Burry Triples Down on Lululemon as Valuation Drops to 12 Times Profit

Joseph Carlson After Hours

Lululemon trades at valuation levels pricing in terminal failure, creating asymmetric upside as aggressive share buybacks and durable brand loyalty outlast executive blunders.

AI-assisted summary of Michael Burry Keeps Buying This Stock — original source. Check the original for full context.

Source published: 2026-09-08

Key ideas

Michael Burry has made Lululemon his largest personal portfolio holding, aggressively buying down to roughly $100 per share on the thesis that its brand equity, $1.39 billion cash balance, and 5% to 10% annual float buyback capacity create asymmetric upside at an 11.9 forward P/E. (3:43)
Intuitive Surgical's valuation multiple has compressed from 50–60x down to a 31 forward P/E as annual revenue growth moderates to 12%–13%, even though its razor-and-blade model continues generating steady recurring revenue from single-use surgical instruments. (8:43)
Adobe is trading below a 10 forward P/E with an 8.5% post-dilution free cash flow yield, priced like an airline or legacy automaker due to fears of generative AI disruption despite 12.5% recent revenue growth and a 14-quarter streak of beating earnings estimates. (12:38)
The thesis that Tesla's Cybercab will render Uber obsolete overlooks peak demand variability, making a hybrid network of base autonomous vehicles supplemented by flexible human gig drivers economically superior to pure robotaxi fleets. (14:43)

Detailed notes

## Background Published on YouTube by Joseph Carlson After Hours on September 8, 2026, this episode examines why Michael Burry continues aggressively buying beaten-down shares of Lululemon despite steep market declines. According to the show notes, the video also covers the Tesla Cybercab launch event, competitive dynamics facing Uber, and an Elizabeth Holmes documentary trailer alongside broader stock deep dives.

## TL;DR Host Joseph Carlson analyzes three deeply beaten-down stocks—Lululemon, Intuitive Surgical, and Adobe—evaluating valuation compression, fundamental performance, and turnaround theses such as Michael Burry's high-conviction bet on Lululemon's brand equity and capital return capacity. The episode then evaluates Tesla's Cybercab rollout, pushing back against claims that autonomous vehicles will destroy Uber by highlighting the necessity of a hybrid model to navigate highly variable demand. Finally, the segment's 'fail of the week' investigates reports of stranded hikers who blamed Google Gemini for their ordeal, concluding that user negligence rather than AI hallucination caused the mountain rescue.

## Atmosphere & style The presentation carries Carlson's trademark measured, analytical cadence, blending dispassionate balance-sheet scrutiny with grounded, common-sense reasoning. The mood transitions seamlessly from patient financial deconstruction to candid skepticism when addressing market hype cycles around robo-taxis. A subtle comedic arc emerges during the closing segment, where righteous indignation at an AI blunder flips into wry amusement as the absurdity of the hikers' own poor decision-making comes to light.

## Bulletin - [03:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=223s) Michael Burry has made Lululemon his largest personal portfolio holding, aggressively buying down to roughly $100 per share on the thesis that its brand equity, $1.39 billion cash balance, and 5% to 10% annual float buyback capacity create asymmetric upside at an 11.9 forward P/E. - [08:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=523s) Intuitive Surgical's valuation multiple has compressed from 50–60x down to a 31 forward P/E as annual revenue growth moderates to 12%–13%, even though its razor-and-blade model continues generating steady recurring revenue from single-use surgical instruments. - [12:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=758s) Adobe is trading below a 10 forward P/E with an 8.5% post-dilution free cash flow yield, priced like an airline or legacy automaker due to fears of generative AI disruption despite 12.5% recent revenue growth and a 14-quarter streak of beating earnings estimates. - [14:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=883s) The thesis that Tesla's Cybercab will render Uber obsolete overlooks peak demand variability, making a hybrid network of base autonomous vehicles supplemented by flexible human gig drivers economically superior to pure robotaxi fleets.

## Key takeaways - [01:18](https://www.youtube.com/watch?v=I7i798VCm6w&t=78s) Lululemon has fallen 51% year-to-date and 76% over five years, with forward multiples compressing to 11.9 as expectations shift to a 1% revenue contraction and an 11% drop in earnings per share. - [03:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=223s) Michael Burry characterizes Lululemon as having a durable consumer brand held back by poor management execution, specifically misaligned marketing and slow responses to athleisure rivals like Vuori and Alo Yoga. - [06:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=398s) Lululemon maintains a strong liquidity cushion of $1.39 billion in cash and is retiring over 5% of its share float annually with minimal stock-based compensation dilution. - [06:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=398s) Historical precedent in apparel retailers, such as Abercrombie & Fitch and Ralph Lauren, demonstrates that out-of-favor consumer brands can experience massive multi-year reratings once operational headwinds normalize. - [08:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=523s) Intuitive Surgical's stock has slumped 36% year-to-date and sits flat over five years as revenue growth expectations have dropped from historical 20% rates to 12% to 13%. - [10:52](https://www.youtube.com/watch?v=I7i798VCm6w&t=652s) Intuitive Surgical relies on a 'printer and ink' operational model, where initial robot installations create sustained long-term revenue through disposable single-use tools, accessories, and maintenance services. - [12:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=758s) Adobe is down 61% over the past five years and is valued below 10 times forward earnings despite growing top-line revenue 12.5% in its most recent quarter. - [12:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=758s) Even after accounting for stock-based compensation, Adobe offers an 8.5% free cash flow yield and holds a track record of beating earnings per share estimates across 14 consecutive quarters. - [14:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=883s) Pure robotaxi networks face an inherent fleet optimization paradox: sizing for peak commute surges leaves excessive capital idling off-peak, while sizing for base hours forfeits rush-hour business. - [17:17](https://www.youtube.com/watch?v=I7i798VCm6w&t=1037s) Uber's existing hybrid approach—combining autonomous vehicles for predictable baseline demand with independent human drivers to absorb peak demand spikes—is structurally better positioned than closed autonomous fleets. - [17:50](https://www.youtube.com/watch?v=I7i798VCm6w&t=1070s) A viral story blaming Google Gemini for stranding three hikers on Mount Shasta proved to be a consequence of hiker negligence, after they ignored safety rules and summited seven hours after the designated turnaround window.

## Detailed walkthrough ### [00:00](https://www.youtube.com/watch?v=I7i798VCm6w&t=0s) Overview: Three Beaten-Down Stocks, Tesla's Cybercab, and AI Fails

The episode opens with a look at three heavily beaten-down companies currently sitting in dramatic price dips: Lululemon, Intuitive Surgical, and Adobe. Each comes with a unique narrative: - Lululemon has become the top personal bet of famed investor Michael Burry. - Intuitive Surgical, widely regarded as one of the highest-quality and fastest-growing medical equipment manufacturers in the world, is seeing its stock slide regardless. - Adobe, like much of enterprise software over the past year, has been battered but faces an upcoming Thursday earnings report that could spark a sharp rally similar to Salesforce.

Beyond individual stocks, the show previews major tech headlines. Tesla hosted another theatrical launch event for its steering-wheel-free Cybercab, prompting bold declarations from commentators like Ross Gerber that "Uber is toast"—a conclusion Carlson pushes back on by highlighting key dynamics Tesla bulls overlook. Finally, the segment's "fail of the week" spotlights Google Gemini after three hikers relied on the AI model to map out a trek, only for the venture to turn into a full-blown wilderness rescue disaster.

