Is the Data Center Backlash a Real Investment Risk for AI Infrastructure?

0:00This is Invest Talk from KPP Financial. Helping investors make sense of the markets one day at a time. Here's your host, Luke Guerrero. Good afternoon fellow investors and welcome to the October 1st, 2026 edition of Invest Talk. I'm your host, Luke Guerrero and I am ready to dive in with all of you to Q4 of 2026. That is right. The year is just barreling along. There are three months left. And because we're headed to the end of the year, it does not mean that you can lose focus. In fact, some of the moves you make heading into 2027 will likely impact you far off into the future. To that end, before we talk about today's market performance and run down our show topics, let's tackle this color question now.

1:24The question's on ticker TJX, which was formerly TJ Maxx. They have not just that business, but a couple other well-known discount stores, marshals, home goods, being among the banner flagship stores that they have. It is a name that we hold for clients in one of our strategies. We've held it for a couple of years now. In fact, going back to 2022, this thing has been a perennial outperformer relative to its industry. But this year it's been a bit struggling a bit. And most of that has been in the past month or so. When you look at it on its face, you saw an earnings report that had 15.2 billion in net sales. It was a $5% year-over-year. You had diluted EPS at 1.36. That was up 24% year-over-year. You had gross profit margins at 33.4%.

2:28And you had guidance both being raised. And so you look at it, you say, huh, what is going on here? What I think happened is, if you take a look deeper into earnings, you see that about $219 million of the pre-tax profit, about $0.14 of earnings per share, came directly from one-time tariff refunds. What that means is that the 24% headline diluted earnings growth, well, I mean, that's pretty overstating what the actual underlying growth rate was, which was about 11%. But there's still a lot of positives here. Comparable sales growth at 4%, that company's own internal plan. And so what we see, at least for the foreseeable future, is just a little bit of a drawdown because you're seeing this growth and you're saying, okay, it's not as great as it sounded. But at the same time, maybe we need to take a look at this, take a pause. It was trading at pretty elevated valuations.

3:30Right now it's trading at about its average. I think this is a pretty solid value for a name that is still consistently growing. And has been seeing a bit of margin expansion in the recent past. That is TJX, TJX companies. Thanks for the call. We had a great show for you yesterday. Justin talked all about the Trump G Summit. And more specifically, what the investment playbook looks like after this meeting. He also answered a listener question on Otis Worldwide Corp that is taking OTIS. If you want to hear about both of those topics, I encourage you to check out yesterday's episode of Invest Talk. And remember, the best way to never miss an episode is to subscribe wherever you get your podcasts. All right, today we got a lot packed into the next 45 minutes, including my main focus point on the data center backlash. And focusing on if it's a real investment risk for AI infrastructure,

4:33because there has been a massive wave of blue collar jobs tied to data center construction. But you're seeing in these communities a lot of opposition. And is this going to threaten the pace of expansion? Meaning that investors who might be betting on AI infrastructure, you have to understand the human and political factors that may slow the boom. We also have some voice bank calls ready to play, including one on Portfolio Commission. That'll be an interesting one. And another on Centrous Energy Corp Tiger, LEU, as well as some questions that came in from the comment section of the Invest Talk YouTube channel. And hopefully we hear from some of you live throughout the show. We're headed into a break. As always, it is a quick one. Please remember, you can call any time and leave your questions on the Invest Talk voice bank. If you're listening via our live stream or possibly AM 1220 in the Bay Area, I encourage you to call now at 888-99-CHER. We come back. We'll talk about today's market activities.

5:38There are a few things that make KPP financial special. One of them is parallel investing. This means they invest right alongside their clients. Here's how it works. When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP. On the same day at the same price and same percentage. No front running, no special treatment. Learn more about parallel investing at Invest Talk.com. When we started off the quarter with a overall positive day, I'll be at just slightly. The Dow was up 4 Bips, S&P 500, up 20 NAS, DECUP 4 and Russell 2000, up 35. If you look at the difference between the S&P and the equi-weight S&P, we saw the equi-weight outperforming the KPP index. In spite of that, looks like we're still on track for a seventh straight weekly decline.

