Oracle Earnings and Chip Demand

Key Concepts:

• Supply constraints in the chip industry
• Oracle's cloud business and Cerner acquisition
• "Promote and protect" policy regarding American technology
• Tesla's Robotaxi and Optimus robot
• Rare earth minerals and US manufacturing

1. Chip Supply and Investment:

• Oracle's strong numbers and Micron's investment signal a high demand for chips.
• Hyperscalers are consistently requesting more chips, as highlighted by the dinner between Elon Musk, Larry Ellison, and Jensen Wong ("More chips, please").
• Supply constraints are currently a major issue in the technology sector.

2. Oracle's Performance and Strategy:

• Oracle is a significant holding in the speaker's ETF (TLR).
• Larry Ellison's active involvement is seen as a positive factor for the company.
• Oracle is experiencing significant demand and order volume.
• Oracle's focus on cloud computing provides flexibility.
• The Cerner acquisition and its potential in healthcare AI applications are considered important. AI can be applied not just to pharmaceutical development but care.
• Oracle's backlog and enthusiasm indicate positive momentum.
• Oracle offers dividend growth of 10-12% annually.

3. "Promote and Protect" Policy:

• The White House's "promote and protect" policy aims to support the American technology stack.
• Rene Haas, the ARM CEO, expressed concerns that limiting technology access could hinder growth and harm consumers.
• Larry Ellison discussed potential business with Chinese customers like Temu.
• There are concerns about the administration applying industrial policy or protectionism to technology distribution.
• The speaker favors competition and innovation over strict protectionism, suggesting limiting Chinese impact through other means.

4. Tesla and Robotaxi:

• Tesla's stock has recovered after a period of tension between Elon Musk and the President.
• Tesla's approach to vertical integration has evolved.
• The need to resolve regulations and improve rare earth harvesting in the US is emphasized.
• Tesla's Robotaxi is a key focus, with an initial internal target launch date of June 12th in Austin, followed by Elon Musk posting June 22nd.
• The speaker notes Waymo's presence in Phoenix and suggests that Tesla's cost per mile for Robotaxi is 30-40% below Waymo's.
• Robotaxi is expected to drive significant revenue growth for Tesla, shifting from primarily EV sales to ride-hailing.
• The speaker is not as bullish as Cathie Wood's $958 billion a year camp, but anticipates significant growth beyond the current $98 billion in revenues.

5. Tesla's Optimus Robot:

• Tesla is suing a former engineer regarding Optimus, highlighting the importance of protecting its IP.
• Optimus is considered a significant element of Tesla's future.
• Tesla plans to deploy thousands of Optimus robots in its factories.
• Robots are seen as a solution to fill the 450,000 unfilled manufacturing jobs in the US.
• The goal is for robots to build other robots, enabling the reshoring of manufacturing to the US.

6. Rare Earths and Manufacturing:

• The discussion pivots to the importance of rare earth minerals and metals, particularly those sourced from China.
• The need to improve domestic rare earth harvesting is emphasized, citing a cobalt plant that faced a decade-long regulatory delay.

7. Notable Quotes:

• "More chips, please" - A repeated request from Elon Musk and Larry Ellison to Jensen Wong, highlighting the chip shortage.
• Larry Ellison is "writing code now"
• Elon is famously said "the robots will make the robots"

8. Synthesis/Conclusion:

The conversation highlights the interplay of supply chain dynamics, technological innovation, and geopolitical factors influencing key companies like Oracle and Tesla. The chip shortage and the need for increased production capacity are central themes. Oracle's strategic focus on cloud and healthcare AI, coupled with Larry Ellison's renewed engagement, positions the company for continued growth. Tesla's advancements in Robotaxi and Optimus, along with the imperative to secure rare earth resources and automate manufacturing, underscore the company's ambitious vision for the future. The "promote and protect" policy reflects the tension between fostering domestic innovation and maintaining global competitiveness.