Markets Recap 9/5

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Welcome back to another weekly Friday Edition of OffTheTicker! Lots of things to recap this week. We’re excited to walk you through the key market news and developments from the past few days. More importantly, we’ll break down what these events mean—and share how we’re adjusting our investments in response. This week we are breaking down three of our favorite stories and what it means for three stocks that we are currently holding long term and may even add more over the weekend.

Elon Musks MASSIVE pay package:

Late Thursday night Tesla’s board unveiled an INSANE performance-based compensation plan for Elon Musk that could reach up to $1 trillion, which would easily be the largest CEO pay package in history. It’s structured in 12 tiers, each tied to crazy milestones over the next 10 years, including boosting Tesla’s market cap from around $1 trillion to $8.5 trillion, delivering 20 million vehicles, unlocking 10 million active Full Self-Driving subscriptions, deploying 1 million AI robots and 1 million robotaxis, and reaching $400 billion in EBITDA. Musk receives no salary or bonus but instead is poised to earn up to 423 million TSLA shares if he meets each benchmark, with vesting beginning after at least 7.5 years and full payout only after 10 years.

This isn’t Musk chasing cash, it’s a playbook tailored to his ultimate goal. His vision has always gone beyond electric cars. He wants to make Tesla the leader in AI, robotics, and autonomy. By tying his reward to these targets, Tesla is doing its best to make sure Musk stays fully invested, both financially and passionately, in steering the company toward becoming the most valuable enterprise ever. The board emphasizes that only through Musk’s "singular vision" can Tesla navigate this critical technological inflection point.

Doing the Math:

As of the date of writing this post early Friday morning, Tesla currently sits at a market cap of around 1.1 trillion dollars. If the company were to grow to 8.5 trillion dollars over the next ten years, this would 7.7x the companies stock, leaving the stock sitting somewhere between $2600 and $2700. Obviously all twelve steps most likely will not be hit over this time period, but even a low estimate on the compensation package may entice Musk to stick around with the company for a little over 7 years.

Our Thesis:

Our thesis behind Tesla has always been one rooted in making sure that Elon Musk stays focused on the end goal of the company and leaves politics aside and stops fighting with the president. It only takes attention away from the critical steps ahead for the company, which are scaling the autonomous vehicle sector and the humanoid robotics sector. Recently, companies like Meta and Apple have hinted at researching for their own humanoid robotics, which may actually not be a bad thing. This package ensures that Elon stays ahead of these companies and may use this competition to help drive quicker production. Like him or not, it is hard to bet against the richest and one of the smartest men in the world. Elon has a vision of turning Tesla into the leader in the AI race and putting research into production. Even if Elon musk reaches half of the valuation that is expected over the next 10 years for this pay package, the stock would see a jump of almost 4x. We have been holding onto Tesla stock and think that any advances in the humanoid robotics sector will make us more eager to jump in. We are also staying cautious of the possibility that the autonomous vehicles and the safety behind them may be on full display and make the stock more prone to short term volatility. We have many friends right now that are playing the options game every week depending on Musks tweets and any sudden news on these autonomous vehicles possibly having a hiccup. Trade Cautiously!!

Google Keeping Chrome:

This week, U.S. District Judge Amit Mehta finally gave investors like ourselves a clear decision in the Department of Justice’s long-running antitrust case against Google, allowing them to keep their Chrome browser and Android OS, avoiding a radical breakup that many expected and that the stock price seemed to have factored in. Instead, Mehta imposed milder but meaningful restrictions: Google must end exclusive distribution contracts for its products and share certain search and user data with qualified competitors, all aimed at injecting more competition into online search and advertising markets. This is a huge win for companies like OpenAi and Grok, who rely on the information that Google produces.

Judge Mehta openly acknowledged that mandates like breaking up Google would be “messy” and risk unintended consequences for innovation and consumers. A major factor shaping his decision was the rapid rise of generative AI companies, like ChatGPT and other chatbot technologies, which he noted were challenging Google’s dominance independently. As such, rather than enforcing a blunt split, the judge opted for a forward-looking approach, providing rivals access to Google's search data while recognizing that tech markets are already evolving swiftly. This threw the ‘monopoly’ term out the door in terms of Google being a monopoly that was too hard to compete with a take down.

This ruling is a clear win for both Google and all of the AI industry. It preserves core assets and business models while avoiding the most severe penalties. Investors responded immediately, shares jumped nearly 8% on the news. However, the mandate to share data introduces a long-term competitive risk, giving rivals (especially in AI and search) a critical resource previously out of reach. With the possibility of appeals still in play this is a stock that we are keeping our eye on.

Our Thesis: 

Our thesis behind Google has been the same since before the lawsuit was settled and is only being strengthened by Google being able to keep Chrome and allows Google to further implement the own data that they are receiving into their own Gemini AI bot. Google also retains the distribution power and user base that fuel its ad and search businesses, which is by far the biggest money maker for the company. This means that Google keeps its moat largely intact while gaining time to innovate in AI and search to defend its dominance. Another big move this week regarding Google was its partnership with Apple regarding Siri and how it may use Gemini to help power its bot, which we will talk about in the next segment below. We are holding Google long term and expect them to continue to grow after this court ruling.

Apple is Making an AI Push:

Apple is making a bold move to reclaim its standing in the AI race by developing its own AI-powered search tool, codenamed “World Knowledge Answers”, to rival ChatGPT and similar services. This tool will be embedded in Siri but may lean on Google’s Gemini model to power it. The agreement to evaluate Google’s AI model marks a surprising shift for Apple, which has been reluctant to partner with any other companies in regard to its software.

As we have been saying for quite some time now, sooner rather than later Apple will recognize the urgency of delivering compelling AI experiences and will try it’s best eventually to catch up to competitors it’s lagged behind in recent years. Speculation that its Siri overhaul is delayed until 2026 underscores just how critical this development is. Turning to Google now doesn’t signal surrender; rather, it’s a bridge strategy, allowing Apple to stay competitive in AI while ramping up its internal capabilities and regaining momentum. This aligns with Apple's broader AI strategy, which includes growing its AI teams, building its own model infrastructure, and pursuing targeted acquisitions.

Our Thesis:

As we have previously stated in other newsletters that we have had regarding Apple earnings and other market recaps from the week, it would only be a matter of time until Apple joined the AI race, and it seems as if they have positioned themselves in a position that would be based on a purchase of another AI company or a partnership with one of the biggest AI companies to combine the AI power that they do not possess with the retail products that they seem to have a stronghold on. We have always said that Apple is a Dinosaur when it comes to the AI world, seemingly not coming out with anything over the last few years that would hint towards any new innovation other then the iPhone (which is getting old with these new displays), but is a company that is positioned better then anyone to begin to make a play on AI with the amount of cash and resources they possess. This new partnership should bring a new revenue stream to Google, which has seen its phone sales lagging way behind Apple, as well as some excitement about the new iPhone having this AI capability in the palm of everyone’s hands. This could jack the price of the new iPhone up and we are theorizing that this may actually need a subscription for an upgraded Siri, like we are seeing Open AI doing with its larger compute AI software. We are holding both Google and Apple long term off this news.

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