Rich Diaz

In the 2000 IT bubble, these companies had no earnings, had no margins and had no moats around their businesses.

That's not true at all today.

The moats are deep.

They have incredible earnings and incredible margins.

What's different over the last little while, I'd say?

is that the free cash flow for all these companies is starting to really, really decline.

So in the past, their businesses were sort of CapEx light, meaning you generate lots of money and you didn't really have to invest as much money to keep those earnings going.

relatively high now you're seeing it's a different model where in order to keep those earnings and margins they're having to pour a lot of money into new data centers technology chips etc and so your free cash flow so your earnings minus your capex is what's known as free cash flow and being

you know, very simple, but that's basically what it is.

Free cash flow yields are very important, which is, but anyway, so what's really cool.

So for example, I think Meta or Facebook or whatever had a negative free cash flow for like the first time in eons, like for ages and ages and ages.

So it is, it is, it's really interesting.

It's like a different world, but these nevertheless, these companies are making lots and lots of money.

So it's cool.

Keith.

What's interesting, though, is what I thought one of the coolest charts that I've seen in a while is sort of the dislocation between hardware.

So SanDisk is hardware.

NVIDIA is hardware, et cetera.

Intel is probably hardware, although I'm sure they do a little bit of software, too.

And so the two indexes have just gone completely opposite.