[01:18](https://www.youtube.com/watch?v=I7i798VCm6w&t=78s) The Fall of Lululemon: From Market Darling to Value Trap

Lululemon's stock chart reflects severe market punishment. The athleisure giant has become one of the worst-performing stocks of the year, falling 51% year-to-date, down 38% over the trailing twelve months, and plunging roughly 76% over a five-year horizon. This is a dramatic fall from grace for a company that post-2020 was widely hailed across Reddit, X, and investing Discords as "the new Nike" with an "unstoppable" brand narrative and consistent 15% to 20% annual top-line expansion.

That momentum has completely reversed into outright deceleration. Current projections anticipate a 1% decline in annual revenue and an 11% contraction in earnings per share (EPS). Facing both negative top-line growth and shrinking profits, generalist investors have fled, compressing the stock's forward price-to-earnings ratio over the next 12 months down to just 11.9. Carlson notes that this valuation falls well below commodity multiples, signaling that Wall Street is currently pricing Lululemon for outright capital destruction. Yet, as Peter Lynch famously observed, discarded companies undergoing severe operational stress can become some of the most lucrative "turnaround plays" in public markets if the underlying business survives.

```mermaid flowchart TD accTitle: Lululemon Turnaround Dynamic accDescr: Visualizing the shift from premium growth to depressed valuation and potential catalyst for a turnaround.

subgraph Headwinds["Operational & Market Headwinds"] A["Competition: Alo Yoga, Vuori, Costco Dupes"] B["Marketing Missteps: Off-target ad campaigns"] C["Growth Deceleration: -1% Rev, -11% EPS"] end

subgraph Valuation["Market Reaction"] D["Stock Drop: -51% YTD, -76% 5Y"] E["Multiple Compression: 11.9x Fwd P/E"] end

subgraph BurryThesis["Turnaround Catalysts (Burry's Thesis)"] F["Strong Core Brand Affinity"] G["Aggressive Share Buybacks (>5% to 10% Float)"] H["Pristine Balance Sheet: $1.39B Cash"] end

Headwinds --> Valuation Valuation --> BurryThesis ```

[03:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=223s) Michael Burry's Conviction and the Turnaround Thesis

Despite broad institutional abandonment, Scion Asset Management founder Michael Burry has been aggressively buying shares. Back in 2025, when Burry still managed external capital, Lululemon represented roughly a 32% fund position at an average purchase price of around $177 per share. After closing the fund to manage his own family office and write an investment blog, Burry disclosed in February 2026 that he was buying even more, stating he would "load the truck" if the price breached $150. Even with shares falling to around $100—putting him down roughly 45% on his initial cost basis—Burry has repeatedly doubled and tripled down, making Lululemon the single largest holding in his personal portfolio.

Burry's central thesis separates product reputation from corporate leadership: he views Lululemon as "a much better brand than a management team." The company retains durable brand equity and customer loyalty among affluent buyers, but leadership has suffered self-inflicted execution blunders, particularly in marketing and product styling.

- **Marketing Misalignment:** While fast-growing rivals like Vuori and Alo Yoga produce sleek, modern, aspirational campaigns, Lululemon ran ads featuring a 78-year-old grandmother working out in yoga pants—alienating its core demographic while competitors stole shelf space. - **Costco and Fast-Fashion Dupes:** Retailers began flooding the market with cheaper knockoffs, exploiting Lululemon's lack of fresh product differentiation. - **Priced for Failure:** At an 11.9 forward multiple, virtually all operational mishaps, brand dilution fears, and margin compression are fully priced into the equity. Any baseline stabilization or operational improvement creates asymmetric upside.

[06:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=398s) Capital Allocation: Buybacks, Cash Reserves, and Historical Comps

A major pillar supporting the bull case is aggressive capital return. At depressed valuation levels, share repurchases generate significant accretive value for remaining shareholders: - **Share Count Reduction:** Lululemon is already retiring more than 5% of its total share float annually with virtually zero stock-based compensation dilution. - **Buyback Capacity:** Given depressed prices, management could easily accelerate repurchases to retire between 7% and 10%+ of outstanding float annually. - **Balance Sheet Strength:** Outside of routine mall lease liabilities, the business holds $1.39 billion in cash, granting significant liquidity to buy back stock at deep discounts.

To illustrate how quickly market sentiment can pivot in apparel, Burry compares Lululemon to Abercrombie & Fitch. Once written off by investors, Abercrombie shares traded near $30 in 2022, rocketed to $185, pulled back to $83, and recovered back toward $150 per share. Burry similarly points to Ralph Lauren's historical cycles, arguing that high-tier retail brands regularly encounter deep troughs where sentiment turns excessively bleak before a strategic correction drives a massive multi-year rerating.

[08:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=523s) Concluding Thoughts on Lululemon and Moving to Intuitive Surgical

Wrapping up the previous discussion on beaten-down stocks, the host points out that over the past 10 years, we have seen similar setups where people completely gave up on a stock in 2022 just before it went on a meteoric rise. With Lululemon, the single biggest factor to determine is whether the company's current struggles are temporary or permanent. If there is a chance Lululemon can reaccelerate growth, recover its marketing, and get back on track to any degree, the stock could experience a massive turnaround.

Shifting to the next company, the host introduces Intuitive Surgical—a business he has historically avoided simply because it operates in the medical field. Like most medical businesses, the industry is tough to understand and bogged down by heavy regulations and red tape, making it a difficult sector to invest in. However, Intuitive Surgical stands out with a very unique and exceptionally good business model.

Despite its quality, Intuitive Surgical's stock is in a steep decline. It has been crushed year-to-date (down 36%), is down 23% over the one-year mark, and sits completely flat over a five-year period, only showing its broader upward trend when zooming out to the 10-year chart. At a glance, it looks like a high-quality stock where overly excited investors got ahead of themselves and are now pulling back as momentum fades. Unlike Lululemon (which trades at a 10 P/E and a 12% free cash flow yield), Intuitive Surgical is still relatively expensive. Its forward P/E ratio has cooled down from the 50s and 60s to a more reasonable—yet still premium—31, alongside a modest free cash flow yield of only 2.56%. The key difference is that Intuitive Surgical is still actively growing revenue, though its deceleration is what spooks the market: after previously growing at 20%, analyst expectations have dropped to 12% growth for the next quarter and 13% over the next year, leading investors to worry about market saturation and compress its high-flying valuation.

[10:52](https://www.youtube.com/watch?v=I7i798VCm6w&t=652s) Intuitive Surgical's "Printer and Ink" Business Model

The host notes that he has started studying Intuitive Surgical and plans to do a full deep dive later, but offers a basic rundown of its operations using a classic "printer and ink" analogy. When you buy a home printer, the upfront machine isn't too expensive, but once it runs out of ink, you are forced to continuously buy very expensive replacement cartridges.

```mermaid flowchart LR accTitle: Intuitive Surgical's Three-Pillar Revenue Model accDescr: Diagram showing how initial surgical system installations drive ongoing revenue from disposable instruments and maintenance services. subgraph Base["1. Initial Sale (The Printer)"] A["Install Surgical Systems (2,000 new systems TTM)"] end subgraph Recurring["2. Recurring Revenue (The Ink & Upkeep)"] B["Instruments & Accessories (Single-use per surgery)"] C["System Services (Ongoing maintenance & repairs)"] end A -->|"Requires compatible tooling"| B A -->|"Complex hardware breaks down"| C ```

Intuitive Surgical operates the exact same way across three distinct revenue pillars: - **Systems (The Printer):** The company starts by selling complex surgical devices to clinics, hospitals, and medical systems. While they make money on the initial hardware sale, that is not where they make the bulk of their profits; rather, everything relies on getting these systems installed first. On a trailing 12-month basis, they have installed 2,000 new systems (representing annual new installations, not the total installed base). - **Instruments and Accessories (The Ink):** Once a hospital has the surgical device, every single surgery requires specialized tooling and disposable, single-use accessories compatible with the system. This constant replacement of parts during every procedure drives the biggest portion of the company's revenue. - **Services (Printer Maintenance):** Because these surgical systems are complex and occasionally break down, Intuitive Surgical also handles the ongoing maintenance and repairs, generating a steady third stream of service revenue.

