth priced in. It's not cheap, but I think MSCI is a big long-term winner for here. Everything we're talking about with AI, everything we're talking about it coming in and playing a bigger role in businesses, they're going to play a big role in that.

Travis Hoium: Dan, when Lou pitched this, I know you like a company where the name and the ticker are exactly the same.

Dan Boyd: I do like that a lot, Travis. I like a little bit of consistency, as we all well know. I also like that Lou used the words great and stable in his description of MSCI. Those are some good words. What's going on your watch list this week? MSCI or Intuitive Surgical.

Travis Hoium: As much as I like robots, and I don't really, so sorry, Jason, but we're going to go with MSCI this time around. I know it works. Congratulations to Lou for Lou Whiteman, Jason Hall, and Dan Boyd behind the glass. I'm Travis Hoium. Thanks for listening. We'll see you here tomorrow.

Jason Hall has positions in Intuitive Surgical, Meritage Homes, and TJX Companies and has the following options: long December 2027 $220 puts on Space Exploration Technologies. Lou Whiteman has positions in Rocket Lab. Travis Hoium has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Deckers Outdoor, Intuitive Surgical, MSCI, Meta Platforms, Microsoft, Netflix, Nike, Rocket Lab, TJX Companies, and Tesla. The Motley Fool recommends General Motors, Meritage Homes, and Space Exploration Technologies and recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.