6:41Some of the best performers' energy software, healthcare distributors did really well. Some of the worst life insurers managed care, large cap, banks. Treasury's been firmer. We did see some curve steepening at the short end. The yields were down pretty substantially, about six to nine basis points. Same time, Dollar Nex was up 60 Bips. Gold finished up 40 and silver was up about 1%. Crude oil settling up 2.7%. Now, I think a lot of the positive performance, because again, when you see the equi-weight outperforming, the cap-weight index typically means that there's bigger breadth. There's more performers that are positive, because they all have an equal weighting. A lot of that was helped from lower yields. It's not as common sometimes to see energy doing really well. And then that breadth very positive. But I think with the move in the yield, certainly offset any of those energy-related concerns today.

7:43Now, you did see on the long end, yields moving the opposite direction. They actually had a fresh 24-year high. The reason being was September ISM manufacturing, that kind of continued to reflect these cost pressures that we have been talking about, that everybody has been seeing. And then you've had slight concerns about re-escalation. The president reportedly sending a third carrier battle group into the Gulf region. Digging in a bit to the data today, September ISM manufacturing missed, despite advances in new orders and employment. We had a weekly initial jobless claim at 197,000. That was below the 200,000 consensus. We had continuing claims at 1.70 million. That was below the 1.704 cast. We're going to head to the rest of the week. You know, we have the September employment report which caps off the week on Friday. I think, honestly, the most interesting thing we saw today,

8:44not really a data bit, but we did get a bit of Fed speak. And afterwards, we said some echoing of what Governor William said earlier in the week about this lack of urgency at the Fed to rate high. To high rates again, as a result, looks like the October rate hike odds are now down to about 26%. I want to keep things moving and take a look at this question that came in via one of our web forums on our website. And it's from Alex from Texas and it's on ticker C-E-N-X. It says like others. Excuse me. Like others, I have been looking to divest from real-t income. I came across C-E-N-X. My question is, do you think this is a better allocation of capital? Seems to be cheap and may have hit its bottom, or is this another falling knife? Really appreciate your insights.

9:45Alright, C-E-N-X is a century aluminum company. They are, as you could guess, an aluminum producer. So they operate smelters not just in the United States. They got smelters in Iceland. They got some in Jamaica. And they have been doing not so great over the past three months. We talked a while ago about some of the structural benefits to aluminum companies because of aluminum pricing, because of how much of the aluminum supply chain runs through the Gulf. And so since the beginning of this incursion, you've seen the price of this company really start to move up. So it was trading about $30 a share, then it reached a peak of about $65. Now it's back down to trading at $35.99. That does put it at the low end of its valuation range. I mean, it's trading at 3.3 times price to forward-looking earnings. The low of the past five years is 3.2.

10:46And this is all in spite of the fact that net sales was up 20% year over year. And it did miss consensus again. A lot of pricing is about market expectations versus what growth actually was. Earnings per share missed on consensus as well. And taking a look at guidance looks like they guided essentially flat. So you have coupled with disappointing earnings. Again, not disappointing because there's no growth but disappointing because they expected better, you have guidance that just stays flat. There is a lot to like here when they did release earnings. Looks like management set all their assets are running at full capacity for the first time in over a decade. So that definitely means a lot for what they can pump out in terms of turning product into revenue. I mean, it was pretty sizeable missed 8 to 10%. It looks like versus consensus.

11:46I think sometimes you have companies that get a little bit ahead of themselves on both the upside and the downside. I think this thing ran up because of the structural issues within the sector itself within the market itself. I mean, it's not too overly levered. There's not too much debt-free cash flow projected to be 807 million this year. Return on equity projected to be 45.9. But when it comes down to it, things that happen within a company can't be superseded by what is happening on a macro environment. And so if you're not capturing what the market expects in terms of revenue growth, in terms of bottom line earnings per share growth, it's going to punish it. Now, it has come down to a point where again, it has not been cheaper in the past five years. So if you believe in the bull case here, which is their assets are now firing, their balance sheet looks solid.

12:50There is continued strength. Then certainly this would be a good area to pick it up. I am of the opinion that it's probably going to be one of those situations where it's a bit of a pullback after a huge run-up here. So certainly I like aluminum. In general, from what I can see, I like centrally-century aluminum, which is actually something we talked about again a while back in one of our videos on our YouTube channel. So I encourage you to check that out. But a CX, thanks for watching. Alright folks, we still have plenty more to go today. Got a great main focus point for you today. A couple of stories which I just realized I forgot to tease at the top of this show. And plenty of answers to your finance and investment questions. Just because it's a new quarter doesn't mean anything changes. Feel free to give me a call at 8-8-99 chart.

