Warren Buffett Makes a Big Buy

In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rick Munarriz discuss:

• Inflation is a bogeyman again.
• UFC gets a $7.7 billion deal with Paramount.
• Warren Buffett makes a big buy.
• Stocks to watch.

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A full transcript is below.

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Travis Hoium: Warren Buffett is making big buys again. Motley Fool Money starts now.

Travis Hoium: From Fool Global headquarters. This is Motley Fool Money. I'm Travis Hoium joined by Lou Whiteman and our Disney expert for today, Rick Munarriz. UnitedHealth stock is up 10% this morning after Warren Buffett and some notable hedge fund managers disclosed positions. Paramount is private again, but making big deals in the content game. But first, we do have to talk about inflation. Inflation has been the boogeyman from the market for months. Tariffs were supposed to lead to higher costs, which haven't materialized yet, but that boogeyman did peek its head out this week, Thursday, PPI or the producer price index increased 3.3% versus a year ago as food, energy and machinery costs went up. Lou, I want to start with you. Is this a blip or is this actually something to worry about as we think about inflation for the rest of the year?

Lou Whiteman: I'm continuing with my boiling frog economy thought here. We want inflation to be a light switch. We want it to match the headlines, what we see on TV, it's just inflation here or inflation not. But in reality, it's a slow creep and taken together, we had the CPI too, which didn't show any real uptick, but PPI did. Consumers aren't seeing it, but producers are. It suggests that there is this slow creep higher of expense, and it may be the consumer hasn't felt it yet, but I think it's still really an open question of whether or not they will. My answer is yes, the consumer will feel this, and the PPI hinted at it.

Travis Hoium: Rick, this is something that I think is a little bit confusing so PPI is the producer price index. That's going to be what people making stuff are seeing from inflation costs. But the CPI includes things like housing. How is this dynamic something that we need to think about maybe a little bit differently as investors, where PPI could be that leading indicator that tells us what inflation is going to look like a few months from now, but isn't going to necessarily tell us if housing costs, for example, are going to go up?

Rick Munarriz: That is part of the problem. But again, overall, as a leading indicator or in this case, a bleeding indicator, the fact that CPI came in fine, PPI came in hot two days later, to me, that's problematic. I think, it's going to be very tricky. Everyone's assuming that the Fed was going to cut rates next month. But I don't know if it's too soon to have a soundtrack for the month ahead, but I think green days wake me up when September ends is probably a good way to get through what should be a very volatile month in September as we work out this inflation news.

Travis Hoium: Yeah, that really is the topic of the day is those fed rate cuts. It seemed a few days ago that that was a done deal, that if inflation was relatively low, we weren't going to need to keep rates high. Rick, where is your hat at with rate cuts? Is that something that you even think about as an investor? Because it's definitely something that's helping buoy stocks over the past couple of weeks.

Rick Munarriz: I think there's almost an obligation to have a small downtak in the Fed with their interest rates.

Travis Hoium: Is that just because everybody's calling for it or is there an economic rationale behind it, I guess. That's what I struggle with is we are seeing inflation. If that's really the concern, then I don't know why cutting rates would be the right thing to do right now. But then if you're cutting rates because the economy is weak, then that should be bad for stocks, so it's like this strange tension in the market.

Rick Munarriz: Yeah, prices going up while the economy is going down. There's a scary word for it, and I don't mention it, but it starts with a stag, and it ends with inflation. I don't want to go there.

Lou Whiteman: It is, I think, important, Travis, to your point that this whole dual mandate we talk about with both inflation and jobs. The scary thing is, like Rick says, the job market doesn't look terrible, but it doesn't look great. It feels like the best I can figure it out, there isn't mass layoffs in the economy, but no one's hiring, either. I think there is the beginnings of an argument to cut rates on the job side. That's really hard to do with the inflation. Again, I continue to believe that the Fed doesn't want to be stuck at zero or anywhere near zero. I continue to think that we probably will get a cut, but the Fed is much less anxious to cut than investors are anxious for the Fed to cut.

