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All right, everyone. Me Kevin here. Look, I was wrong. I made a mistake on some recent bullish optimism, and I want to come clean about what was wrong and where we're going now, because the market's going into a very interesting direction. And I think it creates an opportunity for us. Uh but in order to actually understand what this opportunity might be, we should really just sit down together and have a conversation about what went wrong uh what went right and which of the thesis sort of still remain in play. Uh because there are a lot of them that actually remain in play. We just want to make sure we have the timing right. Uh and there's a new sector that's getting a lot of attention right now, but I
actually think there's a warning to be had around that particular sector. And so we're going to go through some analysis. I'm going to give you my full opinion on all of this. Uh, but first, I'm I'm just going to be very straight with you and blunt with you about where I was wrong. I think the largest mistake that I made over the last week, week and a half here is I was too optimistic that Kevin Worsh was going to be a dove. He basically chose violence by choosing silence. He chose silence as a way to signal Federal Reserve independence and his commitment to the left side of the decimal point of inflation, which to me sounds long-term doubbish, but to markets sounded short-term hawkish. And
of course, that's why markets reacted the way uh they did. Uh and this was also accelerated by some other issues in the marketplace that we should really discuss. Uh and I think when we put it all together, we can really understand why market leadership is moving. uh from where it had been really sexy, you know, Nvidia to some extent, uh AMD, even the memory chip stocks, which today are giving back even more of their gains, which means we're not back to levels we had before micron earnings, and now we're even lower uh than where we've been over the last, you know, post earnings rally, if you will.
Uh so, let's understand this. The very first problem that we had was Kevin Walsh. There's no question about that. I want to be very clear. I'm not changing my opinion on Kevin Walsh. I think he's a guy that is going to drive interest rates to zero. The biggest concern I have with Kevin War is based on his history, he is not going to be a money printer kind of guy, which means when and if we have a uh, you know, dramatic recession or depression because AI hardware rolls over and everybody loses all their money because growth rates roll over and people are like, "Oh my gosh, please run the money printer and bail us out." I actually think he's not going to run the money printer, which
does create a real risk factor for how quick of a V-shaped recovery we would have, such as that bottom that we saw uh in uh you know, September to March of 2002 to 2003, the V-shaped recovery we saw in February of 2009, the V-shaped recovery that we saw uh in really January of 2019 after the December bond market crisis and the Fed pivot then. Uh and then of course the March COVID Fed pivot. You could even throw in sort of the banking crisis, massive, you know, rapid bailout if you will or guarantee of bailout. Uh all of those things have been associated with prior Fed generations of we're going to run the money primer. I do not think Worsh is going to be that guy, which
makes me concerned. But I also maintain that I think he's right. We are going into a disinflationary regime, maybe even a deflationary regime. Okay, that's worse. You probably already know that opinion about me. I just want to make it crystal clear that even though he came out hawkish, I still think he is a deflation dove. I don't think any of that has changed. The timing was just complicated. Here's why. Right after Wars comes out dovish, we end up getting the Japanese yen breaking through pretty bad technical levels which send the signal that intervention might be coming. when USD trades, you know, when you get one USD to one JPY that's sitting above 160 now, sort of rejecting
off of 162, people fear that, oh no, the Bank of Japan is going to intervene. We may as well quickly pay off debt. Uh, you know, US hedge funds may as well quickly pay off debt. So, what do they do? They sell high-flying tech names in the United States because it is now cheaper to do so before that potential intervention. I didn't as clearly as I should have explained that in my video two days, two or three days ago. Uh there was this implication that you know somehow people are uh liquidating their Japanese yen debt positions because the yen is getting weaker which actually makes it cheaper to pay off that Japanese yen debt. This is true but that is the perfect opportunity people use to