13:50If Invest Talk has helped you become a more informed investor, but now you realize you'd be better off if you had someone help manage the entire picture. KPP Financial is ready to put their focused efficiency to work for you. So learn more, request a conversation, or get a free portfolio review. You can start now at InvestTalk.com. Understandably, as we get towards tax season, ways to reduce your taxable income are going to be top of mind. And for roughly 144 million Americans who take the standard deduction, there is a new charitable deduction available that not a lot of people are really discussing.

14:50So I really wanted to make everybody aware of this because under the one big beautiful bill act starting this year, a new above the line deduction allows standard deduction fires to deduct 1000 single or 2000 joint for cash gifts to public 501c3 charities. And that's on top of the standard deduction. You don't need to itemize it as permanent and it is available to everybody. At the same time, Congress created a break for non-itemizers. It made itemized charitable deductions worse. There is a 50 basis point off, a GI floor now that applies to itemized charitable deductions. So at $200,000 a GI, just a gross income, the first thousand dollars if you're giving is not deductible at all. 400,000 the first 2000 and for top bracket filers, a new 35 cent cap limits the value of each dollar of deduction. A $2,000 gift saves 700 instead of 740.

15:51There's a Vanguard report that I saw where they kind of walked through this a little bit so at 200,000 a GI, a thousand dollar charitable gift claimed on schedule 8 produces zero itemized benefit. The floor essentially eats it entirely. The same 1000 claimed above the line as a non-itemizer delivers full value. So for many people, the non-itemizer route is now strictly better than itemizing the same gift. I think this is very important, especially if the gift you're giving is appreciated stock. So long term appreciated securities, they remain deductible at fair market value for people itemizing. That's the only place where itemizing still wins. If you are somebody who gives between a thousand and 5,000 annually, which is most charitable households, the math, kind of flipped. If you're not itemizing already and you give cash to qualified charities, you now get a deduction you didn't have before.

16:51If you're itemizing and your AGI is above 200,000, the first chunk of your giving, it no longer counts. So this is something that I think is important to keep in mind. Because US charitable giving hits 617 billion in 2025. The first year above 600 billion, most of that giving happens in Q4. If you haven't already modeled out these new rules into what your year and giving plan is, I heavily encourage you to talk to your tax advisor before Thanksgiving. Because for a lot of people, the arithmetic has changed. Why don't we pivot back to the Invest Talk voice bank? You know the number, 88899 chart. Hey, you can just build who build help to you. Call in about centrist energy to a single LED view. That's a point you are fuel and services of a nuclear power industry. And I think they have a few contracts with Amazon and Google and possibly that as well. And what's interesting to get your thoughts to see if this would be as little possible by at this level.

17:56If I should wait, where you just think overall that it's not an include stock to have a local point. Looking forward to hearing your answer. What would you guys do? Take care. Tigger centrist energy corp. Ticker L.E.U. is a nuclear fuel company that sells low and rich uranium. Hence L.E.U. And they have seen over the past couple years some pretty significant growth and a lot of that demand has really come from hyperscalers. Because there is an immense energy requirement in order to consistently run these data centers and nuclear is for a lot of companies within that plan. Most recently revenue was up 176 million. That was 14% from the previous year. A lot of that was driven by the sales of low and rich uranium gross profit operating income. It was pretty solid for the quarter at 50 million and 10 million respectively.

19:00They reaffirmed their guidance. But in spite of all this, it's doing really poorly. Down 57% over the past 52 weeks down 42% over the past nine months. One of the reasons could be that it was up 264% in 2025. You know, I think that when you have a situation where I mean that a pretty solid quarter they had a backlog surging to 4.5 billion. I think you just have a bit of a re-rate here from the bananza that all of these uranium companies saw in the end of 2024 into 2025. And where they are now, I mean it's still trading at 50 times price to forward looking earnings, which is still a little bit expensive here. I think there is a lot of upside but because of the volatility of a name like this, I mean the 52 week betas at 2.35. You have to be careful at your entry point. The understanding that next quarter's earnings is likely to be a catalyst if they can continue to ride through this wave of growth that they're seeing.