Travis Hoium: What does this ultimately do for the stock market, Lou? Because the last time that we had inflation was 2022. The numbers went up really quickly, but things were also very different back then. Auto -ompanies could raise the prices of vehicles by $10,000, and there was no supply, so people just had to pay whatever the price was for vehicles. It seemed that way for everything. I remember going down the chip aisle at the grocery store, and it seemed like prices had doubled from the last time I was there. That's probably not where we are today. There may be whether it's tariffs, whether it's higher commodity costs, there may be higher costs, but is there a difference between the inflation that we saw a few years ago and the potential for maybe 3, 4% inflation being the norm Lou?

Lou Whiteman: Yeah, it's going to be interesting to say. I think that is the potential, it's hard to be overly bullish about this. Taking literally the PPI and CPI together would suggest bad news for margins because the companies are seeing higher prices and they're not passing it on. I think that they will pass it on over time. I think if not bull case, the non bear case from here is, is that if this is gradual enough that we can adjust and we aren't going to get a shock to the system and that maybe there won't be a market panic. But it does feel like at best, even if you're trying to make a bullcase trying to figure out earnings growth from here, that this cost is going to be a headwind, and maybe lower margins because of it's going to be a headwind for the second half of this year and into 2026.

Travis Hoium: Yeah, and let's keep in mind that the tariffs were announced a little over four months ago. It seems like an eternity ago, but the prices that we're seeing in stores today were not set in April. Retailers are making their plans months and months in advance, what I have to wonder is Christmas time? The holiday season is that going to be really when we see inflation start to hit. Rick, I don't know if that's something you're thinking about as we go toward the end of the year. Hey, are we going to see a little bit higher costs, and maybe should I front run some of my shopping? Maybe time to start thinking about.

Rick Munarriz: Some layaway shopping, layaway investing. I think as a consumer, yes. As an investor, these events don't normally correlate. You were talking about when prices spiked when the pandemic happened that we had this I remember when I was paying for a 12 pack of diet Coke was very different in 2019 and early 2020 than it was when aluminum prices and all these other things were factoring into play or when there used to be a McDonald's dollar menu, and it really was $1 menu, and then it just totally changed. The market was fine with that. Stocks appreciated over that time. I don't think it's necessarily the market may not have a negative reaction to this, but as consumers, we will probably feel a pinch.

Travis Hoium: Speaking of prices going up, we are going to see higher prices for sports content. I think that's probably pretty clear ESPN is going over the top with their app. I believe it's next week that's actually coming out. But the big news this week, we've talked about ESPN in Disney cozying up with the NFL on this show over the past couple of weeks. But the big news this week, Rick, was the UFC making a $1.1 billion deal per year with Paramount. What do we need to know about this? Because this seems like Paramount is now going to be the UFC app.

Rick Munarriz: You figured, Hey, Paramount Plus, they're like it's almost like a bottom feeder of the premium streaming services. Once in a while, it'll have a hit show, but it's not something that's just totally driving the platform. Paramount itself was having issues. Again, that's why it's gone through all these transformations. The fact that it was able to sign this seven year 7.7 billion dollar deal, that's quite a jackpot Fool. To me, this is the thing where while it helps Paramount. I don't think it helps consumers necessarily when they have to keep, this movable feast to find content, but I do think it's interesting, but I don't know if it's in the best interest for UFC. I saw what Joe Rogan had to say. I saw what a lot of fans about MMA were saying after this. But I don't think this is what the sport needs, the UFC needs to draw a larger audience.

Travis Hoium: Yeah, I want to put some numbers to this, and this is from Ariel Helwani who reported that the social exposure for ESPN, 300.8 million followers across Twitter, Instagram, and I believe it was TikTok. Paramount CBS 32 million. ESPN has 10 times the reach if you're UFC, you have to think about two things. You have to think about how much money do we have coming in the door? This was probably the biggest check they were going to get. But you also have to think about how many people are going to be watching us. Do we want to be MLB and be somewhat irrelevant to the younger generation? Lou, this is a real tension for these companies who are trying to play two games at once here.