pay off their Japanese debt before a potential intervention risk. So I just wanted to clarify that. Ignoring the complexity of that for a moment, Kevin Worsh goes hawkish when Kevin thought doubbish. I still think long-term doubbish, but that's obviously bearish for tech stocks. The Japanese carry trade getting cheaper to pay off is bearish for tech stocks. Third thing, we all knew, and we talked about this ad nauseium, we knew that SpaceX was going to meme rally because they were only putting out 4.2% of the float. We knew that was going to happen. We knew it would peak out. The only problem is we don't know when. People ask me, Kevin, when should we buy puts on SpaceX? I'm
like, it's really tough to know exactly. I think the beginning of July. I didn't buy any shorts or puts or whatever. It's just not my trading style. And unfortunately, it didn't peak out at the beginning of July. It peaked out after just three full trading days, which would be around June 16th when Jim Kramer really hyped it up. Okay, maybe that was our real warning sign. But anyway, that peak came a lot quicker than expected for SpaceX. And you know, maybe I need to get used to things just coming quicker than expected around here. But that is another bearish move for the tech sector because it contributed to uh the insiders open over at OpenAI saying, "Hey, we're going to delay our IPO till 2027." Three
insiders, anonymous insiders, uh revealed that volatility because of SpaceX and tech stocks recently uh contributed to the decision to uh likely delay the open AI IPO. That's not official yet, but that's the expectation. Then number four, you know, that obviously number three is bearish uh attack, but number four, you had the SpaceX bond sale. The SpaceX bond sale sold with a way higher spread than it should have. 50 basis point premium over Intel is not good. That was the bond market going, you know, we don't like this. We're gonna have to be compensated for this. And they were, you know, obviously bond holders have a priority over all equity holders, so they already have that in the event of a
bankruptcy. Not that anybody actually thinks SpaceX is going to go bankrupt, but you know, there was a very clear desire for more protection uh from the bond market. Uh that was bearish tech. Then of course we had the premicron earnings sell-off, the postmicron rebound which did not cover the sell-off and now we have even more of a post micron earnings sell-off even though the earnings were fantastic. That is a sign of a lack of liquidity, right? So in other words, it's like we know Kevin Wars was going to be doubbish but he wasn't dovish quick enough. That caused the yen problems. We knew SpaceX was going to peak, but it peaked before the end of the month, earlier than expected. We knew that Micron was
going to be really sensitive at the time of earnings, but instead of selling off on earnings, it sold off right before earnings and then the day after earnings, two days after earnings. Right on top of that, which we also saw coming because we subscribed to the Alpha Wire, which is totally free. You could get on the Meet Kevin app. um Apple Android app store. We saw that Apple was rumored to raise prices uh on their devices by 16 to 20% and they did. Unfortunately, that dragged Apple down. So now you've got six bearish items that occur inside of the tech stack. And where are people flocking? That's what we're going to talk about next. But all
of this is a downweight to bullish end of the month targets for the NASDAQ 100 because technology stocks are basically getting hammered especially hardware exposed relative to where expectations have been and this is unfortunate. It it means that in the short term we had noopsy dupsy and I apologize for that. Can't be perfect all the time. I know people regularly they say Kevin how are you hitting all these targets on the alpha report or you know whatever and it's like well we don't always uh and this is unfortunately uh I mean one of the first ones that I could think of in a while off the top of my mind here where uh you know we're just not going to hit our QQQ price
target for the end of the month. Uh, and I'm disappointed by that. And I'm not trying to make excuses because I still think that I'm correct on Warf. I'm correct on SpaceX. I still think I'm correct about that. The Harbor Cycle still has legs. AVG go, you know, Broadcom and Micronics are so freaking good. We've still got legs on that movement. But unfortunately, when you combine all these things together, it means we could be right about the long term, but wrong about the timing in the near term. And I think it's worth being transparent about that. Uh, of course, then you can add in number seven, that Kevin is still somehow on vacation. I'll be back on Sunday, so maybe that's the
true catalyst. That said, let's get into where markets are actually going right now, and that is to some extent cyber security, but also software. Now, I want to caution some of this. Excuse me because we have seen this game before. So I really want to be careful here. Uh first of all I want to look at what some software movers have done today. We had Axon stock up 4 and a.5% great into it up almost 5%. Palunteer which has been plummeting close to my $89 price target or trending in that direction was up 5% today. Cloudflare up 46. Crowd Strike up three. Meta up 13. and Microsoft up almost 6%.