[12:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=758s) Adobe: Priced Like an Airline in the AI Disruption Debate

The final stock on the list is Adobe, which sits right at the center of the AI disruption debate. The stock has fallen another 3% to $256, bringing it down 23% year-to-date and a staggering 61% over the past five years. The prevailing market narrative—which grows louder every quarter—is that competition is catching up, AI image and video creation and editing tools are improving daily, and Adobe's pricing power is eroding.

Yet, while the narrative worsens, Adobe's actual fundamentals keep moving in the right direction. Just last quarter, the company grew by a fast 12.5%, with revenue expanding across every business segment. Forward estimates do show a slight slowdown—projecting 13% earnings per share (EPS) growth alongside 9% year-over-year revenue growth—which has investors worried that AI disruption is finally showing up in the numbers. However, the host argues these valid concerns are already fully priced in. Adobe currently trades below a 10 forward P/E ratio. Despite being a high-margin, faster-growing software business, it is being valued like an automaker such as Ford, or "getting close to the airline category."

| Metric | Adobe (ADBE) | Lululemon (LULU) | Intuitive Surgical (ISRG) | |:--- |:--- |:--- |:--- | | **YTD Stock Performance** | -23% | — | -36% | | **5-Year Stock Performance** | -61% | — | Flat (0%) | | **Forward P/E Ratio** | < 10 | 10 | 31 (down from 50s–60s) | | **Free Cash Flow Yield** | > 10% (8.5% after SBC dilution) | 12% | 2.56% | | **Expected Revenue Growth** | 9% YoY (12.5% last quarter) | Stagnating | 12% next quarter / 13% next year |

Furthermore, Adobe's free cash flow yield is now above 10%. Even after accounting for stock-based compensation—which makes up around 19% of total free cash flow—investors are looking at an 8.5% dilution-adjusted free cash flow yield. With Adobe set to report earnings after the market closes on Thursday, the host highlights its remarkable track record: out of the past 14 quarters, Adobe has literally never missed on EPS estimates. Guessing that they will do the exact same thing they always do and beat expectations by 2% to 3%, he notes that sentiment is so rock-bottom that any glimmer of hope, "any magic that's introduced into the stock," or any positive guidance could spark renewed enthusiasm and send the stock jumping big in a single day.

[14:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=883s) Tesla's Cybercab Launch and Why Uber Isn't "Cooked"

Turning to recent tech news, Tesla held its Cybercab launch event. Even though there was no gigantic livestream spectacle, plenty of creators uploaded footage of themselves climbing into the Cybercab and letting it drive them around on smaller trips within a localized area in Texas. While the media and reporters weren't overly impressed by the rollout, one reporter noted that as the ride went on, "it was kind of boring. And it's boring because it was doing what we do every day, and that is drive a car like a normal kind of person, but it was a robot." That, the argument goes, is precisely what Tesla needs to achieve: putting robot cars on public streets without incidents, making the experience boring, and gradually building out an audience.

This progress has led many commentators, including investor Ross Gerber, to predict that autonomous rides will spell doom for Uber. Gerber stated: "I think humans have to differentiate the service level from the robo-taxis, and then they'll be able to compete, but on a whole, I think Uber's cooked."

The host strongly disagrees with the idea that growing robo-taxi networks will put Uber in serious trouble, pointing out that many investors overlook the crucial concept of **highly variable demand**. Across most US cities and territories, ride demand is heavily concentrated into just a couple of rush-hour windows per day when everyone needs a ride all at once, followed by much quieter traffic for the rest of the day. A standalone robo-taxi network faces a catch-22 when trying to manage this: - **Option A (Size for Normalized Demand):** They build a fleet solely to handle baseline, normal hours (represented as dark blue hours on a demand chart), which leaves them without enough vehicles to capture peak rush-hour demand. - **Option B (Size for Peak Demand):** They overinvest and buy a massive fleet just to cover peak rush hours, leaving way too many expensive vehicles sitting idle, inefficient, and ineffective during normal hours.

Uber naturally solves this problem because its supply is just as variable as its demand. Whenever demand spikes, everyday people can leave their homes, pull their personal cars out of the garage, jump onto the Uber app, and absorb the rush-hour surge. Therefore, the host concludes that the optimal setup is a hybrid approach: utilizing autonomous vehicles that run continuously to handle normalized baseline demand throughout the day, while keeping human drivers in the loop for peak spikes. Crucially, Uber already operates this exact hybrid model—it already commands the human driver network while actively introducing and partnering with robo-taxi providers.

[17:17](https://www.youtube.com/watch?v=I7i798VCm6w&t=1037s) Autonomous Fleets: Why Uber's Hybrid Model Wins

While Tesla continues testing and rolls out roughly 40 vehicles on the road, with plans to expand slowly across various metropolitan areas over time, Uber is already pursuing a parallel path with autonomous vehicles. Driverless cars are already operating on Uber's network, and the company is integrating more of them continuously.

The optimal endgame for ride-hailing is not a pure play, but a hybrid model. This setup elegantly balances steady baseline demand throughout the day with erratic spikes during peak hours when everyone needs a ride at once. Fleets composed entirely of robotaxis would sit idle during off-peak hours or fail to handle massive surges. By combining autonomous vehicles with independent human drivers, Uber can service both predictable daily volume and sudden surges. As long as passengers know they can open the app and reliably get a ride because supply meets demand, Uber’s network will remain exceptionally valuable.

```mermaid flowchart TD accTitle: Uber Hybrid Model Architecture accDescr: Flowchart illustrating how Uber balances steady base demand and variable peak demand using robotaxis and human drivers.

subgraph DemandTypes["Demand Fluctuations"] BD["Stable Base Demand (Throughout Day)"] PD["Peak Variable Demand (Commute & Weekend Surges)"] end

subgraph Fulfillment["Hybrid Network Fulfillment"] AV["Autonomous Fleet (Robotaxis / Driverless)"] HD["Human Drivers (Flexible Gig Supply)"] end

BD --> AV PD --> HD AV --> UN["Uber Network Reliability"] HD --> UN ```

[17:50](https://www.youtube.com/watch?v=I7i798VCm6w&t=1070s) "Fail of the Week": The Mount Shasta Gemini Controversy

The discussion pivots to the segment's "Fail of the Week." Although Joseph Carlson holds Google in high esteem and has generated substantial investment returns from Alphabet, he initially calls out Google's Gemini AI for what news reports framed as a massive blunder involving three stranded hikers from Roseville, California.

```mermaid flowchart TD accTitle: Mount Shasta Hikers Timeline accDescr: Timeline of events for the three hikers on Mount Shasta from departure to rescue.

A["Saturday: Base Camp Set"] --> B["Sunday 3:00 AM: Depart with Day Packs"] B --> C["12:00 PM: Recommended Turnaround Time (Ignored)"] C --> D["7:00 PM: Reached Summit (7 Hours Late)"] D --> E["8:00 PM: Descent Begins / Call Dispatch for Directions"] E --> F["Wandered into Mud Creek Canyon"] F --> G["Monday Morning: Rescued by USFS Climbing Rangers"] ```

A news broadcast segment reveals that the Siskiyou County Sheriff's Office Search and Rescue Team and US Forest Service Climbing Rangers had to rescue three men stranded along the Clear Creek Route on Mount Shasta. Following their evacuation, the hikers claimed they had relied heavily on Google Gemini for trip planning, route details, and packing recommendations. The Sheriff's Office issued warnings that Gemini made a "critical misstep" by recommending inadequate food and water supplies, which backfired when their planned eight-hour ascent spiraled into an emergency multi-day ordeal.

