Being Exponential With Luke Lango
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Being Exponential With Luke Lango
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In this episode of Being Exponential, Luke Lango breaks down two of the biggest stories shaping markets right now: the potential SpaceX IPO and Nvidia’s next-generation AI chip roadmap.
We start with the growing excitement around a future SpaceX IPO and why it could become one of the most important public offerings in history. From Starlink and satellite communications to defense contracts, orbital infrastructure, and the future of space-based AI compute, Luke explains why SpaceX sits at the intersection of multiple trillion-dollar trends.
Next, we dive into Nvidia's newest AI chip announcement and what it means for the future of AI infrastructure, data centers, semiconductors, and hyperscale computing. As Big Tech continues to spend hundreds of billions on AI, Nvidia is pushing the boundaries of performance, efficiency, inference, and next-generation AI workloads.
We also examine the surprising bounce back in software stocks after months of AI disruption fears. Is this a temporary relief rally, or are investors beginning to recognize a new generation of AI-powered software winners? Luke breaks down the opportunities and risks facing SaaS, enterprise software, and AI applications.
Finally, we discuss why the White House is increasingly focused on drones, autonomous systems, and defense technology. As geopolitical tensions rise and military modernization accelerates, drone stocks and defense AI are emerging as major investment themes with implications for national security, manufacturing, and automation.
From SpaceX, Nvidia, AI chips, software stocks, drone technology, defense spending, and AI infrastructure, this episode covers the most important trends driving markets today.
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Hello and welcome back to Being Exponential. This week we are covering a series of topics. So let's uh start off with the SpaceX IPO, Luke. Um now big news last week. Uh the space economy stocks were booming. However, it does it seem like there might be a bit of a failure to launch with this particular uh IPO. Uh any any more insight there, Luke?
SPEAKER_01No, not a failure to launch. I mean, just the SpaceX IPO hype trade is running into its first kind of valuation reality governance gut check, if you will. Right? I mean, you have a lot of these um financial commentators out there saying, oh, $2 trillion is ridiculous. This is a dump on retail investors, and you have people pointing out the the fast tracking stuff, right? How the Nasdaq and uh the Russell and all these other indices, it normally you have to wait a certain amount of weeks, really, uh, or even months before the IPO stock gets included in those industries, and those indices are forced to buy the stock, or the funds that track those indices are forced to buy the stock. But those windows have been reduced dramatically for this, for this IPO. Um, and so there are these, you know, a lot of this kind of again, governance gut checks, valuation gut checks, uh sanity gut checks, is all this stuff really possible that he wants to do? Um, so that's all I'm I think that's going on. Is you have this IPO hype trade that was running red, red, red hot, carrying the space stocks with it, and boom, now it's run into this uh reality wall, if you will. The question now is does the IPO trade burst through the reality wall or die at the reality wall? And that's the difference between IPOs that work and IPOs that don't work because every IPO has hype. Every IPO eventually runs into the reality wall. The ones that fail, GoPro, Fitbit, um, things like that, they fail at the reality wall. Reality really weighs on them, and it's like, wait, this company's not all that great. Then there's other ones like Facebook, right? The Facebook IPO dropped. I mean, that was a 50% drawdown in the first couple of years, and then all of a sudden, look where it is now, right? So a lot of times you hit the reality wall and then you struggle and then you burst right through it, and you become a better company, and your visions do become reality. The SpaceX thing is gonna be the latter, right? Like I'm very confident in that. When you talk about the business of launching stuff into space, you are talking about what I would argue is the hardest business in the world. Case in point, the Blue Origin rocket blow up last week, explosion last week. This is something that Jeff Bezos, arguably the second greatest or third greatest, one of the five greatest uh tech innovators, inventors of our time, business minds of our time, has invested so much money into. He's big on Blue Origin. It's his big venture, his big project right now. That company just blew up before it even took off the ground. That rocket blew up before it even took off, essentially. This is the hardest stuff to do in the world. This is they call it rocket science, right? This is not rocket science. That that old saying, this is rocket science. This is quite literally rocket science. The companies that have been able to reliably, repeatedly, and regularly uh turn rocket science into a commercial venture. Uh I mean, that there's two of them, Rocket Lab and SpaceX, and they deserve the biggest multiples the market's ever awarded because of that moat. That technical moat is enormous, and nobody is going to penetrate it. Nobody. We're seeing Blue Origin try and fail, try