Scott and Ed discuss Huawei’s new challenge to Nvidia, Apple shifting U.S. iPhone production from China to India, and Spotify’s Q1 earnings report. Then Mark Mahaney, senior managing director and head of internet research at Evercore, returns to the show to share his top internet stock picks. He explains why he believes Google is the cheapest of big tech, highlights the strategic value of Waymo, and offers his insights on Uber. He also breaks down what’s driving market enthusiasm around Netflix and Spotify. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: What are the implications of Huawei's new AI chip?
The thing that will, I think, make Huawei potentially an outperformer here relative to NVIDIA is, one, NVIDIA's got an extraordinary market cap right now. But also, I think the worm has turned in terms of people's receptivity or favoritism that was biased towards the U.S., and that is the deepest-pocketed companies and countries in the world.
No, I wouldn't say unbeknownst to us, but it was taken for granted, or we didn't realize how much goodwill we had. I think you're going to see a lot of European companies take meetings with Huawei and say, we're less freaked out, or we're no less freaked out about Chinese espionage or them having access to our data, but we're much more freaked out about Americans having our data now.
And we don't feel nearly the allegiance to maintain U.S. prosperity, given that they're no longer guaranteeing our military umbrella, that they appear to be declaring war on us economically. So I think Huawei has the wind at their back right now.
But I'd love to know the relative valuations, because I would think that Huawei is going to get a lot more meetings with Latin American, Asian, and European companies today.
to discuss their AI and their chips. This is not a public company, so it's hard to know, but I just want to highlight some statistics that sort of illustrate what we're up against here. China produces 3.6 million STEM graduates every year, and that is more than four times the number that we produce in America.
They also have produced 13,000 granted patents in AI so far, and we have produced less than 9,000. They're also beating us in terms of public investment into AI. They allocated $142 billion to semiconductor manufacturing last year, compared that to the US where we were at $75 billion. There are a lot of places where China is actually very strong.
I don't think you could make the case that right now China is beating us. I mean, we have the best chips in the world. We also have the best models in the world. We're also leading by far in terms of private investment into AI, 12 times higher. by dollar value than China last year. So I think if we're in a race, and I believe we are, I think we're ahead.
But this will be really interesting to keep track of, because you just look at what they're doing in terms of investing in their research institutions, in terms of the innovation that we're seeing in the patent world, they're clearly laser-focused on being the world leader in AI. And this is the thing that could easily define the next generation of technology.
What I think is going to do real structural harm to America's competitiveness on an economic level are some of the things you're talking about. And that is, if you look at the number of—and Frisa Kari did a great segment on this—if you look at the number of universities in the top 500—
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Chapter 2: How is Apple shifting iPhone production to India?
And that is, it has so much scale and so much capital to reinvest into innovation that slowly but surely, and also it benefits from focus, it's pulling away from Apple and Amazon and the other music streamers. And I can't think of another company that was able to take an entire medium and distill it down to one searchable icon on your iPhone.
I mean, even YouTube, as much as we talk about YouTube, there's just certain things, a lot of things I cannot find on YouTube. I can find pretty much everything in terms of music and podcasts on Spotify. I think they've been really innovative around the commenting and the video. They're trying to create it into a social platform.
I just I love the branding. It's basically the best managed company in tech, in my view. I mean, every there have been so many forks in the road for this company. And you look back and they've made every every decision has been the right one. And I think one of their biggest decisions, which we're now seeing reflected, was their decision to get into podcasting.
Now we can make, you know, we can have a conversation about, did they do it the right way? But what is very clear is that this is now a big leader in the podcasting space. That was a decision they decided to go with. And now we're seeing a lot of emphasis on podcasting on the earnings calls and in the earnings reports. And one thing that's so interesting, we're seeing it play out in our business.
The biggest platform for this show, Profiteer Markets, in the audio, at least, was Apple Podcasts. This week, Spotify actually overtook Apple as our top audio platform for property markets. Our growth on Spotify is way outpacing our growth on Apple. And I've been trying to think about why that is. And it's two main things for me. One, I think Spotify is just attracting a younger audience.
And I think a lot of that has to do with many of the things you mentioned there. I think their marketing is great. They're leaning into video. They're trying to really focus on engagement by implementing these new comments features. They're doing a lot of stuff that resonates with young people. And you look at this program, This is a largely young audience.
Out of the ProfG Media portfolio, ProfG Markets is the youngest. 36% of our audience is under the age of 34. If you look at Raging Moderates for comparison, that number is 24%. And so that would explain why Raging Moderates, as an example, has 86% more followers on Apple Podcasts versus Spotify. And then you look at this program where Spotify is actually leading.
So I think that's one explanation there. It's attracting a young base. And the second thing is the recommendation algorithm. I think a lot of people are finding this show because Spotify is recommending it. At least that's what I've heard anecdotally from people who listen to the podcast.
And this is the real differentiator between Spotify and Apple as an audio platform and the reason it's pulling ahead. The way you find a new podcast on Apple... you kind of just have to find it on the top 10 list. It's basically an entirely editorial recommendation system. It's the same way that traditional media works. Or, you know, like, you look at books. I mean, how do you sell books?
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Chapter 3: What are Mark Mahaney's top internet stock picks?
My biggest concern on Reddit is, I think they've got this great growth, but at the end of the day, you know, the revenue comes, maybe they haven't rolled out any sort of subscription revenue yet. I think, I mean, I would want to watch that. But it's a mid-tier ad platform. And I've never really seen a mid-tier ad platform break through, whether it was Snap, Pinterest, Twitter.
None of them have ever done it because at the end of the day, you got to go to marketers and you got to say, yeah, spend some of your money. shift some bucks away from linear or break it away from meta or Google and spend it on my platform. And the marketer's going to say, because your targeting is better or your reach is better, your frequency is better. Why?
Chapter 4: Why is Amazon considered a top stock right now?
Chapter 5: How does Spotify compare to its competitors in the podcast space?
Chapter 6: What market trends are impacting tech stocks?
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Today's number, 50%. That's how much more often British people apologize than Americans do. So I'd like to apologize to all our listeners that I have not yet offended. It's coming. It's coming. Ed, true story. When I started at Morgan Stanley, I was consistently late. And I thought of an interesting apology in the all hands meeting said, I want to apologize for being late.
I was at home not being miserable. Yeah, it's not very good, is it? I got to come up with something better. All right, you talk. I'll find something better. What do you want me to talk about? I apologize for slapping you twice, but I needed to slap both faces. Get it? Two-faced? This is going nowhere, Ed. This is going nowhere. Keep throwing. See if anything sticks.
I promise to do a better job at hiding how much you annoy me, Ed. Finally some truth.
I'm like Don Rickles minus the talent right now. I do love that statistic. I think it's very true. We apologize way too much. You think? In fact, just before we recorded, yeah, I went to the bathroom and then I came back into the recording session. I was like, sorry. And everyone laughed at me. I shouldn't be apologizing for going to the bathroom.
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