As the broadcast unpacks the timeline, Carlson's initial frustration with Google shifts toward skepticism of the hikers themselves: - **Departure:** The hikers established base camp on Saturday and departed with basic day packs at 3:00 a.m. on Sunday morning. - **Ignored Cutoff:** The universally recommended turnaround time for Mount Shasta is 12:00 p.m. to avoid being trapped after dark. Instead of turning back, the men pressed forward and summited at 7:00 p.m.—seven hours past the safety window. - **Wrong Turn:** One hour into their descent at 8:00 p.m., in the pitch dark, they called the sheriff's dispatch asking for directions, drifted off-trail, and became stuck in the steep drainage of Mud Creek Canyon until rangers extracted them Monday morning.

Carlson completely re-evaluates the verdict: "I've actually changed my mind on this one. I'm no longer highlighting Gemini as the failure. I'm highlighting these three hikers." The hikers followed basic preparation instructions for a standard day hike, ignored essential mountaineering turnaround safety rules, got lost in treacherous terrain, and then blamed the AI to save face. He notes the emerging cultural trend: whenever things go smoothly, people take personal credit, but when reckless decisions lead to disaster, "it was the AI." Gemini packed them for an eight-hour route, not an unplanned two-day survival scenario caused by user error and poor navigation.

## Notable quotes > [00:00](https://www.youtube.com/watch?v=I7i798VCm6w&t=0s) Uber is toast — Ross Gerber

> [03:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=223s) load the truck — Michael Burry

> [03:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=223s) a much better brand than a management team. — Michael Burry

> [12:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=758s) getting close to the airline category. — Joseph Carlson

> [12:38](https://www.youtube.com/watch?v=I7i798VCm6w&t=758s) any magic that's introduced into the stock, — Joseph Carlson

> [14:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=883s) it was kind of boring. And it's boring because it was doing what we do every day, and that is drive a car like a normal kind of person, but it was a robot. — Reporter

> [14:43](https://www.youtube.com/watch?v=I7i798VCm6w&t=883s) I think humans have to differentiate the service level from the robo-taxis, and then they'll be able to compete, but on a whole, I think Uber's cooked. — Ross Gerber

> [17:50](https://www.youtube.com/watch?v=I7i798VCm6w&t=1070s) I've actually changed my mind on this one. I'm no longer highlighting Gemini as the failure. I'm highlighting these three hikers. — Joseph Carlson

## Mentioned Joseph Carlson, Michael Burry, Lululemon, Intuitive Surgical, Adobe, Salesforce, Tesla, Cybercab, Ross Gerber, Uber, Google Gemini, Alphabet, Google, Nike, Peter Lynch, Alo Yoga, Vuori, Costco, Scion Asset Management, Abercrombie & Fitch, Ralph Lauren, Ford, Mount Shasta, Siskiyou County Sheriff's Office, US Forest Service, Elizabeth Holmes, Qualtrim, M1, Reddit, X, Discord

## Video description Join Qualtrim, the stock analysis platform I built and use, and join over 13,000 other paying members: https://www.qualtrim.com/

00:00 Why Michael Burry Keeps Buying Lululemon 16:30 Tesla Cybercab Launch event 19:27 Elizabeth Holmes Documentary Trailer

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[Source](https://www.youtube.com/watch?v=I7i798VCm6w)

中文简报

估值跌至12倍利润，Burry三倍重仓Lululemon Lululemon的估值水平已反映出近乎终局性失败的预期，而激进的股票回购和持久的品牌忠诚度有望挺过管理层失误，从而带来不对称的上行空间。主持人Joseph Carlson分析了三只遭遇重挫的股票——Lululemon、Intuitive Surgical和Adobe，评估了估值压缩、基本面表现以及反转逻辑，例如Michael Burry对Lululemon品牌资产和资本回报能力的高确信度押注。本期节目随后评估了特斯拉Cybercab的推出，通过强调应对高度波动的需求时混合模式的必要性，反驳了自动驾驶汽车将摧毁Uber的说法。最后，本期的“每周败局”调查了被困徒步者将遭遇归咎于Google Gemini的报道，认为导致山地救援的原因是用户自身疏忽而非AI幻觉。 Michael Burry已将Lululemon列为其个人投资组合的第一大重仓股，在跌至约100美元/股时大举加仓，其逻辑是凭借品牌资产、13.9亿美元现金储备以及每年回购5%至10%流通股的能力，在11.9倍预期市盈率下具备不对称的上行空间。 (3:43) Intuitive Surgical的估值倍数已从50–60倍压缩至31倍预期市盈率，尽管其“剃刀与刀片”模式继续从一次性手术器械中产生稳定的经常性收入，但其年营收增速已放缓至12%–13%。 (8:43) 由于市场对生成式AI颠覆的担忧，Adobe的交易估值已低于10倍预期市盈率，稀释后自由现金流收益率为8.5%，估值定价堪比航空公司或传统汽车制造商，尽管其近期营收增长12.5%且连续14个季度超出盈利预期。 (12:38) 认为特斯拉Cybercab将淘汰Uber的论点忽视了峰值需求的不稳定性，这使得以基础自动驾驶汽车为主、辅以灵活人类零工司机的混合网络在经济性上优于纯Robotaxi车队。 (14:43)

