In this episode of Motley Fool Hidden Gems Investing , Motley Fool contributors Travis Hoium, Lou Whiteman, and Jason Moser discuss:
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center . When you're ready to invest, check out this top 10 list of stocks to buy .
A full transcript is below.
This podcast was recorded on Aug. 14, 2026.
Travis Hoium: We're racing to the biggest IPOs in history. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing . I'm Travis Hoium. I'm joined today by Lou Whiteman and Jason Moser. Guys, we've had a lot of earnings over the past couple of weeks, but the backdrop of all of these earnings reports seems to be Anthropic and OpenAI racing towards their IPOs. They're trying to get as much compute as possible. They're trying to grow revenue as much as possible. We've already seen SpaceX IPO this year, got to I think it was nearly $2 trillion valuation. I don't know if it ever popped above that, fell back pretty quickly after that. But Lou, we did learn this week that OpenAI is starting to catch up to Anthropic with their revenue because of a little bit more aggressive pricing. Also, I think both of these companies are willing to pay top dollar for a compute. As we think about that, and I want to get to some of the neoclouds in particular in just a moment, but how should we be thinking about the growth of these companies and whether or not it's profitable? Because it does seem a little bit like they're growing almost at all cost at this point.
Lou Whiteman: As they should, and that is. Profits are not a requirement. As we saw with the SpaceX IPO, profits are not required now. Growth is required. They are doing what they should do. Look, it could turn tomorrow, but as of now, there's a lot of source of capital. As Anthropic and OpenAI go public, there's even more sources of capital. You need profits when the market tells you you need profits. The hard thing of the management team is is that you don't necessarily get a exit sign 3 miles in advance. You don't get a warning. You better be ready for profits when they come. But as of now, there is nothing that tells us that the market is worried about this quarter's results. They're curious about what you're building. Go out and build something, and may it long continue for these companies because I don't know when they're going to hit profitability.
Travis Hoium: Jason, is that how you see this? Because it does look a little bit like I think the neoclouds were a good example over the past week. The numbers are phenomenal. Lou is right. The revenue numbers are great. But every time I look at these companies, I’m wondering what is sustainable and what isn’t, because it does seem like we have this exponential growth to infinity. I even saw projections that SpaceX could add 10 gigawatts worth of capacity, which would be several hundred billion dollars worth of customer revenue. I'm not sure exactly where that comes from, but it does seem like these companies are growing at an astronomical pace. I'm not sure where the end of that is.
Jason Moser: It makes me think of that investing style GARP, growth at a reasonable price. These businesses are just growth at all cost. Right now, the market is pricing these companies entirely on growth, no regard as far as margins are concerned. I get that. That makes sense today. The question mark is, how long will that be tolerated? My suspicion is, it will be tolerated for a while. What's that old saying? The market can remain irrational far longer than you can remain solvent or something like that.
Travis Hoium: Yes.
Jason Moser: It may seem irrational. We're not exactly seeing the clear pathway to profitability, because you're right. All of these investments in compute they're paying up for it, of course. But what is the ultimate return? I think that's what we're all asking. It's probably easier to see at the enterprise level right now, but my bet is if you just go take a walk down Main Street and just ask a random sample of people, how is AI impacting your life today? Most people would probably be like, I don't know, maybe they use an LLM.
Travis Hoium: It makes customer support worse to interact with.
Jason Moser: We need to see that aha moment where we really understand how these dots all connect. I don't doubt that we'll get there eventually. But until we do, these companies are just going to continue to raise money, spend on growth at all costs, and hope, I guess, that profits come at some point. I think the question mark for me is, where do those profits really ultimately come from? Because again, going back to just general society, most people are not paying for subscriptions to Claude or Gemini or whatever. It is just a very minuscule percentage of people that actually pay for those subscriptions. That's not going to be a source of income. That's not going to be the solution. That begs the question. Will it be advertising? Well, I don't know. It's worked out well for Google, but I guess we'll just have to wait and see.
Lou Whiteman: It's hard to imagine a world where all of these companies are winners, which is really hard because even if I agree with you, JMo. Look, can you imagine Google trying to charge for search, even if it's AI search now.
Jason Moser: Exactly.
Lou Whiteman: It's a nonstarter.
Jason Moser: It's nonstarter exactly.
Lou Whiteman: I don't know. Advertising, I guess, will change, but maybe stay. It's hard to imagine, I've even seen these personal assistant things, and they I don't think life or at least, life for me, isn't rigid enough to fit into the confines of a personal assistant the way they do them. I think it's a real tough sell. It is for the enterprise who can gain traction, but even then, I haven't seen anything to suggest, we are just signing a 10-year deal with Anthropic or something like that. Even that feels very fleeting company to company. There's definitely a there there. Like Jason says, there is definitely something is involving here, and there's something there. But how it turns into sustainable profits for any of these companies, I don't know. It's a weird moment as an investor, because I both guarantee you, Travis, that this is not sustainable and it won't work for everyone. I wouldn't put your money out there betting against it right now. Because, so you're just.
Travis Hoium: Thank you, Lou. I appreciate that.