and fail. Everybody else is 10, 15, 20 years behind. So these are in an era where moats are arguably getting eroded. This moat is very much alive, very much real, and very much durable. So that's the first part of it. The second part of it is the stuff that these guys are going to do, going to enable, going to unlock by launching stuff into space is going to have huge economic value. We've talked about orbital computing. I think that's going to be massive, a multi-hundred billion dollar, not multi-trillion dollar market. Satellite intelligence, asset monitoring, weather predictions, uh, national defense, geospatial observations. These things are huge. Outer space manufacturing, maybe further on down the line, but I think it could be big. Point-to-point Earth travel. Let's say we get up there and all of a sudden we start to really build some infrastructure and we can go from, you know, we take a rocket from uh LAX to a little satellite up in LAX or a little, you know, human satellite, human space station, and then point to point all the way to Beijing in an hour or so. That that's stuff that I think is very possible as well. Does it sound like science fiction? Absolutely. So did electric vehicles in 2010 when Tesla IPO'd. When Tesla IPO'd and Elon had this vision of creating an electric vehicle that's going to cost $20,000, $30,000, $40,000 and go mainstream and take over the auto market. Everybody laughed and called it science fiction, just like probably a lot of viewers laughed right now when I said point-to-point space travel. But you know what? 16 years later, here we are. Tesla's the most dominant and valuable automaker on the planet. This is a guy who turned science fiction into reality if given enough time and if given enough resources. He has earned the market's respect to give him enough time and enough resources. He's going to get $85 billion out of this IPO, $75 billion, whatever it's going to be. He's going to get somewhere between $75 and $85 billion out of this IPO. He has $15 billion in the balance sheet. He can tap banks whenever the heck he wants to tap banks. He's got Tesla's balance sheet as well. There is a lot of ammunition here to turn this vision into a reality. If there's someone I'm going to bet on to do that, it's the guy who has done it repeatedly before with the most ambitious of projects. So that's going to be Elon Musk. So I'm a believer in the SpaceX IPO long term. It's going to crush through this reality wall. I'm also a believer in all the stocks around it Rocket Lab, Planet Labs, AST Space Mobile, NASA, which is kind of that ETF on the whole basket. Those stocks have come back in a little bit. I think a lot of them are getting some pretty attractive buying opportunities. We can go over the technical levels in a bit, but that's sort of my kind of broad thesis on the space, no pun intended. I'd be a dip buyer pretty soon at major technical support levels.
SPEAKER_00Gotcha. Now, I did I did just want to uh touch on the detractions there uh without going too much into the weeds. So it's kind of this public sentiment thing, right? So uh with that NASDAQ deregulation for uh getting the SpaceX onto the index, a lot of ison light outlets have kind of said this is a way for Elon to grift uh uh 401ks, right? So that that that's a bit of a stretch from what the the reality there. So can you just kind of speak on how that's kind of a hurdle that we're we're crossing versus you know the the reality of the situation?
SPEAKER_01Uh yeah, I mean I get where people are coming from. I think it's completely biased. Uh unbiased, like just objectively speaking, you want the indices zone SpaceX, you want the indices zone anthropic, you want indices on OpenAI. Could you imagine an index fund that doesn't have a trillion dollar company? Yeah, it doesn't make sense. The reason these things are being fast tracked is because, like, oh, they're doing it specifically for this IPO. They're doing it specifically for the wave of IPOs that are coming because we've never had trillion dollar IPOs before, right? I mean, we've had multi-hundred billion dollar, 200, 300 billion dollar IPOs, but not multi-trillion dollar IPOs. We're gonna get a $2 trillion IPO out of SpaceX, a $1 trillion IPO out of Anthropic, and a $1 trillion IPO out of OpenAI. Imagine there is a point in time, let's say all of these uh time constraints remain in place. There could realistically be a point in time where there are index funds out there that do not track $4 trillion worth of companies, of three of the most valuable companies on the planet. That makes absolutely no sense. That would make for an inefficient portfolio, an inefficient index. So to me, it makes a lot of objective, rational, non-like we're trying to dump shares on you cents to include these stocks in the indices as soon as you can. When a two trillion dollar company goes public, that needs to be in the indices ASAP. I would argue day one. Now, the fact that they're giving it five days, ten days, twenty days, I think is, you know, that's an argument for the fact that they're not trying to do this immediate dump on retail investors. What they're trying to do is create an efficient index. You can't create an efficient index if you leave out what is probably going to be the fourth or fifth most valuable company in the world from the index. It's not efficient. So they're just creating a more efficient mechanism to account for the fact that we have a two trillion dollar company going public in two weeks.