Reading summary

Joseph Carlson analyzes market pessimism across heavily discounted equities—highlighting Michael Burry's aggressive turnaround bet on Lululemon alongside compressed valuations in Intuitive Surgical and Adobe—while disputing claims that Tesla's Cybercab threatens Uber's business model. Burry's Asymmetric Turnaround Bet on Lululemon (1:18) Lululemon has fallen 51% year-to-date and roughly 76% over five years, weighed down by projections of a 1% revenue drop and an 11% contraction in earnings per share. This deceleration compressed its forward price-to-earnings ratio to 11.9. Despite broad institutional selling, Scion Asset Management founder Michael Burry made Lululemon his largest personal holding. Burry initially built a 32% fund allocation at an average cost around $177 per share in 2025 and continued buying down toward $100 after transitioning to a family office, absorbing an estimated 45% unrealized decline. Burry separates the company's durable brand loyalty from management's operational missteps, which include marketing blunders—such as promoting yoga pants with a 78-year-old grandmother rather than aspirational imagery—and exposure to lower-cost dupes while competitors like Vuori and Alo Yoga gained market share. The turnaround thesis is anchored in valuation and capital return: with $1.39 billion in cash, Lululemon is repurchasing over 5% of its shares annually with minimal stock-based compensation dilution, with capacity to reach 7% to 10% or more. Drawing parallels to multi-year turnarounds at Abercrombie & Fitch and Ralph Lauren, the thesis holds that current pricing reflects outright failure, leaving asymmetric upside if operations stabilize. Valuation Disconnects at Intuitive Surgical and Adobe (8:43) Carlson identifies contrasting opportunities in Intuitive Surgical and Adobe, where market worries have driven sharp multiple compressions despite operational resilience. Intuitive Surgical's stock is down 36% year-to-date and flat over five years as revenue growth slowed from 20% to projected rates of 12% to 13%. However, the company relies on a recurring 'printer and ink' model: selling surgical systems (2,000 systems installed over the trailing twelve months) establishes a captive base for higher-margin, single-use instruments, accessories, and maintenance contracts. While its forward P/E has declined from the 50s and 60s to 31, its valuation retains a premium compared to traditional value plays. Adobe faces aggressive skepticism over AI disruption, falling 23% year-to-date and 61% over five years to $256. Carlson argues that narrative has outrun reality: Adobe grew revenue 12.5% in its latest quarter, projects 9% top-line and 13% EPS growth, and has not missed EPS targets across the past 14 quarters. Valued below 10 times forward earnings—a multiple Carlson compares to airlines and legacy automakers—Adobe yields over 10% in free cash flow (8.5% adjusted for stock-based compensation), setting up potential sharp repricing on any positive earnings surprises. Tesla's Cybercab and Uber's Hybrid Advantage (14:43) Following Tesla's localized Cybercab demonstrations in Texas, market commentators such as Ross Gerber claimed autonomous networks would render Uber obsolete. Carlson rejects this forecast, arguing that pure-play robotaxi fleets cannot efficiently handle urban ride-hailing's highly variable demand curves. If an autonomous operator dimensions its vehicle fleet solely for baseline hours, it forfeits peak rush-hour volume; if it sizes fleet capacity for peak demand, expensive capital assets sit unprofitable and idle throughout off-peak hours. Carlson argues Uber's structural advantage lies in a hybrid platform that pairs full-time capacity with an elastic supply of human gig drivers who absorb surge-hour traffic. Because Uber already operates driverless vehicles alongside human drivers on its network, it provides the requisite routing scale and passenger reliability that pure autonomous hardware providers currently lack. Mount Shasta Rescue and AI Blame Shifting (17:50) The segment's 'Fail of the Week' initially examined reports that three hikers stranded on Mount Shasta's Clear Creek Route required rescue by Siskiyou County Search and Rescue and Forest Service rangers after relying on Google Gemini for trip planning. Local authorities warned that Gemini committed a critical error by recommending inadequate rations for the climb. However, examining the incident timeline led Carlson to shift blame away from the AI tool and onto user error. The hikers departed at 3:00 a.m. on Sunday with day packs but ignored the universally advised 12:00 p.m. turnaround cutoff, reaching the summit seven hours late at 7:00 p.m. They descended in pitch darkness, strayed off-trail into Mud Creek Canyon, and called dispatch for directions at 8:00 p.m. before their Monday morning evacuation. Carlson concludes that the hikers used Gemini's standard day-hike checklist, violated basic mountaineering safety rules, and attributed the resulting multi-day survival ordeal to the AI model. Across consumer retail, medical devices, enterprise software, and mobility, Carlson asserts that excessive market pessimism creates stark mispricings, while real-world operational complexities—from ride-hailing demand curves to personal decision-making—continue to confound surface-level market narratives.

Source quotes

[0:00] Ross Gerber: Uber is toast [3:43] Michael Burry: load the truck [3:43] Michael Burry: a much better brand than a management team. [12:38] Joseph Carlson: getting close to the airline category. [12:38] Joseph Carlson: any magic that's introduced into the stock, [14:43] Reporter: it was kind of boring. And it's boring because it was doing what we do every day, and that is drive a car like a normal kind of person, but it was a robot. [14:43] Ross Gerber: I think humans have to differentiate the service level from the robo-taxis, and then they'll be able to compete, but on a whole, I think Uber's cooked. [17:50] Joseph Carlson: I've actually changed my mind on this one. I'm no longer highlighting Gemini as the failure. I'm highlighting these three hikers.

