On this podcast, Motley Idiot analyst Tim Beyers and contributor Lou Whiteman focus on:
- Extra AI-fueled earnings from Micron.
- Modifications on the Fed?
- The Paris Air Present’s huge reveals
- Debating the higher inventory: Boeing or Airbus?
To catch full episodes of all The Motley Idiot’s free podcasts, take a look at our podcast heart. While you’re prepared to take a position, take a look at this prime 10 listing of shares to purchase.
A full transcript is under.
This podcast was recorded on June 26, 2025.
Tim Beyers: Will improvements from the Paris Air Present be sufficient to raise airways to new heights? You are listening. Motley Idiot Cash. I am Tim Beyers right here with Lou Whiteman, Lou. How are you? Totally caffeinated?
Lou Whiteman: At the very least partially caffeinated. Hopefully, that is ok.
Tim Beyers: I imply, I am totally caffeinated, able to go. Let’s get into it. We had some information straight off the highest. President Trump making ready to a doable nominee to exchange Fed Chairman Jerome Powell. That is, in response to the Wall Road Journal, the president may announce his selection for a successor as early as this summer season, and that is regardless of Powell nonetheless having 11 months remaining in his time period. Look out. I do not know. We’ll see right here, Lou. Then Micron, reporting actually robust fiscal Q3 earnings. Inventory was up 1.5% roughly in pre market buying and selling. Total income jumped. 15.5% sequentially, 36.6% yr over yr to 9.3 billion. Seems like they’re on observe for 10.5 billion subsequent quarter. No shocker right here, Lou. AI is a factor and remains to be a factor.
Lou Whiteman: It appears to be doing all proper for Micron.
Tim Beyers: Palantir teaming to construct AI software program for constructing nuclear crops. This can be a partnership with a nuclear firm will end in a brand new software program system, I ought to say, known as NOS, the nuclear working system. Truthfully, I get quick and livid vibes on this one, after I hear NOS I believe, like, vehicles going actually, actually quick. Then, lastly, Mark Zuckerberg is constant his AI recruiting press, touchdown three OpenAI researchers within the newest spherical. Right here, he is spending a great deal of cash. Lucas Beyer, Alexander Kolesnikov and Xiaohua Zhai have all joined Meta for Zuck’s tremendous intelligence effort. All three had arrange the Zurich workplace of OpenAI simply final yr, Lou. I imply, have you ever gotten a suggestion from Mark Zuckerberg, Lou?
Lou Whiteman: I have never, however listening to what they have been quoting, I actually want I might. I will say this. Sam Altman, the CEO of Open I, he telegraphed this, and look, we’d like a great feud. We’d like a great rivalry. I am all for this. Let’s let this occur. This may very well be enjoyable.
Tim Beyers: There you go. The Lakers/Celtics of the AI world, Meta versus OpenAI. We adore it. Let’s transfer on to the Paris Air Present, Lou, which is an space of your experience. I wish to speak in regards to the CFM rise engine. This was one thing I assumed was completely fascinating as a result of to me, this appears to be like like a prop engine as a result of primarily you are taking away the nisel. You could have a prop engine, however is operating like a jet and apparently has 20% gasoline effectivity. Inform me, what is that this factor? I imply, is that this a factor that saves airways? I saves them a bunch of cash?
Lou Whiteman: Possibly. It is positively actual. The query is, if and when it is sensible. The thought has been round for many years. It goes again to the Seventies, the oil disaster. However composite supplies are higher. We have made different developments, so it’s getting towards real looking. There are downsides. The nitrous engine would we have to rethink plane design. There’s a variety of security concerns, weight concerns. Pratt and Whitney, the RTX firm, one of many rivals right here. They appear to suppose they’d be higher off simply getting effectivity beneficial properties by refining their geared turbofan than not doing one thing new. However hey, the producer, CFM. That is GE house and Safran. It is a three way partnership. They actually hope to commercialize this by early 2030s, TBD, however it’s actually cool wanting. I am with you. I might like to see it on an airplane.
Tim Beyers: I imply, it is a number of the idea designs look actually fascinating. Transferring on to Rolls Royce, Riyadh Airways has chosen to outfit its Airbus 350 plane with Rolls Royce engines. I keep in mind seeing Rolls Royce engines on DC three plane after I was flying again after I was a child. How huge a participant at present is Rolls Royce within the business air market? As a result of this inventory is buying and selling close to the CSBA 52 week excessive. So inform me, are you a purchaser right here? Is that this an enormous deal?