Lou Whiteman: Yeah. Absolutely. First of all, I got to give some credit to Paramount Plus. For those of us who do enjoy second and third-tier English soccer, they are already a go to app, so enough with this UFC only. But Travis, it's a good point, but there's a few things to consider. Unlike what MLB has done with Apple TV and MLS has done with Apple TV, there is a "over-the-air component here," or the old-fashioned. Paramount brings CBS and some other outlets, so it's not just all behind the paywall. I don't think it's just going to disappear off the face of the Earth. I think it's also fair to say, look we can't compare it to what has been. ESPN is changing, too. This idea of just all access everywhere from anybody is going away. Things are going behind paywalls. It's just a question of whose paywall are you going to. I don't think this is a move to irrelevance. If anything, Disney's deal, it was a double dip for UFC fans because you had to subscribe and then pay preview. Pay Perview goes away here, which is a benefit for the fans. But I think comparing it to five years ago deal, which included a lot of just over the air or on your cable box for free, I don't know ESPN or anyone that is really going to highlight that going forward. It's hard to just say, Well, what we had five years ago was better.

Rick Munarriz: To Lou's point, Travis, I think that the CBAs angle is interesting because it won't all be on Paramount Plus. Once in a while, they'll have content available freely through CBS, which is a great way for the UFC to remain relevant. But to me if Billy Joel giving up his residency at Madison Square Garden for an exclusive engagement and an eccentric billionaires bunker. This is going to be a problem, because, again, this is CBS of 2025. This isn't CBS of 2015, 2005, or 1980s, sorry. This is not the same reach that CBS used to have anymore. It is a changing media landscape. I don't think that this is what UFC needs beyond just the instant pay. They have the $1.1 billion a year that they'll be getting in the whole process.

Travis Hoium: Well, thinking about what these companies are bundling together is interesting, too. You're right, CBS is going to have some of this UFC content, but it's going to be along with their other flagship content, which is CSI and content that, young males who are typically going to be the UFC watchers are not going to gravitate toward the same things on CBS. Does that name, CBS mean anything to them? Fox is kind of running into the same thing. They announced that they're going to be at least an option to bundle in with ESPN for an additional $10 a month. But Fox is trying to sell Fox One with some college football games and FOX News, which doesn't necessarily make a lot of sense together. At least, it seems to me if you're trying to build a streaming service, at least the Disney Plus, that's for families, Hulu, the General entertainment, ESPN. It's just sports. All these other ones are mishmashing everything together. But am I overthinking this, Lou?

Lou Whiteman: Maybe. The truth is we don't know how it's going to end up. My pushback on Rick's analogy and what you're saying is I don't know if ESPN is Madison Square Garden going forward, either. I think the days of like you said, the CBS, the over the top, it's going to be there for the NFL. It's going to be there for your college football game of the week. But I think increasingly, wherever you are, you are going to be in some a limited access pay to play world. Why not max out the money?

Travis Hoium: TKO is going to be fascinating to watch because they're playing both sides WWE, signed with ESPN and obviously UFC, which they also own, signed with Paramount. They're playing all of these cards here. Next up, we are going to talk about some of the big buys from the biggest investors in the world. You're listening to Motley Fool Money.

The day every investor waits for 13F, filing day is today. That's when big hedge funds, big public investors like Warren Buffett have to file. What's called a 13F tells us the stocks that they actually own. The quarterly filings we get what those values are, but we don't necessarily get these specific stocks. The interesting one that came out last night was Warren Buffett and Berkshire Hathaway disclosed what they owned for the quarter, continued selling shares of Apple. But the one that's getting a lot of news today, Rick, is buying $1.6 billion worth of shares of UnitedHealth are up 10% on that news. What do you take of it?

Rick Munarriz: I think, especially with UnitedHealth, a lot of people even in the weeks leading up to this, my whole social was paid with UNH is just so cheap right now. How can this happen? How can this be? But there's usually a good reason why stocks are this out of favor. In this case, it's Warren Buffett being a contrarian at a time when there seems to be a lot of contrarians out there. It's encouraging if you are a long suffering United Healthcare investor. But to me, it's not one of my favorite picks that Warren made this past quarter.