Original transcript

[0:00] Welcome back everyone. Today on the [0:01] Joseph Carlson Show, we have three [0:02] stocks that are all beaten down. These [0:04] are companies that are in dramatic dips. [0:06] We're going to be going over all three [0:07] of them. They're Lululemon, Intuitive [0:10] Surgical, and Adobe. And all three of [0:12] these have stories. For example, [0:14] Lululemon is the top investment from [0:16] Michael Burry. Intuitive Surgical is one [0:18] of the biggest medical equipment makers [0:19] in the world. It's considered one of the [0:21] highest quality companies in the world. [0:22] It's still growing fast, but the stock [0:24] price is going down. And then we have [0:26] Adobe, which like many software [0:28] companies, it's been beat down for the [0:30] past year, but it's reporting earnings [0:31] this Thursday. Could it have a big bump [0:33] like Salesforce? I'll be making my [0:35] predictions here. We also have news to [0:37] get into today. For example, the [0:39] Cybertruck launch happened. Tesla had [0:41] the same type of theatrical event. They [0:43] had lots of people jump in, and they [0:45] drove around in vehicles that didn't [0:46] have steering wheels. So, I'll be giving [0:48] some thoughts on this as many investors [0:49] have concluded at the launch of the [0:51] Cybertruck that Uber is dead. Even Ross [0:54] Gerber said that Uber is toast. We'll be [0:57] looking at the significance of the [0:58] Cybertruck event, and what I believe a [1:00] lot of Tesla investors are missing in [1:02] this discussion. And then finally, we [1:04] have the fail of the week, which this [1:05] week unfortunately is Gemini. I have to [1:08] outline Gemini here because three hikers [1:11] used Gemini to plan a hiking trip, of [1:13] which it turned out to be a complete [1:15] disaster. So, we're going over that [1:17] story as well. Now, we start things off [1:18] by looking at Lululemon, the yoga pants [1:21] company, and this one is in a lot of [1:23] trouble. The stock price continues to [1:25] plummet. In fact, when we look at [1:27] Lululemon this year, it's quite [1:29] literally one of the worst performing [1:30] stocks of the year. Year-to-date, it's [1:32] down 51%. If we zoom out in the past [1:34] trailing year, it's down 38%. The past 5 [1:37] years, check this out. Lululemon is down [1:39] 76%. [1:41] Now, when we find a stock like this, [1:43] which was just recently considered a [1:45] great brand and a great stock, in fact, [1:46] it was unstoppable, now it seems like [1:49] nobody wants to buy it, that creates an [1:51] interesting dynamic. These are [1:53] turnaround plays. Peter Lynch called [1:55] them turnaround plays, and he said that [1:56] they're some of the best opportunities [1:57] in the market if you get them right. [2:00] What's happening with Lululemon today is [2:02] that the stock is going through a very [2:03] troubling time. So, if we look at the [2:05] revenue growth, this company was growing [2:07] revenue continually in the 15% to 20% [2:10] per year after COVID, after the 2020 [2:13] bump, it gained a ton of market share. [2:15] This period of time, Lululemon was [2:18] unstoppable. I saw it all through the [2:20] internet, on Reddit, on X, on every [2:22] stock forum, on every Discord, people [2:24] were talking about Lululemon. This [2:26] unstoppable clothing company, it's the [2:28] new Nike. The story had a lot of magic [2:30] in it at the time. [2:32] But then, things started to change. [2:34] Operations shifted. The management [2:37] screwed up big time. A lot of [2:39] competitors started mimicking their [2:40] product. You had Alo Yoga, you had Vuori [2:43] imitating their products and making even [2:44] different variations of it. Companies [2:46] like Costco sold dupes of Lululemon. And [2:49] the growth started to slow down. In [2:52] fact, the growth over just the past year [2:54] has basically flattened out to be low [2:56] inflation. The revenue hasn't only [2:58] slowed down over the past year, it [2:59] continues to decelerate and even go into [3:01] the negative. In fact, the forecast for [3:03] this upcoming year are minus 11% EPS [3:07] growth. So, EPS are going to decline and [3:09] minus 1% revenue growth. So, while the [3:12] growth has heavily slowed down, it's [3:13] decelerated and it's even going into the [3:15] red, we have investors abandoning the [3:17] stock. And that's what's pushing down [3:18] the price. And it's also pushing down [3:20] the multiples that the stock trades at [3:22] today. The forward PE ratio over the [3:25] next 12 months is 11.9. [3:27] And that's assuming earnings per share [3:29] shrinking. These valuations are well [3:31] below commodity multiples, meaning that [3:33] Lululemon is currently being priced for [3:34] capital destruction. And while most [3:36] investors have given up on Lululemon, [3:38] there's still a few investors that have [3:40] hope. They believe a turnaround will [3:42] eventually happen. Michael Burry is one [3:44] of them. In fact, Michael Burry has been [3:45] interested in Lululemon for quite a [3:47] while. In fact, going back to 2025 when [3:49] he was still managing his fund, he had [3:51] Lululemon as a 32% position. The average [3:54] share price was 177. So, the shares are [3:57] roughly down 45% since the purchase [3:59] price of this fund. We also have a more [4:01] recent update. In February of 2026, he's [4:03] no longer managing his fund, he's just [4:05] managing his own money and he's running [4:07] a blog. Michael Burry said that [4:09] Lululemon has pulled back and I'm adding [4:11] to my position a bit. So, Michael Burry [4:13] was buying the stock at 177 earlier this [4:16] year with his own personal money. And he [4:18] said that he would load the truck if the [4:19] stock falls below 150. Right now, it's [4:22] $100 per share. So, it's substantially [4:24] down below his own cost basis. And [4:27] Michael Burry hasn't been discouraged by [4:29] this. In fact, he's continued to double [4:31] and triple down on this, continuing to [4:33] buy more and more Lululemon. His most [4:35] recent indications are that he's still [4:37] overwhelmingly bullish on this company. [4:39] And in fact, it's now his largest [4:41] position in his personal account. So, [4:43] what does he see with this stock? Well, [4:45] there's a couple things that he's [4:45] outlined. The biggest one is that he [4:47] believes Lululemon is a much better [4:50] brand than a management team. Meaning [4:53] that the brand of Lululemon is actually [4:54] great. It's a great product, it's super [4:56] high quality, it's well loved by very [4:58] affluent people. It's just a great [5:00] brand, but the management has stunk. He [5:03] believes that the management is terrible [5:05] and they've mismanaged an incredible [5:07] brand. That's something that's very [5:09] common in the athleisure and in the [5:11] apparel industry. And there's examples [5:13] of this. Even with the Lululemon, here [5:15] are the ads that were running a year or [5:17] so ago. [5:18] This is what they looked like. Now, we [5:20] have on the left here Vuori and Alo [5:23] Yoga. These are the two biggest [5:24] competitors, direct competitors to [5:26] Lululemon. These are the type of ads [5:28] they were running. [5:29] The way that they were presenting their [5:30] product. [5:32] On the right, we have Lululemon. This [5:34] was is a real ad. This is not AI. This [5:36] is just a a year or so ago. [5:39] It's a a grandma, like a a very old [5:41] lady, 78 years old, influencer working [5:44] out in Lululemon pants. And this is just [5:46] one example, which is a marketing issue. [5:48] I could go through far more to tactical [5:50] and navigation mistakes that Lululemon [5:52] has done. So, part of the thesis here is [5:53] that Lululemon actually has still a [5:55] great product. And if management gets [5:57] back on track, if they really do real [5:59] marketing, real product design, and they [6:01] become more relevant, they will take [6:03] back market share. They'll earn back the [6:05] trust of their customers, and the stock [6:07] could have a big bounce because of that. [6:08] They could re-accelerate growth once [6:10] again. But, there's other factors to [6:12] this stock. For example, we looked once [6:14] at the valuation, but if we look at this [6:16] again, it already implies a lot of the [6:19] problems. The deceleration in growth, [6:21] the marketing issues, the product [6:22] design, all of that is baked into the [6:25] stock today. [6:26] So, people like Michael Burry argue that [6:29] this company's already priced as a bad [6:31] company. And if they have any type of [6:33] positive momentum, any type of [6:34] turnaround, it could be massive both in [6:37] Lululemon stock and in others. And [6:38] there's another thing that a low [6:40] valuation does. It makes it so that the [6:42] company can buy back its own shares at [6:44] increasingly attractive prices. This is [6:46] the game that Salesforce eventually did. [6:48] They took out leverage to buy back their [6:49] own shares. When we look at the share [6:51] count over time, we can see that [6:53] Lululemon could arguably do the same [6:55] thing. They're already reducing the [6:57] share count by over 5% per year, which [7:00] is very big. Retiring all of those [7:01] shares out of the float makes it so that [7:03] when you own a share, you actually own a [7:05] bigger percentage of the company. And [7:07] they could accelerate this. I could see [7:09] Lululemon going from 5% share reduction [7:12] to 7% to 10% per year. In fact, they [7:15] could push this upwards of above 10% [7:18] share count reduction per year because [7:20] they have very low dilution, they have [7:21] very low stock-based comp. And another [7:23] thing is that Lululemon has an [7:24] incredibly powerful balance sheet. Now, [7:27] we