SPEAKER_00Roger that. So taking the emotion out and just looking at the quantitative. All right. So uh let's move on to the next segment here. Uh, we want to talk about NVIDIA. They just unveiled a new chip, uh, really designated to uh uh approach that agentic AI or you know, getting to the AGI level. Could you uh speak on that?
SPEAKER_01Yeah, so NVIDIA is getting into the PC game. That's what it is. Nvidia launched the first ever P their first ever PC chip. Uh that's a market that's been dominated by Intel forever and ever and ever and ever. NVIDIA has the GPUs that you know train the AI models that were initially for like gamers and stuff, but they've never gone into the PC market. The PC chip market has been Intel's to own. Nvidia is now getting into it. Now, what this says to me is two things. One, NVIDIA believes that physical AI is going to be the next big kind of value unlock in the AI infrastructure build-out. That we're building all this infrastructure, we're getting all these models, we're now moving towards agentic AI, towards inferencing. And now that we have agentic AI capabilities, now that we have really good inferencing capabilities, we need to find physical distribution mechanisms for them, especially mechanisms for them that can run on device. So they want to put their NVIDIA chips into Dell computers, into Lenovo computers, into HP computers. And what that is going to do is allow these computers locally to run these fantastic AI agents without having to tap into the cloud, without having to uh go back and forth between your server and the data center server, your computer and then the data center server. It's gonna be more efficient, it's gonna be quicker, it's gonna allow you to do things offline. And that to me, I think is gonna be very, it's gonna be a very, very big part of this or chapter of this AI story. So that gets me really excited about Dell. It gets me really excited about HP, it gets me really excited about Lenovo, about that physical side of things. I think they could even extend into wearables, you know, Meta with their glasses, Google with their glasses, Google and Warby Parker, Meta and Ray Ban. I get excited about these things. I'm starting to see validation that the physical AI movement is gaining traction. So that's kind of the first big implication of this move to me. The second big implication is very, very simple. Buy a stock called ARM, A R M. So this NVIDIA PC chip is built on the back of ARM architecture. So now every time that that chip runs, that chip sells, that chip's in a PC, ARM's collecting royalties on it. So what that tells me is that again, ARM, the bull thesis on ARM has always been this is a uh broad licensing play on all things AI. And this just further reconfirms it. NVIDIA decides into the PC market for the first time in its you know multi-decade history, and they choose to do so on top of ARM architecture. Booyah. Right? Like ARM is all roads lead back to, I gotta say all roads lead back to TSMC when it comes to printing the chips, making the chips. All roads lead back to ARM when it comes to distributing these chips and running these chips and actually having the inferencing and agentic uh application side of these chips. So I think ARM, the stock did jump about 20% on the news of the Nvidia PC uh launch, PC chip launch. But I think ARM is one of those like really big, long-term, durable, compound winners that you want to buy on dip. So to me, those are the two big implications. Now, the negative implication side of this is Intel takes a hit maybe, AMD takes a hit maybe, Qualcomm takes a hit maybe. These are stocks that were in PCs already, that were in physical devices already. Maybe they take a little bit of a hit there. But I would argue buy that dip too because the growth stories there right now are not in physical AI, they're in data center AI, Qualcomm launch data center AI chips, Intel launch data center AI chips, AMG GPUs are gaining traction. So from that perspective, I would say the dips you're seeing in those names are also probably buying opportunities.