Lou Whiteman: You're stuck in this Lala Land where I know it can't last forever, but it works right now. That's a very unsettling, at least for me as a conservative. I'm not a YOLO guy. It's a very unsettling place to be where you don't want to FOMO if you're not involved, and you also know that there's another chapter to be written here, and it's not nearly as exciting.
Jason Moser: It makes you feel good as an investor, owning companies like Amazon and Alphabet , for example, where yes, they're making these huge investments, and sure there are question marks as to return on that investment, but at least they've got these businesses to fall back on, if this turns out to just not return what we all hope it will, at least they have these core businesses to fall back on these cash cows that they've already got, whereas with an OpenAI, with an Anthropic that's more of a one trick pony right now. It's not to say that'll always be the case, they may be able to introduce a number of different revenue streams, as well. I'm not saying they can't, but for now, essentially, they are just kind of one trick ponies in a market that seems to become just more and more commoditized by the day.
Travis Hoium: Let's also bring in the risk that I think is new in the last six months, not entirely new, but we've gone to a new phase where so much of this build-out is now being fueled by debt. You have the hyperscalers, which are now taking on immense amounts of debt, tens of billions of dollars worth of debt. Even Alphabet is now burning through all of its operating cash. It is now free cash flow negative. But Lou, we talked about the neoclouds. They're on the front lines here. The piece that I think is so interesting is everybody is saying we have more demand than we can supply for this compute. We have to pay whatever it takes for memory, we have to pay whatever it takes for debt. Some of those debt costs are going up. But you tie all of these pieces together, and CoreWeave says we have a bunch of demand, but that demand comes from Alphabet or from Meta or from Microsof t, and that demand for Microsoft and Alphabet and Meta ultimately comes from a couple of these companies that we talked about at the beginning that are looking at IPO, OpenAI and Anthropic. It does all seem to come back to is this a house of cards that's built on top of specifically those two companies that are still in this high growth mode, but we don't know what their profitability is going to be like. How do we think about debt layering into this? Because it does seem to take the risk to a new level.
Lou Whiteman: Debt is a fantastic tool, assuming you pay the debt back. Many of fortunes have been lost on that second part, that is the thing. We all are living in houses today thanks to debt. There are really good uses of debt. This is a house of cards, or it's a solid foundation that all depends on whether or not they can come through. They don't even really need profits here. All of these companies you don't need profits. You just need sustained cash flow. You just need to be able to sing that revenue. For investors, you need the profits. But for the lenders, all you need is just cash coming in the door. We can get into, there's other companies doing this, but for the neoclouds the good news is that there's a lot of demand for compute power. Outside of AI. There is a fallback. If you build it, they will probably come. But will they come to the extent that we are planning for right now when we are at maximum stage with AI? Also, will there be any pricing power as far, again, about an investment? It sounds like what I'm talking about is if you just build it, it's out there. That's how commodities start getting formed. I think pricing power. I do think there will be winners and losers. I do think you have to tread carefully. But I don't know if we are set up for the worst-case scenario where just everybody defaults on their loans because I do think I see cash flow. I just don't know if I see profits, which as an investor, at some point, unless I'm just investing in the lenders, I need to see profits, as well.
Travis Hoium: Jason, the other piece that came out this week was Nvidia backstopping a bunch of debt from a number of institutional providers of debt, and just in very simple terms, they're cutting up the risk profile, the way that you do with a credit default swap or with securitizations of mortgages where there's somebody who's first in line, second in line, third in line. Nvidia is saying, we'll be last in line. We'll make sure you get your money back. Just keep buying our GPUs. It seems like we're entering a new phase with all this debt and now with even the supplier saying, we'll backstop this.
Jason Moser: That's been the big question mark for a while. It's just the interrelatedness of all of these different entities, these different companies investing in each other to try to ensure each other's success. Ultimately, it's like, well, where is all of the money going to come from? With Nvidia, for example, at least we know they have this deliverable their technology is something they can deliver on, and that should continue for the foreseeable future. But, I look at these neoclouds, for example, well, consolidation, I think, is ultimately going to have to happen, it just doesn't seem to make any real sense unless there's some differentiation that you possess. The cost of compute is going to continue to come down. These neoclouds that are riddled with debt and have these questionable capital structures, that's going to come to the surface. The tide's going to go out, and you're going to see who's swimming naked. My suspicion is we'll see some consolidation in that sector over the course of the next several years.
Lou Whiteman: Maybe I'm too positive here, but can I give you the positive big macro spin on these.
Travis Hoium: We need a little positivity.
Lou Whiteman: Again, because the obvious what we're dancing around is what happened the last time that debt just got overwhelmed the system? That was 2008. I think I can squint and read Nvidia coming out and doing this publicly as a sign that the lenders are doing their due diligence, that there is a need for Nvidia to do this because there are people asking the right questions or there are people aware of all of these things. They're not oblivious to all of the issues. Look, again, it could still turn out terribly for some of the specific companies involved. But as someone who just doesn't want to see a repeat of 2008, I do think there are at least some signs that we have learned from those mistakes, and that's a very good thing, if so.