Uh, in my opinion, and that's a $2.7 trillion company. In my opinion, some of what's going on here is a short squeeze. I think a lot of stocks like Microsoft and Meta, uh, into it, Axon have been shorted and, uh, as a result, we get these sort of relief days where the shorts take profits, they have to cover, they have to buy the stock. Those are not necessarily lasting moves. I can't call a software bottom yet. I still maintain that a software bottom will come in the third or fourth quarter, but I don't know exactly where. And I do think there are opportunities to buy software, which even though I haven't bought Palanteer yet, I am tempted to because it's getting cheap. I want to be clear, I'm not tempted to buy
Bitcoin. I don't own Bitcoin. I don't own Ethereum. I don't own crypto. I think outside of like a maybe like a, you know, short week basis of like a week, a few weeks of a trade, I've never held crypto. Uh, and so I'm not advocating for that and I'm not trying to argue that, oh, crypto's bad, stay away. I'm just saying that's not what I think is the next play. I really think software is the next play. I just don't know when. So, I'm just being very transparent about that. You know, some knucklehead left a comment yesterday like, Cad, you're complaining about the market only down 4% off alltime highs. But the whole point of these videos is to help you pick up on directional trends that are occurring so you could
see these things happen before they happen. You know, for example, when we turned bullish around April 4th, and I think this is really worth mentioning, we turned bullish around April 4th, the NASDAQ 100 was trading for around $590 a share, you know, via QQQ. Uh, and now we're at 76. So yeah, we missed the upside price target, but we've had so much upside between then and now. And we've been right about the direction, but we've had a lot of doubters. Now people, you know, those same sort of people, but Kevin, why didn't you tell us to buy then? I did. And they're all documented videos, right? That's the beauty about this channel is we're going to be transparent about the wins. Also, the L's. So the next phase that I see is not
software right now. Even though IGV is moving, I'm going to tell you why I think IGV is moving. IGV is the uh EyesShares expanded software tech ETF. Uh it's been doing decently. It actually went up 4% today. So you look at IGV, it was up 4% today and the NASDAQ was down 1.38%. That's a 5% spread between the two, which suggests that hardware is being sold and software is being bought. But that's too simplistic. You know, Nvidia is down another 1.6% which is a big deal for a big company like that. But it's too simplistic to say that. I think that Microsoft and Meta in it Axon, I think there was a little bit of
short covering going on in these. And what's really actually driving IGV up lately are companies like Palo Alto Networks, cyber security plays. PanW has recently exploded in price. You know, I uh I wish their growth was a little bit stronger. Uh, and even though their growth is good, I wish it was a little bit stronger. You know, just about a month ago, they were trading for around 130, 140, 150 bucks. Uh, and their stock price growth has been phenomenal. But I'll tell you where I see some of the skeletons in the closet. Stock price growth has doubled uh in that time frame. Cyber security stocks have done exceptionally well and they started out expensive and now they're even more
expensive. Okay, so here's the problem. Let's zoom into a company like Palo Alto. Now, you're just going to have to rely on me talking about this verbally. This will be posted in the stock tab of the Mean Kevin app for all those of you who are members. So, you'll be able to actually see the analysis. You can also use our uh new stock tools uh and do the analysis yourself. That's all obviously included in your membership when you join over at meetke.com. We do have a price increase on the 30th, which is on Monday uh last day of the month. And that's also when we're coming out with our valuation reinvest product over at
reinvest.co or houseock.com. That uh valuation feature is coming out on schedule. But let's look at PANW for a moment. So if I go to the cash flow statement on PANW over the last nine months, I actually have net income, but I have declining net income, which I find very interesting. The company has seen its net income decline by 33% over the last 9 months. A little odd. At the same time, their net income has gone down by, you know, that 30-ish percent. We've seen stock compensation rise by 39%. So, my assumption is they're paying more for AI talent while at the same time the company's net income is going down, suggesting their pricing power may not actually be as big as people think.
Now, in fairness, their operating cash flow is great. It's up about 18.5% and they spend very little on capex. That's very different from a company like Microsoft or Meta, which are companies that are blowing money on capex. So is Google, you know, Alphabet. And as a result, they are actually able to repurchase stock. Something that, for example, Meta and Google have not been doing recently. Repurchasing stock. They've repurchased about a billion dollars of stock in the last nine months. Uh they have uh you know, in my opinion, they've recently gone through this transition of oh AI is a threat to AI as an opportunity. I think that's
going to happen to software as well. And then we'll see those same or similar moves in some software stocks. I don't really personally like IGV because I don't like a lot of their holdings. You know, for example, they hold Adobe and they hold Service Now. Now, I apologize to or even Salesforce. Now, I apologize to people who own those three stocks, Salesforce, Service Now, and Adobe, but I think those are three of the most AI replaceable stocks, whereas companies that utilize government data like Axon or business data like in it are some of the least replaceable stocks. Yes, it is true that at into it some of their usage is declining because the free tiers as some would say the brokies that's not
meant to be offensive that's what some analysts actually say they are not using the product because they could use other free services or AI or whatever but people with more complicated uh you know businesses are actually spending more money on the AI enhanced features at into it and you're seeing a similar thing over at Axon with more revenue coming in due to uh their AI enhanced platform I mean People don't even talk about Done and how valuable that's going to be for uh policing. Uh people don't even talk about how their artificial intelligence dispatching software, which is a company they acquired and now they're integrating even more AI into it, uh is a moat that just doesn't
exist anywhere else in my opinion. But anyway, so I like Axon and into it and they do have exposure to it, but I personally think that Adobe and Service Now and Salesforce are more replaceable AI. I also don't like Oracle spending. I think they spend like drunken sailors. These are all high holdings. These are all within the top 20 holdings of IGV. So, I don't actually like IGV because of that. I'd rather pick the names that I like. Like right now, I do like their second largest holding, Microsoft. I'm getting close to liking Palanteer, their third largest holding. I am liking Apploving, which is about their seventh largest holding. Uh I also like in it, which is about their 14th largest
holding, and so on and so forth. Right? So I don't like the whole IGV ticker. I like components of it. Now as far as their biggest holding PaloAlto Network, it's the cyber security momentum at a high valuation that I expect will translate to software survivors over time. The issue that I have with PaloAlto Networks though is not their balance sheet. Balance sheet is great. I've got about 5.2 billion in cash and cash receivables. I've got about two billion in current liabilities. So no liquidity issues over the next year. And even if I include the long-term debt, we really don't have liquidity issues.