Travis Hoium: Lou, the other thing, Buffett and we should mention Greg Abel is going to be taking over as CEO, so he definitely has his fingerprints all over these moves. We don't necessarily know exactly who's making the final calls there. But the other thing that he was buying was housing stocks. This is something that I think a lot of people have been bullish on for a long time. Is this, again, a play on interest rates? Is this a recovery of the economy play? What could be going on here?

Lou Whiteman: Travis, full disclosure. I'm not Warren Buffett and me questioning his stock picks takes a lot of hubris, but I am a Berkshire Hathaway investor. Look, I'm really underwhelmed by this, everything you're talking about. Real quick United Healthcare, that scares me because healthcare is changing. I don't think anyone knows how this will end up. I don't think it's a given that yesterday's winners will be tomorrow's winners. This feels like it has all of the potential to be a falling knife you don't want to catch. Then you mentioned the Home Builders. I think this is a logical play on Big Macro. We need more homes over time, but the headwinds in this industry are still very strong. At best, this is early. I want to know if Home Builders look attractive today, why not just get back into repurchasing? Why not initiate a dividend? As a shareholder, I'm not going to question Warren Buffett. I'm not going to just go hide, run away and have a temper tantrum. But this is very underwhelming, the moves they're making both buying and selling.

Travis Hoium: Rick, the other one that they did sell is T-Mobile. That was one that you brought up, I think that is interesting. But a lot of little moves at the margins, buying more POOL CORP, Nucor, just some interesting. With as much cash as they have on the balance sheet, they could be buying stocks like crazy. They could also be continuing to raise more cash as they can generate a pretty good income just from treasuries. But what is the overall takeaway from at least Buffett's moves. He's mired a lot of the big hedge funds this quarter?

Rick Munarriz: I think you mentioned it. They have a lot of money. They didn't put anywhere close to all of it to work, which is just a very cautious stance, which I think is probably the right approach right now. I'm not necessarily a fan of all the moves that Berkshire Hathaway made, but they do make sense to me. Some of them do. But again, not a full commitment. It wasn't necessarily a very bullish move by still keeping the cash hoard so large.

Travis Hoium: Lou, what are your final thoughts here?

Lou Whiteman: This is intentionally provocative, and I am not selling Berkshire Hathaway, but I look at all this and nothing is going to move the needle. Selling Apple as much as Apple's gone doesn't really.

Travis Hoium: Well, they could go out and buy one of the big tech companies like Alphabet seems to fit a lot of the things that Buffett likes.

Lou Whiteman: But they're not. That's my point. Increasingly, like I said, I'm not dumping the shares, but why bother? If this is what the portfolio is going to be, then maybe I should just buy a total market index and get a little bit of a dividend on the side, too, or something. I feel like that there needs to be just something more in the quarters to come. It doesn't need to be overnight. You don't want to be not patient with Warren Buffett and Berkshire. But it feels like that the status quo quarter after quarter of, just nibbling at the edges. I don't know how long that's going to go on.

Travis Hoium: He's been complaining about having too much cash to invest for quite a while, and we're getting to that point where unless he finds another Apple idea, it's a tough position to be in. Next up, we're going to be playing. Let's go with some big stock moves. You're listening to Motley Fool Money.

After earning season, we have some big stock moves to talk about. Some companies who are performing pretty well, but their stocks are down. I want to get an idea whether these stocks are, oh, no, they're really in trouble. Or is this a back the truck up moment and let's go? Those are your options. Lou and Rick, the first stock that I want to talk about is one that always seems to look like a value. Shares are down another 10% over the past month. That's Lululemon. But revenue was up 7.3%. Of course, that revenue growth rate has come down, but net income was down. Rick, are you an oh, no or a let's go with Lululemon stock right now?

