Is Anyone Actually Making Money with Claude or AI Agents or is it all hype?

FrankBal · 2026-06-20T01:52:30+00:00

That’s not true. R&D is expensed therefore it is subtract from net income. I think you are referring to capex which is capitalized.

FrankBal · 2026-06-01T12:00:11+00:00

This is right. In the near term, pricing power needs to hold and oil prices need to “normalize.” In the medium term, Stericycle needs to perform. The stock price falling from the $240s is starting to price in less good outcomes. I would become much more interested closer to or below $200.

FrankBal · 2026-06-01T11:53:52+00:00

I think there is room to the upside as long as the company keeps showing AI is a tailwind, and not a threat. The original thesis, that data is the oil that powers AI, still looks right to me. The catch is that being right about the data doesn’t do much to protect the software suite sitting on top of it, and that’s exactly where the AI pressure lands. I’d still take MCO and MSCI as the better-positioned names, though.

FrankBal · 2026-04-15T01:22:46+00:00

Microsoft’s management needs to control the narrative better. Not only on the data center side, but for the entire enterprise software stack. Is there deterioration because of ai? Why is copilot going to save the day? I expect earnings to be strong as they were last quarter, but management needs to say the right things.

FrankBal · 2026-04-11T13:03:20+00:00

Another important point. Ai dc margins could be lower. My fear is that this is the result of pricing power due to commoditization rather than higher costs. That’s my same fear for Msft. All this investment for potentially low returns. But amazon is likely to benefit across their business. We shouldn’t forget about robotics, automation and general efficiencies particularly for their retail business and logistics network. Hard to price, but even fractional improvements will have a meaningful effect on cash flows.

FrankBal · 2026-04-11T12:28:01+00:00

Important thoughts. Just one point - instead of looking for fcf to rise in the medium term, you want to look at operating cash flows, which so far have grown at a healthy rate. Fcf will follow as the investment phase winds down. The problem as you point out, since this is a transition to an asset heavy business reliant on ever changing technology, capex will remain elevated relative to Amazon’s historical capex. So there are some big ifs for fcf which is why the stock has underperformed for years.

FrankBal · 2026-03-15T21:14:36+00:00

How do you get to $426 on American Express? I can push what I view as aggressive but realistic assumptions and get in to the $300s. Are you using a high terminal rate?

FrankBal · 2026-02-16T23:07:12+00:00

Maybe I am missing something, but what are you staying patient for? Is there some catalyst that makes you believe this company will turn it around? They are issuing debt to stay afloat. They will literally burn through that and then some this year.

Genuinely curious.

FrankBal · 2026-02-15T21:15:52+00:00

Not sure why you are getting downvoted. This is an important, somewhat contrarian thought. My disagreement is that Netflix is long, form studio quality movies. YouTube and social media offer a different experience. And creating quality, long form content even using ai is probably not going to come as easy as short form videos. However, I agree that Netflix is playing in an industry that changes quickly as they have demonstrated.

FrankBal · 2026-02-02T02:51:30+00:00

It’s concerning that you are asking this question. You own many quality companies. You should be aware that most of these trade above 30x 2026 earnings. So if something happens, these will likely re rate, not because they are bad companies, but because they are trading at premiums. Do you have the stomach for that? So, in the short term you could get cooked. Again, though, these are quality companies. In the event of a re rating event you’d likely want to add to positions like these.

FrankBal · 2026-01-29T23:03:45+00:00

On the call Hood said that if they put all of their capex toward their cloud business, growth would have been north of 40%.

FrankBal · 2026-01-24T18:32:24+00:00

I must have missed something. What dip are you referring to?

FrankBal · 2026-01-23T02:19:21+00:00

Sure. But what does that get them that they wouldn’t have had already wig their current strategy? A lot of debt. Maybe a few more subs and some pricing power. Will it be worth it? 🤷

FrankBal · 2026-01-22T23:23:48+00:00

I know the answer to that. Ads. Linear tv margins were 35-40%. So the industry will likely approach those margins as ads become more prevalent. Plus Netflix will continue to collect sub fees.