Long-term debt is uh sitting at around 1.9 plus 1.2 in convertibles, the converts are going to convert because the stock is going up and the long-term debt is more than offset by the cash that they have available even after current liabilities. So, balance sheet fine. What about the revenue statement? Well, this is where things actually get a little interesting. So, their total revenue went up 31.1%. But their total gross profit only went up about 21.4%. So pricing power is shrinking, which is odd. Why is their gross profit declining? Well, I mean, I shouldn't say declining, but only growing at 21% when their top line is growing at 31%. At the same time, their sales and marketing is up 46%.
So, your top line is up 31%, but your sales and marketing is up 46%. So, are you having to spend more on sales and marketing to get more customers? pricing power is, you know, also shrinking. So, that's sort of a hm their SGNA doubled. In fairness, some of that could be because of recent acquisitions. Uh they have recently made a few uh acquisitions. Uh they acquired Chronosphere and Cyber Arc. Uh and uh they had revenue of 388 million and 391 million uh for those companies combined. Um those companies also posted an operating loss of 523 and 524 million for the 3 and 9 months ended 20 uh April 30th 2026. That's sort of the combined uh in revenue and loss of both of those. So they acquired some money losing
businesses. That could be part of why their margins are compressing. But it's also possible that cyber security stocks are a very competitive bunch. Cloudflare is losing money and yet their revenues are exploding and Crowd Strike is barely making any money which is weird. Like how do these companies that have been around for so long barely make money? And that's the biggest issue I have with these cyber security plays which makes their price to earnings growth multiples look very high because their EPS is very low. That makes me frustrated by cyber because I actually agree that cyber is a great beneficiary of artificial intelligence. Huge beneficiary, just not at the price. I like it. I'm very uh
picky. Like I want Palanteer at 89 bucks and I'm going to wait until I get my Palanteer at 89 bucks. Now, if this proves to be a software bottom and Palanteer skyrockets from here, well, I guess I missed my opportunity. But I think this recent software push we've seen is the same that we've seen about four weeks ago and a couple weeks even before that where you get like one or two updates on stocks like Microsoft and then they go down even more. This is why the allocation that we're throwing into stocks while we're allocating stocks is relatively low to cash or other assets because some valuations are, you know, some stocks are still falling knives and you're going to be able to get them
cheaper. Other stocks just have ridiculous valuations. This is all combined with the fact that I was still overall and economically bullish on Train America. So, this is a lot of information to ingest and I personally think and maybe I'm wrong about this. Maybe leave me a comment. Although I don't think if I'm wrong about this, the people who would tell me I'm wrong about this are actually watching this. But, you know, for the 10 of you watching to the end, first of all, I really appreciate you. I I my goal is to provide perspective and a lot of perspective on what's actually happening out there. And my goal is that hopefully you're like, "Ah, I didn't think about that confluence of Apple, SpaceX, Bon, SpaceX, the Japanese
yen, Kevin Worsh, and Micron all happening at the same time, tanking the cues down, screwing up timing as quickly as it did." Oh, I didn't think about how cyber security looks expensive because they barely make freaking money and they might be a competitive, really competitive business because any Joe Blow can go start a cyber security startup. I mean, okay, I'm not trying to be facitious to these companies, but there are a lot of cyber security companies out there, okay? Like, you look up, hey, I need a Pinterest done for House Hack, let's say. Dude, there are like 50 companies I can call and you know, we've talked to a lot of them.
We're like, man, how do you all even differentiate yourselves? Geez. Um, kind of wild. Uh, but anyway, so putting all of that together, my goal is to provide unique insights based on what we're seeing as business operators, uh, but also as financial analysts. what I'm seeing on actual documents. Uh and then of course just being transparent where uh things are going well and correct and where things are wrong. Uh and so hopefully that transparency is useful to you. If you want more of that sort of analysis or transparency, come join us. Go to mekevin.com, pay once. You get lifetime access to uh the all the courses on building your wealth, the alpha report, the course member live
streams. Those things will always be included in your lifetime membership and we want to keep providing more value uh for those members. So consider joining. Thank you so very much for being here and uh with that folks, I will see you in the next video. Oh, look at that. I could zoom in and out. Whoa. Like and subscribe.