Rick Munarriz: I'm a let's go, but not with an exclamation point at the end. To me, Lululemon is it's not the same growth stock. It was 5, 10, 15 years ago. That is not the Lululemon you're getting now. It's a more competitive landscape in Athletia. You have the tariff concerns, which are weighing on just about everybody. But, again, I think the fact that the valuation here is at a point. Yes, it seemed like a value stock and almost a value drop that's tripping people up, but I do think that Lululemon will appreciate from here, and it's a good buying spot here.

Lou Whiteman: I'm, oh, no. I hate to be because it's quality stuff, and I really do believe in this stuff. It's an reflection on that. But I do feel like this was a bit of a fad company, and this is just a one quarter thing, Travis. This has been trending in the wrong direction for a long time now. There are more affordable options that have at least pretty good quality. That's always bad news. I don't know. I'm not convinced they can get it back.

Travis Hoium: If I got to break the tie here, I have to agree with Lou. The local Lululemon store, which is in an upscale mall here, closed and it became an Alo store. I think and maybe I'm seeing all these names incorrectly. I'm not the target market there, but that is just shows that they are not necessarily the brand that they once were, so little warning signs there, even though the stock is pretty cheap at about 14 times earnings. We talked a little bit about the changes in streaming where UFC and WWE are going. The market has reacted positively to TKO group who owns a lot of this content. Shares are up 13% over the past month. Revenue was up 10% last quarter, net income nearly double. That's before really any of these new deals kicked in. Rick, is TKO Group a little bit too rich in, oh, no, or are you let's go with their shares?

Rick Munarriz: Yes, I'm going to go with the let's go, and I'm not excited over the TKO deal with Paramount. I think it's bad for consumers in the short run, bad for the league in the long run, and eventually bad for TKO investors in the long run. But I get it. Live sports continues to be that one thing that defined gravity among the media network. It's great to be in that driver's seat with two very strong products out there that people demand to see. I think the company is doing fine, and I think, it's a let's go.

Lou Whiteman: Near term, I'm going to let's go because there is a lot of money coming in, and that's good. But I'm a long term investor, and long term, I'm oh, no, because I'm going to call it, guys. This feels like a top for sports fees. There's a gold rush going on right now among sports leagues as these streaming services try to just grab territory. I think for a lot of these leagues, it'll never get better than this. I think certain properties NFL maybe will sustain, but I don't think it gets any better than this deal, and so for long term, I think you got to adjust down over time.

Travis Hoium: The stock looks expensive at 110 times earnings, but forward PE ratio is 34. Rick, the thing I wanted to ask you about is these new deals that we're talking about, TKO typically doesn't have the same cost structure as a lot of bigger leagues who have unions where there's a revenue share with players. Are they going to actually be able to push their margins higher so they double their fee from moving from ESPN to Paramount? Do they get to keep that extra $500-$600 million, or is there going to be some work stoppage on the horizon?

Rick Munarriz: I think you've answered the question right there. Yes, they're going to keep it initially, but down the line, again, the money's coming in, the talent will want to get paid. Obviously, we've seen the WWE over the year where you can dump talent if they ask for too much, if they want too much. But I think it's a different story now. It is something that I still think margins will overall improve. I think they know this, and I think they will reward their talent and their content producers in the process.

Travis Hoium: Let's move on to Quantum Computing. Rigetti Computing shares are up another 31%. The stock is just absolutely on fire. But revenue was down 42%. Not that, that really matters because this is a pre-revenue company. Net income was negative, so that growth is irrelevant. But Lou, is this a oh, no, or let's go?

Lou Whiteman: I really want to say neither, but that's cheating. But look, they hit every buzzword in the world. They are Cloud. They are AI. They are Quantum. I don't know what any of that means, Travis, and I refuse to. Maybe it's just a solid investing, but for me, if anything, it's an oh, no. Let's see actually what you do and how you make revenue from it and what the profitability is. Then maybe let's talk, but for now, just my brain's not big enough for this.

