Nov 7, 2026 · 48 min
Value investors test AI exuberance against beaten-down stocks
Why Bill Ackman Loves Uber at 16x Earnings + Our 2 Favorite Cheap Stocks
The discussion weighs whether today’s AI spending can sustain high returns while overlooked consumer and insurance businesses offer cheaper, cash-generating alternatives.
- 1AI infrastructure spending may echo the fiber-optic buildout, with high valuations vulnerable to competition and cyclical overinvestment.
- 2Declining consumer companies can still reward investors when strong cash generation funds buybacks and disciplined capital allocation.
- 3Uber, insurance, and retail illustrate how valuation, competitive threats, and management decisions shape deep-value outcomes.
Don't miss
The sharpest tension arrives when the hosts compare today’s AI infrastructure spending with the fiber-optic buildout and question whether extraordinary returns can last.
The brief
Tobias Carlisle and Tim Travis open with small- and mid-cap value stocks, arguing that markets often punish uncertainty more severely than disappointing outcomes.
The AI infrastructure boom becomes a test of valuation: hyperscaler spending may support durable businesses, but smaller providers face uncertain profits and eventual competition.
Uber anchors the debate over growth, valuation, and threats from Waymo and Tesla, before the conversation connects Ackman’s strategy to Howard Hughes and insurance.
Retail and insurance offer contrasting value lessons, from the failures of J.C. Penney and Sears to cash-generating businesses such as Dillard’s, AutoZone, and O’Reilly Automotive.
The hosts close on cheap consumer stocks and the options wheel, asking whether beaten-down valuations compensate investors for squeezed consumers, inflation, and cyclical risk.
What was said on this episode
39 statements · 21 positive · 17 negative · 1 neutral
Small- and mid-cap value stocks have performed well this year.
“It's been a pretty good year for small value, mid-cap value on the whole”
Listen at 1:21
Energy prices have risen approximately 20% year over year.
“I saw energy inflation is like 20% year over year”
Listen at 1:59
Markets dislike uncertainty more than a realized worst-case outcome.
“the market really hates uncertainty more than even the worst case outcome”
Listen at 5:12
Blue-state governors will oppose data-center development.
“I think that the blue state governors are going to be anti-data center”
Listen at 5:24
Reduced data-center construction could lower chip and memory prices.
“if some of these projects don't get built, potentially you could see chip prices and the memory prices go down a little bit”
Listen at 5:39
AI will transform the entire economy.
“AI is an incredible tool that is going to be absolutely transformative for the entire economy”
Listen at 7:00
AI-related capital expenditure could reach $7 trillion over several years.
“$7 trillion in CapEx, that was one of the numbers that I saw floated over the next few years”
Listen at 7:15
Most companies that built early internet fiber networks went bankrupt.
“The ones that built out all of that fiber optic cable went bust for the most part.”
Listen at 9:15
Current AI sellers may not capture future AI benefits.
“it doesn't mean that today's AI sellers are going to be the ones that benefit from it”
Listen at 9:33
CoreWeave and Nebius have weaker AI profitability prospects than Amazon, Meta, and Alphabet.
“I don't know that their path to profitability and the multiple pillars of capitalizing on AI are as powerful as it is for the Amazons and the Metas and the Alphabets of the world.”
Listen at 10:58
A recession and lower rates could increase the value of long-term corporate bonds.
“if you get a recession at some point and rates go down. You could see those bonds appreciating potentially.”
Listen at 11:39
Waymo and Tesla gaining key-city market share could hurt Uber.
“if they get, you know, strong market share in some of those key cities that could hurt Uber”
Listen at 12:44
Existing Tesla owners may reduce demand for Tesla robotaxi rides.
“it seems like, I don't know, even if you're a Tesla fan, you might already have a Tesla”
Listen at 12:51
Uber has a reasonable rather than heroic valuation.
“it doesn't seem to be uh you don't need it's not a heroic valuation that you're paying for it's a pretty reasonable valuation”
Listen at 13:42
Tesla’s Cybercab rapidly surpassed Waymo in rides after launching.