SPEAKER_00Excellent. Yep. Jensen is no slouch. All right, so let's uh move on to the next topic here. We want to talk about the bounce back and software socks. So we've mentioned on this podcast before that it was a dead cat bounce. Now, uh, some of the the the the word around town is that this is no longer a short squeeze situation. This is software coming back because they are attempting to monetize AI. Uh, what's your take on that, Luke?
SPEAKER_01Yeah, so uh the software socks. I mean, you gotta say when you're wrong, and I was I was wrong. I thought it was a dead cat bounce, and technically it's not been a dead cat bounce. This has been a very impressive 45% rally off the lows. Uh, we bounced off the 200-week moving average in IGV. That's very compelling and looks a lot like the early 23 bounce. Uh that was, you know, led to a bigger rally uh over the next several months and quarters. Uh, retook the 200-day, 100-day, 50-day. We're only 10% or so off the highs now. We were 40%, but 36% off the highs. So we are seeing a lot of technical signs of strength in IGV. And this is not a dead cat bounce if you look at the technical evidence. But fundamentally, nothing about this rally resolves the risks that I'm worried about, which is that long term, the terminal values of these things should head towards zero as AI collapses demand for uh SaaS. I I don't think that anything's changed about that whatsoever. What has changed is that I think the market is becoming more selective. So certain stocks where certain software providers where you are the nervous system, I guess, you own the data, you're actually serving a function within the business that uh AI cannot itself service. These are stocks like Snowflake, DigitalOcean, Datadog, uh Samsara, Axon. There's a physical component to the business. Those bounces, I think, are very legitimate. But I think you're getting this kind of rising tide lifts all boats dynamic in software right now. That should not be happening. Why does that apply to Salesforce? It shouldn't. Why does that apply to ServiceNow? I know Jensen likes it. I know Trump likes it, but I don't think it should apply to ServiceNow. Why should that apply to Intuit? Why should that apply to Adobe? Those are pure software offerings that don't have a physical component. The data element's not really all that real or all that valuable. So they're not a nervous system play. They're just a function. And so when you're just a function, that's where AI is an automatic you out. So I think what's happening in the software bounce right now is yes, we were wrong. This bounce is very legitimate. I'll admit that I called it a dead cat bounce when it wasn't a dead cat bounce. I was proven wrong. But I think that long term I will be proven right in that right now there is a rising tide. Low saw both sides. I would be selectively bullish on a very few number of names, some of the ones we just mentioned, but more broadly bearish on a bigger basket of names of the space.
SPEAKER_00Gotcha. So it's a potentially a hype train situation because we kind of got that Midas touch from Jensen on uh uh one or two stocks.
SPEAKER_01Yeah, and then Trump, too, right? I mean, there was that whole, you know, who what what he's buying and ServiceNow is a big buy. And so yeah, the sentiment shifted. But what happens there is, yeah, I mean, these things move in group and they shouldn't move in group, right? This the whole group went down like crazy. Now the whole group's rebounding like crazy. Probably neither of those things should have happened. In long term, the fundamentals will show that the upper 10% of SaaS companies will survive disruption risks and will be long-term compounders, and the bottom 90% will get wiped out. Which, when I look at IGV, if you're gonna tell me the topper 10 are gonna make it and the bottom 90 are not, that probably means IgV goes lower long term. But in the short term, the trade is higher. The technical strength is absolutely there, and I admit that we were wrong about that.
SPEAKER_00Gotcha. No worries. Appreciate the humility. And now we just mentioned Trump. So uh we want to move on to the the next sector here. Uh earlier in the week, we mentioned Red Cat Holdings, a uh drone maker, and then uh this is based off the news that the administration is looking at policy changes, or I think instilling policy changes to uh change the drone infrastructure. Could you dive into that just a bit more?