Rick Munarriz: I'm going to go with oh, no, and to me, it's not the numbers. Travis, the stock up 31%. You see revenue down 42%, income growth negative. Those are scary things, but you're not buying into Rigetti Computing for what happens in the next quarter or even in the next year. This is a future story on Quantum Computing, which is going to continue to grow. It's a long term play, and I don't want to focus too much on this. But, valuation wise, even looking a couple of years out to when it becomes more of a reality, I'm not convinced. I'm going to go, oh, no.

Travis Hoium: Five point eight billion dollar market cap, despite not really proving out a business model. I struggle with those but it continues to go higher. Let's move over to healthcare. Eli Lilly's shares are down 11% over the past month despite a 38% increase in revenue, net income almost doubled. Lou, oh, no, or let's go.

Lou Whiteman: I'm on cautious let's go here. This probably wouldn't be my first choice here. But I'm too old to believe that this is a one hit wonder, that it's just that bound or nothing. This is a really good company that opportunities and risks involve the GOP ones, but I wish they had a better dividend. You can actually get better dividends out of some of these that are maybe more attractive.

Travis Hoium: They're just 29% today.

Lou Whiteman: Yeah. But I do think that we are getting overly caught up in that one product. Yes, they need to build out the rest of a pipeline and actually do more but I think they haven't. This isn't again, it's not an enthusiastic let's go, but I'd rather walk toward this than away from it.

Travis Hoium: I'm also very lukewarm. Let's go. Again, seeing the revenue and the earnings growth right now, that's right now. This is a company that's basically in a two company monopoly right now. There's a lot of companies fighting for this space. While there has been good news for Eli Lilly and for Novo Nordisk in that some of the other treatments have basically fumbled on their way to the end of the Phase 3 finish line of clinical trials. I do think that Eli Lilly is still attractively priced here. Again, when you are successful and you're making a lot of money you will find ways to buy, you will acquire growth if you can't make it in house. Reddit is one of the hotter stocks in the market up 64% over the past month. I've completely missed this one. Revenue has jumped 78% when they were public. I didn't think they would be able to post those numbers and now net income is positive. Rick is Reddit stock. Oh, no, at this valuation, or let's go.

Rick Munarriz: I'm going to say, oh, no, for the stock but I'm a big fan of Reddit. I think the company itself is great. To me, it's impressive how when the company was going public just a couple of years ago, this was a matter of no, it's terrible, it's not going to be able to monetized. These communities of communities they're going to basically have a revolution and it happened early on with API and other stuff just other issues that were happening. But I think Reddit the stock itself, I think, has extended itself, overextended the reality of the situation and the fact that there will be monetization challenges once we get to that point which will probably happen sooner or later so I'm going, oh, no.

Lou Whiteman: Yeah, I'm, too. I love the platform, but oh, no, we've just seen it with so many of these, whether it's Twitter, Pinterest, the monetization is hard. They might have some levers to pull but I want to see it to believe it.

Travis Hoium: I didn't have you two as Reddit heads, but I guess here we are. Their content continues to end up everywhere in artificial intelligence so it seems like that will be a tailwind as these AI companies try to figure out how to get up to date information. Apparently Reddit is the best place to get it right now. Let's move over to the company from Rick's neck of the woods and what I have sitting next to me is a can of Celsius. Stock is up 25% in the past month, year over year revenue growth is 84%. That does include the Alan new acquisition. Net income is up 28%. Rick, have things turned around and is this a let's go?

Rick Munarriz: Yes. I'm going to go with let's go. The stock has more than doubled this year, so it's one of the many surprises stocks that have more than doubled. Again, it's not organic growth, but the Celsius brand after three quarters of negative growth, did grow 3%. Obviously, 84% was all basically the Alani Lou lifting but I think they found themselves a great brand. More importantly, was that their profitability came in a lot stronger than expected. This is a company that was able to integrate with Alani Lu in April and just some three months was able to make it very profitable and help on the bottom line. I think as far as the stock has gone I do think that there's some potential upside at least the next three quarters here.