have here a lot of capital leases. [7:29] Those are like lease agreements in [7:30] malls, but that's more of an ongoing [7:32] expense. When you look at the amount of [7:33] cash they have, it's at 1.39 billion. [7:36] So, they do have some financial [7:37] flexibility here. And if they wanted to, [7:39] they could use some of this cash to buy [7:41] back shares if their shares get [7:42] attractive enough. Another thing Michael [7:44] Burry has argued with Lululemon is that [7:46] it's not unusual for a stock that's a [7:48] great brand to go through a troubled [7:50] time period, for people to lose hope on [7:52] it, and then to have it have a [7:53] turnaround. For example, he references [7:55] Abercrombie & Fitch. This clothing [7:57] brand, which I don't even think is good, [7:59] it's not as good as Lululemon. It's a a [8:01] lot different of a style, but I don't [8:02] think it's quite as unique as Lululemon. [8:04] But look at the stock chart. This one [8:06] was also in just 2022 at $30 per share. [8:10] It went up to 185. [8:13] Then it went back to 83, then it went [8:15] back to $150 per share today. So, this [8:18] shows you that the story for these type [8:20] of stocks can change dramatically. What [8:22] Michael Burry's looking at is this type [8:24] of thing playing out. He believes that [8:26] right now Lululemon is somewhere right [8:29] here. And although he's been wrong so [8:31] far, Lululemon has continually gone down [8:33] even after he's purchased shares, he's [8:35] in the red deeply on the stock, he is [8:37] sticking with his pick. Another one that [8:38] he references is Ralph Lauren. Another [8:40] clothing brand, well-known, and it's [8:42] gone through a series of troubles in the [8:43] past 10 years. People were giving up on [8:45] the stock in 2022, and then it has this [8:47] meteoric rise. So, this type of thing [8:49] has happened before in other similar [8:51] companies. The biggest factor to look at [8:53] with Lululemon is deciding whether or [8:54] not this problem in the company is [8:56] temporary or permanent. But if you think [8:58] there's a chance that they can [8:59] reaccelerate growth, recover their [9:01] marketing, get back on track to any [9:03] degree, this one could have a massive [9:05] turnaround. Now, next up we have [9:06] Intuitive Surgical. This is a company [9:08] that I've historically avoided because [9:10] it's in the medical field, and like most [9:12] things in the medical field, it's very [9:13] difficult to understand the industry, [9:15] there's lots of regulations, there's [9:17] lots of red tape, and it seems overall [9:18] like a difficult industry to invest in. [9:21] But Intuitive Surgical has a very unique [9:23] business model within the medical field, [9:25] and I actually believe it's a very, very [9:27] good business model. But Intuitive [9:29] Surgical is in a decline, like the [9:30] stocks are outlining here, this one has [9:32] been really crushed over just the [9:34] year-to-date period, it's down 36%. We [9:36] go to the one year, down 23%, completely [9:39] flat on the five years. We go to 10 [9:41] years and we see more of a long-term [9:43] trend. And this is where this one gets [9:45] interesting. Intuitive Surgical at a [9:46] glance seems like a high-quality stock [9:49] where investors got a little too [9:50] excited, a little ahead of themselves, [9:52] but now investors, those same investors [9:53] are pulling back. The momentum has [9:55] faded. Now, this one's a bit different [9:57] than Lululemon. It doesn't trade [9:58] anywhere near the low valuation of [10:00] Lululemon. So, for example, it trades at [10:02] a 31 forward PE ratio. That's still a [10:05] premium PE ratio, but it's no longer [10:07] crazy. The PE ratio was in the 50s and [10:10] 60s before, now it's come down to a more [10:12] reasonable premium PE ratio. We also [10:14] have a free cash flow yield of only [10:16] 2.56%. [10:17] So, this isn't Lululemon where it's [10:19] trading at a 10 PE and a 12% free cash [10:21] flow yield. It's much more expensive, [10:23] but it's also not Lululemon where this [10:25] company is no longer growing revenue. If [10:27] we look at the analyst expectations this [10:29] next quarter, it's expected to grow at [10:30] 12% and then over the next year, it's [10:32] expected to grow at 13%. And I think [10:35] that's part of the problem. Is it was [10:37] just growing at 20%, now it's expected [10:39] to grow at roughly 13%. So, there is [10:42] deceleration and that's what's [10:43] concerning a lot of investors. They [10:45] believe that this company has gotten to [10:47] a point of more saturation and slower [10:49] growth, so that high-flying valuation [10:51] needs to come down. Now, Intuitive [10:53] Surgical is a very interesting company. [10:54] It's one that I started to study and I [10:56] plan on doing a deep dive into, but for [10:58] now I'll just give you a basic rundown [11:00] of what this company does. I view it as [11:01] a printer and the ink type of company. [11:04] You know you need to buy a printer. It's [11:06] not too expensive, you just get the [11:07] printer in your home, but then you [11:09] realize it runs out of ink. And then you [11:10] have to buy ink and the ink is very [11:12] expensive. And that's basically what [11:14] this company does. The printer in this [11:15] case are surgical devices that they sell [11:17] to hospitals. Once they sell them to [11:19] hospitals, the surgical devices require [11:21] a lot of tooling and a lot of disposable [11:23] things. They're one-use things. So, the [11:25] company starts by selling a surgical [11:27] device to either a clinic, a hospital, [11:30] or any type of medical system. They buy [11:32] that and that's some of the revenue. So, [11:34] they make money on the sale, but that's [11:35] really not where they like to make most [11:37] of their money. The biggest portion of [11:39] it comes from instruments and [11:40] accessories. These are things that they [11:42] have to use new that are compatible with [11:44] the surgical equipment or with the [11:46] system every single time they do a [11:48] surgery. So, every time they're using [11:50] it, they're running through that ink [11:51] from the printer. That's the [11:53] instruments, that's the accessories. [11:55] But, then there's a third thing. This is [11:57] as if the printer itself has to be [11:59] serviced every once in a while to [12:00] continue working. These systems are [12:02] complex, sometimes they break down, and [12:04] they're the ones that service the [12:05] systems. So, you also have service [12:07] revenue as well. So, basically, [12:09] everything relies initially on getting [12:11] systems installed. Once you have the [12:13] system installed, then you have the [12:15] instruments and accessories, then you [12:16] have the services. We have another KPI [12:18] that tracks their ongoing system [12:20] installations. Now, this is not the [12:22] total systems installed, this is how [12:24] many new that they're installing every [12:26] single year. On a trailing 12-month [12:27] basis, they've installed 2,000 new [12:30] systems. All of those require constant [12:32] parts every surgery and constant [12:33] maintenance. So, this is overall a very [12:35] good business model of a company that [12:37] continues to have its stock decline. [12:38] Now, the last stock here is Adobe, which [12:40] is in the center of the AI disruption [12:42] debate. Adobe's now down to $256, down [12:45] another 3%. When we look at this one [12:47] year-to-date, it's down 23%. In the past [12:50] 5 years, Adobe's down a staggering 61%. [12:54] Adobe's narrative is that competition is [12:56] catching up. Adobe's going to be [12:57] disrupted. AI image creation and video [13:00] creation tools and editing tools are [13:01] getting better every single day. Adobe's [13:03] pricing power is falling. [13:05] The narrative continues to build every [13:07] single quarter. Meanwhile, the [13:09] fundamentals continue to go in the right [13:11] direction. Even as recent as the last [13:13] quarter, it grew by 12 and 1/2%. Fast [13:16] growth. We look at the revenue by [13:18] segment. They're continuing to grow in [13:20] each segment of business. The forecasted [13:22] estimates are slowing down a little bit. [13:24] We have 13% earnings per share growth, [13:27] but only 9% year-over-year revenue [13:29] growth. So, investors are worried that [13:31] it's starting to show in the numbers. [13:33] While these are valid concerns, the [13:35] thing to remember here is that Adobe has [13:37] these concerns likely fully priced in at [13:39] this point. It trades at a below 10 [13:42] forward PE ratio. So, this company is [13:44] basically being treated like a car [13:46] company, like Ford or something. Like a [13:48] it's getting close to the airline [13:50] category. And it's a high margin, faster [13:52] growing software company. The free cash [13:54] flow yield is now above a 10%. They do [13:57] have some stock-based comp, but it only [13:58] makes up around 19% of the total free [14:00] cash flow. So, even factoring in [14:02] dilution, we're looking at an 8 and 1/2% [14:04] free cash flow yield. Adobe's reporting [14:06] earnings after market close on Thursday. [14:08] And if we look at the historical [14:09] performance of Adobe in its earnings, it [14:12] is remarkable. This company never [14:14] misses. We can look at the estimates [14:16] there, and every single time they come [14:17] in above the estimates. In fact, out of [14:19] the past like 14 quarters, they've [14:21] literally never missed on their earnings [14:23] per share. So, if I have to take a [14:24] guess, they're not going to miss. [14:26] They're going to do the exact same thing [14:27] they always do and beat by 2 to 3%. This [14:30] is another company that's so beaten [14:31] down. The