20:05I think there can be a big benefit here. But as always with volatile names, size your positions accordingly. On the next invest stock we'll look into this story. Wall Street is back in charge. What institutional money flowing into markets means for retail investors. Structural investors are reclaiming the role as the primary driver of market moves, displacing the retail trading frenzy that dominated recent years. Understanding how professional money managers think an act can give you individual investors a crucial edge. That's tomorrow for now I'm Luke Guerrero ready to take your calls anytime at 8.88.99 chart. At KPP Financial, accountability means more than advice. It means we invest alongside you. Through our parallel investing approach, when we recommend an investment for clients, one or more KPP principles invest their own capital at the same time. Same day, same price, same percentage.

21:07If your portfolio moves, ours does too. That is alignment. That is transparency. That is the KPP difference. Visit investtalk.com to get your free portfolio review. Recently, I needed to pull together a co-hearant research picture from a messy pile of earnings, transcripts, filings, and my own scattered notes on a handful of companies. Normally, that takes hours of brutal manual work, but I used Claude as my thinking partner. I just pointed it at my project folder. It didn't replace my workflow. It extended my thinking. Claude co-work brings Claude code's agentic power to everyone. No terminal required. Pointed at a folder on your computer or connect tools like Google Drive and Gmail. Describe what you need and it handles the rest. Claude is the AI for problem solvers. It's the collaborator that understands your entire workflow and thinks with you, not for you.

22:12Whether you're debugging code at midnight, building a financial model, or strategizing your next business move, Claude extends your thinking to tackle the problems that matter. Ready to have an AI that can tackle real work? Try Claude co-work. And today, on any paid plan at Claude.ai-slash-invest. That's Claude.ai-slash-invest. And check out Claude Pro, which includes access to all the features mentioned in today's episode. Claude.ai-slash-invest. The Invest Talk Retirement Summit is coming to Irvine, California on Saturday, October 24th. You are invited to join KPP Financial and guest experts in tax, estate planning, real estate, and financial planning for an exclusive in-person event. It will focus on five key decisions that can shape your financial future.

23:16Attendance is complimentary and seating is limited. Reserve your place now at Invest Talk.com. Another thing we do as years come to an end is we start to reflect. So I wanted to take a look back at what has been going on with data centers because it has been a huge year. But it hasn't been without its opposition. So if you take a look in the first quarter of 2026, local community opposition blocked or delayed 75 data center projects worth $130 billion in plan construction. That is the same number of projects that were affected in all 12 months of 2025. So the pace essentially doubled. Then you look at Q2. It continued. There is a organization that tracks this. It's called Data Center Watch. They documented 45 more developments disrupted across 27 states valued at $68 billion.

24:1820 projects have been outright canceled, representing nearly 42 billion in investment. And the public sentiment on data centers is pretty overwhelming. There was a survey Gallup did in March, which found 70% of Americans opposed data centers being built where they lived. 55% are strongly opposed. There was a June poll that found only 14% with support a data center near them. 142 organized advocacy groups across 24 states are now actively fighting new construction. 30 states have introduced legislation addressing concerns. And so this matters pretty enormously for the AI investment thesis because the entire build out depends on getting these things permanent and getting them built. And getting the built fast. I mean, the hyper scalers are planning to spend 650 plus billion on CapEx this year.

25:19In video, 70% growth forecasts assumes the demand for GPU continues. Memory companies have take or pay contracts running into 2028 and beyond. And every single section of the AI supply chain from from chip design, a power generation to cooling is essentially priced for this continued and rapid expansion. I mentioned this months ago on the show where I started to see community opposition as being more effective than it had been and thought that this is possibly the bottleneck. And now what we're starting to see is this physical expansion hitting a wall of this organized opposition that is not getting discouraged because they've seen success. They're in fact getting empowered. I mean, the backlash is real. It reflects a lot of genuine concerns that people have about massive data centers that are costly that employ very few people once they are built that are loud, that consume enormous amounts of water for cooling, that strain local power grids and have been incredibly linked to rising electricity bills.