Lou Whiteman: Never, ever underestimate America's desire for carbonated tang. This is let's go. I personally, I can't stand the stuff people just drink water, but I do think that Rick's right. I'm a very lukewarm, let's go. I think they have their momentum back.

Travis Hoium: It's one of those. I feel at least a little bit better about myself drinking a Celsius than a mountain dew. I don't know if I really should, but I guess I'm the average American. Let's end things with the company that I think Rick and I are licking our wounds on. Crocs is down 16% over the past month. Revenue was up a little bit. Guidance was really weak. Is this an oh no moment for Crocs or such a good value that it's let's go?

Rick Munarriz: I'm going to say, let's go. I get it. This is not the same. There are holes in the shoes, there's holes in the stocks, there's holes in the company. The hey dude thing should have been a hey don't acquisition, but add it all up together. Crocs is the company that when it does take a hit history tells you, get back in. This is not a flash in the pan, a trendy, one trick pony. They find ways to become relevant here and abroad, it's an international play, too. I'm bullish on Crocs and when the stock sells off I think it's usually a good opportunity. History tells us to slide in some comfortable shoes.

Lou Whiteman: I was skeptical about this one. I get it, though, guys. I might be a tentative let's go, or I find it intriguing just as value over value trap. I still don't like buying into investor or consumer trends and that still scares me. But they have reached a point where I don't think they're going out of business so maybe I need to try a pair on, Rick.

Travis Hoium: I was at Vikings training camp yesterday and there was a bunch of kids running around with no shoes on and I was trying to figure out what was going on and they were trying to play football in crocs and decided that it was better to just take their shoes off. Apparently, the kids are still wearing crocs. Next up, we're going to talk a little bit about ChatGPT's latest update and get to the stocks on our radar. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and it's not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure please check out our show notes. The big news in AI for the week was ChatGPT getting an upgrade to GPT 5. Rick, is this something or nothing for either ChatGPT or the rest of the tech space right now?

Rick Munarriz: To me, this seems to be that rare case where the pick and shovel plays are more impressive than the blueprints. An upgrade that makes GPT stronger, deeper and less buggy, great. But this doesn't necessarily a race that I'm going to be racing to buy Microsoft with this 49% stake in Open AI. This is still a race with a very blurry finish line. To me, the safer catch all plays continue to be NVIDIA's AMD's and even Ono, even CoreWeave of the world than the actual companies behind the platforms.

Travis Hoium: CoreWeave has taken a hit. Are you worried about their depreciation schedule? This is something we don't talk a lot about on the podcast, but how long you're expensing those GPUs which may just burn up in a couple of years seems to be really important to investors right now.

Rick Munarriz: It's accounting and also it may be it's a commodity game at the end of the thing. But again, I still think that these are the plays that are going to do better right now until we decide the platform that comes out on top.

Lou Whiteman: CoreWeave scares me for just what you said. The one thing on ChatGPT I'd say is, is that the chatbots are getting all the attention because that's what people are interacting with. Some of this, wow, I don't think the chatbot was as good. But we're talking about the consumer. It's the enterprise is what matters. Even if it isn't as warm and cozy or whatever with the chatbot this time around, if the programmers think it's better that's probably good news for the company.

Travis Hoium: It is going to be interesting to see how this all plays out. The company that keeps coming up in this is Alphabet. They are the other big competitor with Gemini. The interesting news to me this week was that Oracle, who is OpenAI's partner on these massive Stargate data centers announced that Gemini is going to be on Oracle's Cloud. Meanwhile, some of ChaGPT anyways is running now on Google's Cloud. It seems like even though they are the biggest competitor in the company that everyone thinks is going to be disrupted by Open AI they seem to find their way into these markets. Is that a reason to say, maybe the easy answer is just like Rick said, some of these bigger companies like Alphabet, Microsoft, NVIDIA what do you think, Lou?

Lou Whiteman: I do think there's a risk that even if AI goes as planned there's some commoditization effect. I do think that that's at least something investors need to watch and NVIDIA should like Rick said, NVIDIA should work out fine, even if that happens, right?

