This Stock Is Undervalued

Overview

Joseph Carlson reviews the week’s earnings slate amid rising concern about an AI bubble and discusses several companies, along with an interview with investor Brad Gerstner. He says 23–25% of his portfolio holdings report this week, with about 55% reporting the following week. Investors are weighing whether AI-related revenue can justify the sector’s large capital-spending commitments. Higher interest rates and political uncertainty are adding to market nervousness.

Company and market views

SpaceX, Starlink and xAI

Carlson sees satellite internet connectivity as SpaceX’s strongest business, citing 65% year-over-year revenue growth and Starlink’s potential to serve customers underserved by traditional telecom providers. He also notes competition from Amazon’s low-Earth-orbit satellite effort.

SpaceX’s launch business supports its connectivity business. Its AI-cloud business is growing quickly but carries greater contract-duration risk: many customer agreements are reportedly around 90 days, rather than multiyear commitments.

Carlson cites a $2.56 trillion market capitalization, $12 billion in trailing-12-month revenue, and possible revenue of $40–50 billion in the coming year. He compares this with Amazon (AMZN), at about $2.83 trillion in market value and $775 billion in trailing revenue. AWS alone reportedly generated $148 billion. Carlson prefers investing a dollar in Amazon, arguing that SpaceX’s growth prospects are already reflected in its valuation.

Netflix (NFLX)

Carlson is invested in Netflix and describes it as a potential buying opportunity after a roughly 45% drawdown. He cites a 19× forward P/E and a 3.8% free-cash-flow yield, and argues that the market may be overreacting to concerns about engagement. He believes a mid-20s P/E could be justified over time, while emphasizing that earnings reactions are uncertain and the stock could fall another 4–7%.

He contrasts the current valuation with Netflix’s roughly 17× P/E during its 2022 selloff, when the stock had fallen about 70%. Subscriber growth later returned, helped by the password crackdown and an ad-supported tier.

Carlson attributes current negative sentiment partly to management’s comment that engagement was growing but not as quickly as desired, and to layoffs of about 1,000 employees, or 6% of the workforce. Netflix said it remained on track to meet its full-year forecast. Carlson also cites roughly 450 layoffs in 2022, followed by a substantial stock recovery.

ASML

Carlson cites ASML as an example of how a negative market narrative can create an opportunity. After a reported 10% share-price decline following earnings and management’s inability to confirm 2026 growth—amid tariff, export-control and geopolitical uncertainty—he bought shares below $700.

He says the underlying results were strong and interprets management’s caution as uncertainty about external conditions, rather than necessarily a deterioration in the business.

Meta Platforms (META)

Carlson sees strong advertising momentum and calls it “monetization power”: Meta is selling more ad inventory while earning more per ad. He cites:

• Ad-impression growth of 14% year over year.
• Average ad-price increases of 9%, 10%, 6% and 12% across four recent quarters.
• Total advertising-revenue growth of 27%.

His key concern is whether rising capital expenditures (capex) will trouble investors. He says he is willing to hold through the capex cycle.

Tesla (TSLA)

Carlson is not interested in Tesla at its valuation. He cites a 154× forward P/E, roughly flat revenue and free cash flow over about two years, declining vehicle deliveries, and lower year-over-year net income.

He argues that the investment case depends heavily on the robotaxi narrative, whose rollout he sees as slower and more complicated than some investors expected. He views Tesla as facing substantial competition from automakers, autonomous-vehicle companies and Uber’s network.

Carlson prefers SpaceX over Tesla on defensibility and competitive positioning. He acknowledges that Tesla’s technology demonstrations are impressive but says they are not, by themselves, a reason to buy the stock.

Moody’s (MCO)

Carlson calls Moody’s a high-quality, predictable long-term compounder, citing its proprietary data, integrations and trusted brand. He says he expects attractive returns over a ten-year horizon.

AI trade and positioning

In an interview, Brad Gerstner says AI revenues have grown faster than many expected. He acknowledges concerns about whether revenue will justify capex, as well as open-source competition, the sustainability of demand, inflation and interest rates. Gerstner says he remains positive longer term but had reduced exposure to medium-small and to its lowest level in three years.

Carlson criticizes the apparent gap between Gerstner’s public optimism and his portfolio positioning. He cites about $9 billion in Altimeter Partners’ flagship hedge fund versus $593 million in its long-only fund—a roughly 15:1 difference—and argues that the hedge-fund positioning represents most of the capital under management. Gerstner describes the pullback as expected market “chop” and says that more attractive prices could prompt buying.

Frameworks and investment takeaways

• Assess growth against valuation: Carlson compares SpaceX’s potential growth with Amazon’s much larger existing revenue base and AWS scale, concluding that he prefers Amazon at the cited valuations.
• Separate a business’s segments: He evaluates SpaceX’s connectivity, launch and AI-cloud businesses individually, distinguishing strong growth from the durability of short-term AI contracts.
• Test market narratives against fundamentals: For Netflix and ASML, he considers whether negative headlines reflect lasting business problems or short-term uncertainty already reflected in the share price.
• Consider risk and time horizon: He acknowledges uncertainty around Netflix earnings, Meta’s capex and AI valuations, and distinguishes short-term portfolio risk management from long-term investment views.
• Do not equate an impressive product with an attractive stock: His Tesla discussion emphasizes valuation, commercial viability and competition, rather than product demonstrations alone.

Other mentions and disclosures

Companies also named as reporting during the week include GE, Spotify, Lockheed Martin and Bloom Energy. CoreWeave is mentioned in connection with AI-market concerns.

The “fail of the week” segment concerns ESPN, owned by Disney (DIS), and its acceptance of sports-betting advertising. Carlson discusses the potential for gambling sponsorships to discourage critical journalism; this is not presented as an investment thesis.

Carlson promotes his Qualtrim membership, citing a $10 monthly price, an annual plan at about $8.50 per month, and a seven-day free trial.

The subtitles contain no explicit “not financial advice” statement. The investment views above are Carlson’s opinions, not independent recommendations.

Assets, sectors and instruments mentioned

SpaceX, Starlink, xAI, Amazon (AMZN), AWS, Netflix (NFLX), ASML, Meta Platforms (META), Tesla (TSLA), Moody’s (MCO), Uber (UBER), Disney (DIS), GE, Spotify, Lockheed Martin, Bloom Energy, CoreWeave, Anthropic, Google, semiconductors, telecommunications, AI/cloud infrastructure and advertising.

No specific ETF, bond or commodity position is discussed.

Presenters and sources

• Presenter: Joseph Carlson.
• Interview source: Brad Gerstner of Altimeter Partners, interviewed by a host identified in the subtitles as Josh.
• Other source discussed: ESPN producer Nicole Norin, in remarks about gambling advertising and journalism.