26:34There was the XAI facility in Memphis that built methane gas turbines that were accused of polluting the local community construction disrupts that is inherent. And a lot of times you have NDA practices that are being used for developers in order to push products through approval processes without there being public input at all. Now to be a bit balanced here, right? There are real jobs that are created. You have construction jobs, you have operational jobs, you have maintenance jobs, they do generate tax revenue, they do anchor local infrastructure investment. And the AI capabilities they support are certainly not going to go away. So the question isn't really going to be, are these bills, but eventually where are they built? But nonetheless, I mean, this introduces some pretty specific risks for anybody who's invested in AI. You have certainly timeline risk, right? If these projects were supposed to be online in 2027 or 2028, they're being delayed by these permitting fights.

27:37Every month of delay is a month without revenue for the developer. And so the AI build out timeline that Wall Street has priced into valuations assumes that these things get built and get built at the speed at which they were promised. And increasingly that is not the case. There's also concentration risks in terms of where they're built. If half the states in the country are making it harder to build, the projects that do get built concentrate in fewer locations. And so that drives up land cost. It strains local utilities more intensely. It creates these single points of failure for data center fleets. If you look at it today, Virginia already hosts roughly 70% of US internet infrastructure. So you add more capacity in these already strained and saturated regions. That doesn't do much for resilience of this technology. And then of course you got political risk. Right, this is bipartisan. You're seeing this in red communities. You're seeing this in blue communities that do not want their electricity bills to subsidize AI.

28:47And so when a political issue cuts across party lines at the local level, it actually tends to produce legislation and legislation legislative risk that restricts data center development. Kind of changes the economics of the sector entirely. Now this exposure, although it will hit many sectors, it's kind of obvious which one's it's going to hit. You think of your reets, your data center reads your data center developers construction and engineering firms. They are certainly exposed to these timeline delays. Higher costs certainly affect these companies as well. You know, who doesn't affect chip companies, right, they sell to whoever builds wherever they build doesn't really matter memory companies. They have contracted revenue regardless of where this goes. I think power equipment manufacturers, you know, they supply the installation that gets approved. And in a lot of ways, I think the backlash itself creates a bit of a premium for this existed already permitting capacity. So it benefits those companies that have already have operating data centers and desirable locations and data centers are fungible. If one company doesn't want them, another one can come in and utilize that capacity.

30:07The reason why I think it's critical to bring this to everybody's attention is because this backlash is not a fringe movement. It is something that has become politically mainstream. It is more and more a social force that has already disrupted roughly 200 billion in planned investment. So understanding that for a lot of companies that are priced perfection, this could be a thorn in the side of the AI infrastructure thesis. Let's pivot back to the best of voice bank and play a question that came in earlier to 888 99 chart. Hello, my name is Doug and I am 36 years old. I'm the regular listener and I had a good question about my portfolio. So I just started investing that too long ago about 7000 investors. And I was wondering what you suggest for the amount of positions in my portfolio or an account size data. And how many tickets you think is appropriate for that amount. Thank you.

31:07Sure. So, you know, generally speaking for a large portfolio, you get less diversification benefit. So long as you have 30 names, 30 to 40 names that aren't perfectly correlated with each other. Research has shown once you get beyond 40, you're not getting additional diversification benefit in terms of correlations within your portfolio. Now, it becomes a bit rougher for somebody's early on in their investing journey and has what I heard and apologies if I got this wrong. It's a little difficult to hear what I heard was 7000 dollars in their portfolio. I think frankly, for somebody who has 7000 dollars in their portfolio, it's more advisable to deploy a kind of like a core satellite approach. So you have your core investments, be it some sort of index that tracks the US market, international markets, some sort of mix. Okay. The benefit of that is you're getting broad exposure to a bunch of names.

32:07The problem with having a 7000 dollar portfolio and running it as all stocks and doing it in a diversified way is that you lock out a lot of your universe because of position sizing. There are companies that you are unlikely to hold because they are trading over $500, $600 per share. So you can get exposure to these things by having the core structure of your portfolio designed around these ETFs. They give you that exposure. And then with the rest of the positions with the rest of the way, pick a couple names, pick a couple names that you believe in that you understand whose thesis you think is going to provide outsizer turns. So for somebody who's just starting out, I think this is a great way to give you broad diversification, broad exposure and teach you a little bit about investing along the way. Thanks for the call. Why don't we make it to an arrow? Hello Justin and look, this is Miguel calling from Lake Forest California. Actually, I have a question about a company called Carvana. It's a single CLE and I would like to know your opinion on this and a fundamental sum of this company. I will listen on the podcast. Thank you.