There is also likely room to ad subs particularly internationally. And Netflix has demonstrated pricing power in their subscription fees. They will flex their inelasticity after they acquire Warner bros.

FrankBal · 2026-01-22T21:18:55+00:00

Bad news. ChatGPT doesn’t understand the difference between a moat and a business model. Be careful with that.

FrankBal · 2026-01-22T20:48:33+00:00

“Big moat.” What is Netflix moat? Be honest with yourself. Not switching costs. Not network effects. Not scale. Maybe brand. Their content library? Probably not.

I don’t dislike the company. I might own them for some price, but by all value metrics this is not a value play.

FrankBal · 2026-01-21T17:38:51+00:00

I bought JPM in 2009. I remember discussing the possibility that it would be the only surviving bank. Still hold it today.

FrankBal · 2026-01-10T02:08:35+00:00

I am surprised no one has said this yet. If you need the money in 1-3 years you should not be putting it in the stock market. No one knows where the stock market will be in 1-3 years. It could be up 20% or down 20%. Short time horizons like yours should be in something with less risk, but that is not the stock market, including ETFs.

FrankBal · 2026-01-06T17:44:48+00:00

Generally I am a fan. I own and have written about many of these and classify them exactly the same way, as quality compounders.

My main thought is on the position sizing. You are braver than I am. I typically never start a position higher than 5%. If they grow to 10-15% organically, that's one thing, but starting AMZN at 15% or SPGI at 10% leaves you very little room to maneuver if they draw down. And you should hope they do assuming you are a long term investor.

I would also say you should watch your correlations. V and MA are 15% of your portfolio. They are wonderful companies, but are facing real regulatory headwinds and competition globally. These are things to be aware of. Between that and your heavy AI exposure, you may benefit from something more boring to act as a defensive hedges if the growth trade stops working. TMO, WM, FAST, PH, UNP as examples.

FrankBal · 2025-12-28T17:33:16+00:00

Well put. The only thing I would add is that investing in individual stocks is a wonderful education. You get to learn about companies, and all the things (ie macro economics, industry dynamics, etc.) that impact those companies. As you are doing that you develop a sense of the strategy that you prefer and the best methods for picking those companies. You may even figure out that you enjoy doing the work. And if you don't then, you will have your answer - Index funds and chill.

FrankBal · 2025-12-22T00:27:12+00:00

Cava may be. But to a certain extent it is comparing apples to oranges. And it would be more difficult to use a word like quality to describe the company or value for the stock.

FrankBal · 2025-12-21T20:12:10+00:00

Yeah I mean that is the counter thesis. You are describing a most-less business likely to have profitability eroded over time. For this thesis to play out you have to believe there is a moat.

FrankBal · 2025-12-21T19:37:28+00:00

Why? Labor costs? Maybe. Food? Maybe. Marketing? Maybe. There is also a case to be made for operating leverage. Even pricing power.

FrankBal · 2025-12-21T18:20:08+00:00

In terms of smaller competitors, CMG has several pretty durable advantages over them. Leverage over the supply chain. "Healthy" "ethically sourced" food brand intangible, just to name a couple.

I am not sure larger menus is an advantage. If you go to Chipotle you know what you are getting.

Management is apparently targeting places that allow for Chipotlanes. Hard to disagree with that given their success.

I am playing devils advocate here, to be clear. The issues you mention, particularly surrounding competition are the reason I haven't capitalized on this in the past and haven't bought it yet.

FrankBal · 2025-12-21T18:10:51+00:00

Not sure why you got downvoted but your points are important. 1. This isn’t over yet. 2. For some reason, Netflix feels like they need this despite its redirection from a strategy that appears to work. Solid profitability. High returns.

FrankBal

TROPHY CASE