Travis Hoium: We like to end the show with stocks on our radar, along with some comments and questions from our producer Dan Boyd behind the glass. Lou, you are up first. What is on your radar right now?

Lou Whiteman: I'm looking at QXO. Dan, I know, sponsored by Sesame Street. But no. QXO is a building products roll up, it's in its early stages. Just one deal so far. But the person behind the roll up, Brad Jacobs, he's done this before. His last two companies, they are two of the top 10 best performing Fortune 500 stocks of the last decade so there's a great track record here. QXO reported earnings and revenue. Both topped expectations this week. They say they are on track to double EBITA at Beacon Roofing Supply, their first acquisition. I'll be honest, the stock looks fairly valued right now, but QX's goal is to use M&A to be five times as large within a decade. A lot of risks there, a lot of deal making, but an intriguing track record. I'm very interested in how this plays out.

Travis Hoium: Dan, what do you think about QXO?

Dan Boyd: I think that it's great that the spirit of Ron Gross is still here at Motley Fool Money. We've got old economy Lou coming at us once again, Lou, here's a question for you. Brad Jacobs, he's successful, sure, but can he please start an interesting company?

Lou Whiteman: You know what? The funny thing is, some of the best investments are outside of the interesting space and thanks for the compliment, Ron Gross, may you long live on the shelf.

Travis Hoium: Rick, what is on your radar?

Rick Munarriz: I'm going with BBB Foods, ticker symbol TBBB. It's a fast growing deep discount grocer in Mexico. You're thinking, grocery stores in Mexico, it's gone from zero stores 20 years ago to more than 3,000 right now. Posted great results this week. Revenue was up 38%, largely on expansion and added more than 500 stores. But comps were up nearly 18%. You don't see double digit comps very often, especially when it's stacked on top of double digit comps from a year ago. This is a company that's a low cost product, razor thin margins but it's able to make it work, operating profits great, just an overall solid growth stock that's really not really outside of most radars, really is outside of most radars to investors right now.

Travis Hoium: Dan, how do you feel about investing in grocery stores in Mexico?

Dan Boyd: Grocery stores in Mexico is a little bit daunting I'm not going to lie. Grocery stores, of course, have razor thin margins and are just I don't know, maybe not my favorite investment. But as they say in Mexico. Rick, my question to you is Mexican food, what's your go to?

Rick Munarriz: I'm a good fan of chimichangas, if you have to get down to actual Mexican food. But, yeah, no pain, no gain, no risk, as you mentioned before.

Travis Hoium: Dan, what is going to be added to your watch list QXO or TBBB?

Dan Boyd: As much as I like to make fun of boring companies, I do like boring companies, Travis, but I'm quite interested in TBBB. I think I'm going to go south of the border with Rick Munarriz today and put TBBB on my radar.

Travis Hoium: Rick, have you shopped at a BBB store?

Rick Munarriz: No, they are only in Mexico. I have not been in Mexico in about 10, 12 years. Like I said, no, I have not shopped in, but it's a deep discounter, I get it.

Lou Whiteman: Dan, the 12-year-old boy inside of you is really upset that you think getting a new roof is boring but going to the grocery store is exciting.

Dan Boyd: Good boy, Lou.

Travis Hoium: For Lou Whiteman, Rick Munarriz and our production magician behind the glass, Dan Boyd and the entire Motley Fool team, I'm Travis Hoium. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.

Dan Boyd has positions in Berkshire Hathaway and Walt Disney. Lou Whiteman has positions in Berkshire Hathaway and Qxo. Rick Munarriz has positions in Alphabet, Apple, Celsius, Crocs, Novo Nordisk, and Walt Disney. Travis Hoium has positions in Alphabet, Berkshire Hathaway, Celsius, Crocs, and Walt Disney. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, BBB Foods, Berkshire Hathaway, Celsius, Lululemon Athletica Inc., Microsoft, Nvidia, Oracle, Pinterest, and Walt Disney. The Motley Fool recommends Crocs, Novo Nordisk, T-Mobile US, TKO Group Holdings, and UnitedHealth Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.