33:13Carvana. What a company. So Carvana is kind of like an e-commerce online platform for buying and selling used cars. So their value prop here is that they have essentially vertically integrated this online retail with reconditioning a card that they buy from somebody. In fact, I looked up the value of my fiance's old Honda CRV and now they won't keep stop telling me how much they'll pay for it even though we don't have any more. They also combine that with this growing finance warranty business. It has struggled historically. I mean, when it first came out, it first IPO'd, it went gangbusters as a lot of, a lot of this class of business did.

34:14And the pandemic things started to get real rough. It was trading below $1 per share at one point. Now it's trading about $63 per share. Those recent quarter, I mean, revenue was up. They saw a record retail units sold guidance. They raised a bit slightly. In spite of all this, it's still down 25% year to date. It just started trading back near that 2021 level at the beginning of 2025. You know, they have had 10 straight quarters of record growth. But margins are declining. And I think that one of the wasn't, I don't want to ignore the fact that this was a genuinely pretty remarkable turnaround to have 10 consecutive record quarters. But at the same time, you're having this compressing gross profit per unit. And a revenue growth rate that's going to probably normalize lower.

35:24And so you can't judge based on the past success. It is where do we move from here? And the car business sucks. It just does. The car business is bad. It is hard. It is costly. And it has been historically a pretty good destroyer of capital. And for a lot of people who saw this thing go down 20, 98% in 2022, that kind of drives here as well. So I don't want to take away from the turnaround story. But with margin compression going on, I think buying this thing at 30 times price to earnings leaves you a little bit too much risk on the downside. Thanks for the call. All right, let's take a look at opera, take your OPRA because this question came in from YouTube. This is opera has had a really nice run over the past couple months, wondering your thoughts on this. All righty. Well, opera is ticker OPRA and year to date, it is up 24.51%. It is down though 12% of the past three months. So I wouldn't say it necessarily has had a pretty good run.

36:40And it is a name that we hold for clients in maybe two of our strategies, but certainly at least one. They are classified as a marketing company. What they do is they develop these browsers that are really focused around digital wallets for a really long time. They have shifted towards streamers. But they've seen revenue just explode from 165 million to 740 million this upcoming year. They beat on every headline metric in their most recent earnings and raise their full year guidance. I think that this is another case of this clean beaten raise getting sold off anyway, right? Their revenue growth is genuinely and has been accelerating their core segments look healthy. Their full year guidance was raised. I just think this is a bit of a, you know, expectations may be embedded in the stock that may simply have been running a bit ahead of execution from evaluation perspective.

37:46So what's trading at below its average, we like this name because the business is growing the business is consistent and the business is pretty well diversified amongst, you know, geographic streams here and gives you a little bit of ex us exposure. So we hold it. We like it. Certainly approve of ticker OPR a thanks for watching. What if you haven't heard already are upcoming in person event is coming to you live in Irvine, California. It is free to attend, but space is limited. So I encourage you to go to invest talk calm and check it out. This is invest talk. I'm Luke Guerrero and we have one goal here to help you achieve your financial freedom. Our continues after this break. So get your questions and now at 888 99 chart. Luke Guerrero is here and ready to tackle your questions. I wanted to figure out Apple. What do you think about their earnings call? There's a good time to add to my position.

38:53Call Invest Talk 888 99 chart. We all have those closet go to's we wear on repeat. That's where quince can help. Quince creates high quality timeless wardrobe staples using premium materials like organic cotton, marina wool and 100% Mongolian cashmere. I absolutely love my tan gene jacket. The first time I wore it I couldn't believe the quality, especially given the low price. And when the temperatures start to drop, quince makes it easy to build on your everyday staples with premium down jackets and classic wool outerwear. Versatile layers designed to keep you warm and comfortable all season long. Quince charges 50 to 80% less than similar brands by working directly with ethical factories to eliminate retail markups. Their Mongolian cashmere starts at just $60. They even offer hotel quality bedding, bath and home essentials. Find your next fall favorites at Quince.