“the cyber cab launched in January and it's just gone vertical and it's bypassed Waymo in a very short period of time for rides”
Listen at 14:08
Strong earnings growth can produce good stock returns despite paying a higher multiple.
“even if, you know, you pay a little higher multiple, if if. The earnings growth is there. You should get a pretty good return on the stock.”
Listen at 15:14
Howard Hughes is cheap and has substantial upside from Ackman’s strategy.
“I think it's cheap with real estate where it is. And then I think there's a lot of upside to what Ackman's doing there.”
Listen at 16:56
Insurance is a difficult business to operate successfully.
“insurance is a tough business”
Listen at 18:52
AIG remains cheap relative to book value if underwriting results persist.
“the stock is still relatively cheap relative to book value if those results can continue”
Listen at 22:05
Declining companies can be suitable deep-value investments.
“I don't mind companies that are sort of in a gentle decline”
Listen at 25:35
Cash-generative declining companies that repurchase shares can perform effectively.
“They're just throwing off cash and buying back stock. It's a really simple playbook, but it's very, very effective.”
Listen at 26:20
Retail investments should not receive oversized portfolio allocations.
“I would never size anything retail too big in the portfolio”
Listen at 27:16
Insurance and retail can be profitable when investors understand them.
“insurance, retail, they can be quite profitable”
Listen at 27:29
Assured Guaranty trades near historically low valuation levels and is compelling value.
“right now it's trading at one of the cheapest levels other than like the financial crisis or maybe even the peak of COVID. And so I think it is a pretty compelling value.”
Listen at 30:51
Assured Guaranty is not permanently in runoff.
“I don't think it's in permanent runoff.”
Listen at 31:47
Assured Guaranty has expanded into infrastructure and structured debt successfully.
“they've been growing into like infrastructure and to and to some structured debt that that they've done really well on”
Listen at 31:57
Tobias’s portfolios were nearly as cheap as at the end of 2022.
“my portfolios were as cheap as they were at the end of 22”
Listen at 34:30
Current portfolio forward returns are approaching the high teens without multiple expansion.
“I think we're approaching high teens without any multiple expansion.”
Listen at 35:07
Meta, Google, and Amazon are extremely compelling investments.
“I added aggressively to most of the hyperscalers, Meta, Google, Amazon. I thought I thought that they're extremely, extremely compelling.”
Listen at 35:34
Amazon is among the companies Tim would most prefer to own.
“there's not many companies I'd rather own than Amazon in the world”
Listen at 36:03
Options strategies can exploit stock-price volatility.
“you can take advantage of the volatility that's in there”
Listen at 37:58
Depressed consumer-facing stocks offer attractive investment opportunities.
“there's some good opportunities in there and I've been trying to pick some of those up for the accounts that I manage”
Listen at 39:14
The best valuations for this market segment occurred at the beginning of October.
“I think that we passed the best valuations that we're going to see at the beginning of October.”
Listen at 39:26
The largest companies have historically tended to underperform the broader market.
“the biggest companies in the market have tended to underperform the market”
Listen at 40:21
Fastest-growing, capital-intensive companies have historically tended to underperform.
“The fastest growers also, the ones that are deploying the most capital, they also tend to underperform”
Listen at 40:42
Intense hyperscaler competition can reduce returns on capital.
“the competition between the hyperscalers or the businesses that are leading at the time leads to lower returns”
Listen at 41:35
Chip companies could face lower profitability after excess supply emerges.
“I think it's somewhat analogous to like home builders where, you know, not as good of a business as chips, of course, but you get these eras where, you know, they're printing money because it's supply demand. And then you get too much supply out there. And that could happen.”
Listen at 43:57
Hyperscalers cannot sustain current AI spending without corresponding revenues.
“I just can't see how it can because they're all just overspending.”
Listen at 45:25
Cyclical chip businesses are better bought when expensive and loss-making than when cheap and highly profitable.
“you don't buy them when they're super profitable and optically cheap because the market knows that profitability is short term and you buy them when they're expensive and loss making for the most part”
Listen at 46:04
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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