SPEAKER_01So drones were the trade here, is so weird because they were really hot before they should have been hot. And then when they should have gotten hotter, they got ice cold. So before the Iran War, drone stocks were, I mean, they were the shit, man. They were going up and up and up and up. Aero Environment and Kratos and all these Red Cat, they were just going absolutely ballistic. And then the war hit and it validated the thesis that this is all, I mean, all the attacks were drone, drone, drone, drone, drone, drone, drone, drone, right? So it validated the thesis. And once the thesis got validated, everyone decided to sell the news. And a lot of these stocks, I mean, Kratos and AVAV, they dropped like 40, 50, 60 percent. They got absolutely wrecked at a time when they should have been, fundamentally speaking, doing better. Well, now you're getting this jolt of kind of unexpected good news uh from the Trump administration or from the White House, the Pentagon, that's saying, you know, the reports are that they're looking to invest in drone makers. I think this could be the catalyst which sort of reawakens the drone trade. Because again, the fundamentals never really weakened on the trade. The technicals just got ugly because everyone was selling the news. But now you have an unexpected bit of good news entering the situation. I think that stops the selling and brings buyers back into the trade. A lot of these stocks are starting to U-turn at major technical support levels, whether we're talking Kratos or AeroVirement, RCAT, Red Cat, we talked about earlier this week, looks like it's about to take out uh some new highs. Unusual machines, UMAC, that's the one that Donald Trump Jr. uh sits on the board of. That one is going to new highs because it obviously seems sensible that the company that's gonna, if they do invest in drones, the White House, UMAC's probably gonna win some money there because of the the Trump connection. Uh, so you're starting to see some constructive technical action, and I think indeed this could be the beginning of a pretty big comeback trade on a lot of those stocks. I think Aerovirement, Kratos, RCAT, those are probably like my three favorite in the space. A name like Light or uh Ondas, ONDS also may have some upside potential there. These are stocks that they're very volatile. Um, but if indeed this is a turning point, which I think it could prove to be, then these are stocks that could double or triple in the next few months. That's what I think.
SPEAKER_00Excellent. Yeah, it's always uh I don't want to say always safe, but it is generally safe to read those Trump tea leaves, right? I mean, uh, we had that quantum conversation. It seemed like we it wasn't true, but then you know, look at last week and quantum stocks uh took a leap.
SPEAKER_01Yeah, well, so I think that that's that's kind of a good blueprint for this, right? Like quantum stocks, they were really hot, they got ice cold, and then you got that Trump announcement, the White House announcement, they're gonna be investing in quantum companies, and that indeed is proven to be the beginning, or at least part of a big turnaround in these stocks, and the rally has continued since then. Probably the same situation. You view that as a blueprint for drone stocks, red hot, ice cold, announcement comes in. Okay, now we now we start to rebound nicely. So I think what quantum the the the drone stocks are two to four weeks behind the quantum stocks in terms of timeline on that combat. So I think that's a good way to look at that.
SPEAKER_00Excellent. Okay, that wraps up all our topics for the week. Do you have any closing remarks before we uh sign off, Luke?
SPEAKER_01Just the the AI trade is I mean, AI with AI, right? That's been the motto. We pounded the table on it, you gotta own AI, forget everything else. This week, to me, has been one of the purest expressions of that. Uh many days this week, the markets were flat. Seven, eight, nine of the 11 sectors were down and tech was up two to three percent, right? Like this has been this week has been a very pure expression of most of the economy is being weighed down by stagflation pressures, but those stagflation pressures are not big enough to derail the AI train where you're getting Google raising $80 billion, where you're getting NVIDIA CEO Denson Wong calling out Marvell as an X trillion dollar company, where you're getting ST Microelectronics boosting their guidance, where you're getting all of this fabulous news. So the trade is is simple. You gotta own AI and forget everything else. And this week has been a very pure expression of that. I don't think that divide reconciles within the next few months. Uh eventually it has to reconcile. The rubber band can only get stretched so far, as we've talked about between Wall Street and Main Street. But for now, I think the rubber band keeps stretching, and that means uh what we've been saying for several months, which is own AI, particularly if you just want to own an ETF SMH, the Van XM Conductors ETF. That's the way to go. Um, and then forget everything else. I think that's that's the trade.
SPEAKER_00100%. Yep, AI with AI. We said it last year, we're saying it this year, and we'll we'll keep saying it until it's not true anymore. Uh, that's it for being exponential. Uh take care, folks.