39:57Download the Quince app for app exclusive offers or go to quince.com. Get free shipping on your order and 365 day returns. Now available in Canada and the UK too. And when quince asks where you heard about them, let them know it was on Invest Talk. Head to quince.com slash invest. Quince.com slash invest. In the early days, Invest Talk was Jerry Klein and Steve Peasley. Now the torch has been passed and a new generation of hosts is on the job. Justin Klein and Luke Guerrero. So when you've got finance and investment questions, don't forget to call Invest Talk. 88899 chart. Click. We got a live call. Let's go to Sammy from San Francisco. How can I help you? Hey, thanks Luke. What's your take now? Is it a good time to get in or should I wait longer if so? What's a good entry point?

41:16Sure. So SpaceX was the largest IPO in history. It had a pretty volatile few months as a public company. It is down. It was down really significantly. I mean, it spiked up to 185 per share traded down at 108 now it settled somewhere around 148 per share. I think there's some good things with it. It's a pretty profitable mature, starling business that is in a lot of ways. They hope offsetting what has been a igniting of a pile of cash because they've been rapidly cash burning with their AI infrastructure unit that is spending really at an incredible pace. It is a stock that I think the long term thesis is at least to make it a $2 trillion company is around AI and space, right? But you're paying an enormous premium today. They have one good thing going with them was this anthropic compute contract that they're hoping can fund the AI build out long enough for the business to prove itself.

42:30I would say you have a company that is burning a lot of cash and kind of wasting a lot not waste. That only used the word waste, but burning through a lot of what the good portion of their business is doing for me personally is far too volatile and they have a lot to prove in terms of long term profitability. But even if I love this name, even if I loved it at its 52 week beta of 5.1, which is crazy volatile, even if I loved it, I still wouldn't buy it because generally speaking on average companies at IPO underperform the rest of the market in the first year. It doesn't mean this one will, but investing is about tilting things into your favor and what has empirically been shown is one of the best things you can do is to avoid IPOs for the first year of trading. So on SpaceX, take your SPCX. Good, I have to pass. Thanks for the call. Alrighty, we don't have much time left. So let's talk a little bit about stuff about mergers because the merger market, which is a publication, published its nine month 2026 report this morning and both halves of this story are kind of true at the same time that global M&A through September is 4.44 trillion across 32,000 deals up 27% year over year.

43:53But 72% of the volume landed in the first half. So people talk all the time and we mentioned it as well about what a crazy year it has been for mergers. But seemingly all of that happened in the first six months of the year. What changed? Well, I mean oil, oil spiked, rates, move, tariffs, escalated, the trade deficit, widened. And because of this, we've seen deal counts falling faster than dollar volume. Right? We're seeing these mega deals can still happen. They're driven by this strategic necessity, not really finance and conveniences. They want these liquidity events. But those 500 million dollar mid market deals, ones that affect the company's most investors own, those kind of stopped. Because the mid market is where financing rates matter most. So understand that in healthy market a lot of acquisitions happen in a frozen deal market as to effects if you own a company that was a possible target the premiums gone for it. The M&A bid that put a floor under your stock doesn't really exist. No acquisition revenue jumps, no synergy math. And with that, markets can become a bit more volatile.

45:04This is just a way to show how rising finance and costs affect more than you initially think about. I'm Lucrero and this completes another episode of Invest Talk. I want to thank you for joining us and encourage you to tell your friends and family members about our free podcast downloads, which they can get it iTunes as well as Spotify. And while you're at it, we really appreciate it if you left us a rate and review. You also want to mention at KPB Financial, we have a practice called parallel investing where when we make a trade for our clients, we make the same trade for ourselves on the same day, same price, same percentage, no front running, no special treatment, reinvest right alongside our clients to build trust to share the same risks and the same potential for success. One more reminder, market calendars for October 24th, you are invited to join the KPB team and guest experts for the in-person Invest Talk retirement summit. Looking forward to seeing you there. Independent thinking? Share its success. This is Invest Talk. Good night. Invest Talk is a trademark of KPB Financial because of the nature of the interactive dialogue inherent in the format of this program. It's important for the listener to understand that not all comments made will apply to them. Specifically, nothing said she'll be taken to be investment advice or shall statements on this program be considered an offer to buy or sell security.

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