sentiment's so low on this [14:33] stock that any glimmer of hope, any [14:35] magic that's introduced into the stock, [14:37] any type of positive guidance, it could [14:39] cause renewed enthusiasm. And we could [14:41] see the stock jump big in a single day. [14:43] Now, moving on, we get into some news. [14:44] We had the Cybertruck launch event from [14:46] Tesla. Even though there's no gigantic [14:49] big stream event or anything like that, [14:51] we did see a lot of creators upload [14:53] content of them getting into the [14:55] Cybertruck and having it drive them [14:56] around. [15:03] And then there's lots of video footage [15:04] of it just driving around. It's doing [15:06] smaller trips in a little area in Texas [15:08] today, but this shows the technology [15:10] that it's working on the roads. Now, [15:12] there's lots of different reactions to [15:13] this. The media itself and reporters [15:15] weren't too impressed. But then as it [15:17] just kind of kept going, it was kind of [15:18] boring. And it boring because it was [15:21] doing what we do every day, and that is [15:23] drive a car like a normal kind of [15:25] person, but it was a robot. And so [15:27] that's really what Tesla needs to be [15:28] doing here is showing that it can put [15:31] these robot cars onto streets, not have [15:33] incidents, have it be boring, and [15:37] gradually build out an audience. [15:39] >> And many people, including Ross Gerber, [15:41] believes eventually this will lead to [15:43] Uber getting cooked. [15:44] >> I think humans have to differentiate the [15:47] service level from the robo-taxis, and [15:49] then they'll be able to compete, but on [15:51] a whole, I think Uber's cooked. [15:53] >> The thought here is as robo-taxis [15:55] continue to grow and spread, Uber's in a [15:57] lot of trouble. [15:59] And I don't believe that that's really [16:00] the case, at least to the extent that [16:02] people are trying to argue. One of the [16:04] things that I think a lot of investors [16:05] are leaving out is the concept of highly [16:07] variable demand. A robo-taxi network [16:10] either has to decide between handling [16:12] the normalized demand, the dark blue [16:14] hours here, [16:15] and then they don't have enough vehicles [16:17] for the peak demand, or they have to [16:18] overinvest and buy too many vehicles [16:21] just to handle the times of peak demand, [16:23] then they have way too many vehicles [16:25] being inefficient and ineffective during [16:27] the normalized demand. [16:29] This is a problem that Uber solves [16:30] because Uber has variable demand. Uber [16:33] can have people jump on the app and use [16:35] their car that's in their garage [16:36] whenever there's peak demand. People can [16:38] leave their homes, they can go into the [16:40] Uber network, they can start taking [16:41] rides when demand spikes. And in most [16:44] cities across the US and most territory, [16:46] demand is incredibly variable. There are [16:49] only a couple of hours per day where you [16:51] need a lot of rides, and you need them [16:52] all at once. And then the rest of the [16:54] day there's really not nearly as much [16:56] traffic. That's rush hour. Now, the best [16:59] situation here is a hybrid approach. One [17:02] where you have some vehicles, some [17:04] vehicles that can always go around, that [17:06] they can handle the normalized demand [17:07] throughout the normal hours, but then [17:09] you also have humans in the loop. Uber [17:11] already has the hybrid approach. They [17:13] already have all the human drivers, and [17:14] they're introducing and continually [17:15] partnering with the robo-taxis. And [17:17] while Tesla is trying to test this and [17:19] they have 40 on the road and they'll [17:21] build out more and more over time and [17:23] open slowly across different cities, [17:25] Uber is doing the same thing with [17:27] robotaxi's. They have driverless [17:28] vehicles already on their network and [17:30] they're doing more and more of them. So, [17:32] having this hybrid approach I think is [17:33] the best end game. It makes the most [17:35] sense. It satisfies the stable demand [17:38] throughout the day and the peak variable [17:39] demand that's all driven in a couple [17:41] hours. Uber can utilize both of these [17:43] and Uber will remain very valuable if [17:45] people realize that they can always get [17:47] a ride with Uber because there's always [17:49] enough people to fulfill the demand. [17:50] Now, finally we get to the fail of the [17:52] week, which unfortunately in this case I [17:53] have to highlight Gemini. Yes, the [17:56] Gemini from the Google that I know and [17:57] love. I've made a lot of money with the [17:59] investment. I love the company, but I [18:01] have to be fair here. This is a massive [18:03] failure by Gemini. It's a story of three [18:06] hikers that decided to use Gemini as [18:08] advice for how to prepare for this hike. [18:11] >> One of us hikers from Roseville are home [18:14] safe after getting stranded on Mount [18:15] Shasta. Wait to hear what happened. On [18:17] Monday morning, the Siskiyou County [18:19] Sheriff's Office Search and Rescue Team, [18:21] they assisted US Forest Service Climbing [18:23] Rangers to save the three men stranded [18:25] on the Clear Creek Route. Now, at the [18:27] conclusion of the rescue, the men said [18:29] they had relied heavily on Google's [18:31] Gemini AI to provide them with [18:33] information about the route as well as [18:35] what to pack for their [18:36] >> This is This is not the media that you [18:39] want. [18:40] There's people that say any media is [18:41] good media. This is not good media. You [18:43] don't want your AI being highlighted as [18:45] a thing these hikers relied on when they [18:48] had to be rescued. [18:50] It's just not a good situation. Let's go [18:52] ahead and continue listening. [18:53] >> trip. Unfortunately, hmm, they were [18:57] given false information. Ashley Williams [18:59] is here live in studio with a message [19:00] from the Sheriff's Office about the use [19:02] of AI. Kind of guess what they're going [19:04] to say. [19:04] >> Exactly. Exactly. This is It's a wild [19:07] story, Tony. The Sheriff's Office says [19:08] this was a critical misstep. Google's [19:11] Gemini told the group to bring far less [19:14] food and water than what was required, [19:16] especially when their planned 8-hour [19:18] ascent became a multi-day ordeal. Here's [19:21] what happened. The hikers made camp [19:23] >> Okay. [19:24] She just said that Gemini told them to [19:28] bring far less food and water than they [19:29] really needed, especially when their [19:32] planned 8-hour hike turned into a [19:34] multi-day one. Well, how did that [19:35] happen? How did you plan for an 8-hour [19:38] hike, which is is not even a big hike? [19:41] That's like a pretty short hike if [19:42] you're a hiker. Going up 4 hours and [19:43] then turning around and coming down 4 [19:45] hours, not that difficult. [19:47] How did that turn into a multi-day hike? [19:49] Like, what what happened here? I'm [19:51] starting to believe maybe Gemini isn't [19:52] fully to blame here. I'm starting to [19:55] think there's some user error and maybe [19:57] a little bit of misjudgment. Let's see [19:59] if we have any more details here. [20:01] >> camp on Saturday and departed with day [20:03] packs for Mount Shasta's summit at 3:00 [20:06] Sunday morning. The recommended [20:08] turnaround time, though, was 12:00 p.m. [20:09] if you have not reached the peak, but [20:11] the men pressed on well into the [20:13] evening, summiting by 7:00 p.m., but [20:16] things got sticky when they started to [20:18] descend. An hour into their descent, [20:20] they called the sheriff's office [20:22] dispatch to ask for directions, but [20:24] eventually wandered off route into the [20:26] Mud Creek Canyon, and that's where they [20:28] got stranded. [20:29] >> All right, so they're blaming Gemini [20:30] here. [20:31] Did Gemini give them the wrong [20:33] directions? Did they like bring up [20:35] Google Maps and Google Maps was like, [20:36] "Hey, go that way." And it was really [20:37] this way? Gemini was probably correct. [20:39] If they did the hike correctly and not [20:41] get lost, they would have had enough [20:42] food. They chose to go the wrong [20:44] direction, and it isn't highlighted here [20:46] whether or not Gemini told them the [20:48] wrong directions. [20:49] >> and camped out in the steep drainage [20:51] until they were rescued the next morning [20:53] by the USFS climbing rangers. So, while [20:56] AI is at the tip of our fingers, [20:58] deputies are now reminding people it's [21:00] not always reliable. [21:01] >> Now, they have people here warning about [21:03] AI. I've actually changed my mind on [21:05] this one. I'm no longer highlighting [21:07] Gemini's the failure. I'm highlighting [21:08] these three hikers who clearly just [21:11] searched for instructions with Gemini. [21:13] It gave them a basic instruction about [21:14] the hike, but then they got lost [21:16] halfway. They ran out of food. They had [21:18] to call emergency services, and then to [21:21] not look like fools, they blamed Gemini. [21:24] This is This is what we've gotten to. [21:27] Whenever you do something right, it was [21:28] our decisions, but whenever something [21:30] goes wrong, it was the AI. The AI was [21:32] the problem here. I don't like the AI's [21:34] the reason that you went the wrong [21:36] direction. We don't see that in the [21:38] story. The only thing we know here is [21:39] that Gemini didn't tell them to bring [21:40] enough food because Gemini didn't assume [21:43] they'd get lost for 2 days. And I'm not [21:45] sure who's really to blame here. That's [21:47] it for this episode. Hope you enjoyed. [21:48] See you in the next one.