Lou Whiteman: They are a respectable third, however they’re positively third. GEAR house has greater than half of the market, together with that three way partnership we simply talked about. Pratt and Whitney can also be forward of Rolls Royce. Look, Rolls Royce, by the way in which, they do not make the vehicles anymore. Do not give it some thought like that. But it surely’s a top quality producer, however they’re restricted. They solely make engines for these huge huge physique jets, just like the A 350 and the Dreamliner, the 777. That is a small a part of the general market, lower than 40% of the worldwide fleet, and it is rising at a slower tempo. So meaning from the enterprise standpoint, loads much less spare half gross sales, loads much less servicing income over the lifetime within the engine. Total, do I just like the inventory? Look, it is a properly diversified firm. European aerospace shares have gotten a variety of consideration for good causes. It is a double proper now. I do not know if I might be leaping in proper now, however look, they need to have good tailwinds, pardon prime. There ought to be they’re arrange good to carry out from right here.
Tim Beyers: I imply, we like tailwinds, Lou. Tailwinds good.
Lou Whiteman: We’d like tailwinds.
Tim Beyers: Textron. Let’s discuss Textron right here. Having been to Hawaii quite a lot of instances, I’m an enormous fan of the King Air platform. These are little planes that I’ve flown between islands. They’re inter island planes, and so they’re unbelievable. I really like them. It appears to be like like there is a new multi mission model of the Beechcraft King Air. Let’s speak just a little bit extra about this. Truthfully, Textron, , Ticker TXT, it is a inventory that we do not discuss very a lot. Does it deserve just a little bit extra love from buyers?
Lou Whiteman: I believe it most likely does, however in equity to buyers, Textron has made themselves a tricky firm to like in recent times. [laughs] I do not know if it is all our fault. Textron is likely one of the final nice industrial conglomerates. Aviation, as you talked about, the Beechcraft, but in addition Cessna enterprise jets. They personal bell helicopters, Jacobson lawnmowers. They make golf carts. They make all kinds of issues. For some time, each quarter, it appeared inevitably a kind of companies simply laidn egg. Earnings adopted, and it has simply been a variety of one after the opposite. In equity, although, they’ve accomplished loads higher of late. We’re getting into an enormous refresh cycle on enterprise jets. All these CEOs that received shamed in 2008 and held off on shopping for new enterprise jets, these are lastly coming due for alternative. Cessna, there’s, once more, tailwinds there. Bell Helicopter simply gained an enormous competitors to exchange the Black Hawk helicopter. By the way in which, they will be utilizing Rolls Royce engines for that, too. That is one other factor for Rolls Royce. Look, Textron, they traded a reduction to most huge Aerospace names. I believe they’re arrange properly for a minimum of a few of their most essential companies like Bell and Cessna to outperform. If not, I do not know if I am rooting for this, however it is a conglomerate in an age the place a variety of breakups. If they do not meet up with that a number of Tim, I can actually see an activist coming in and begin on the lookout for methods to do to them what we have accomplished to GE or so many others.
Tim Beyers: I imply, that might be fascinating. Up subsequent, which is the higher inventory that we noticed on the Paris Air Present? Is it Boeing? The place is it Airbus? Lou, let’s discuss which is the higher inventory right here. Boeing had I believe it is honest to say Boeing has had a tough possibly three years, however particularly, it is had a previous, actually unhealthy couple of weeks, actual heartbreaking tragedy with the Air India crash of the 787 Dreamliner right here. Airbus, because the European competitor, I imply, we have typically talked about this. That is the business plane duopoly. They got here out of the Paris Airshow with some offers in hand. Inform me what you suppose right here. Who did it higher? It is the who warfare it better of the Paris Air Present right here. Is it Boeing or is it Airbus?
Lou Whiteman: Usually, these are big PR occasions the place Boeing and Airbus will trumpet all of the orders they’ve. However as you say, with the Air India crash, each Boeing and GE Aerospace stayed on the sideline. It was a sober present the we did not see all of the bulletins. We will depend planes, although, and know the way they’re doing. Boeing’s truly outperforming Airbus for the yr, and so they could also be on observe 4,000 or so orders, which might be actually, actually good as a result of, you mentioned I might truly say it has been a tricky decade for Boeing nearly now. I do hope they’re on the upswing. They’re nonetheless underneath regulatory restrictions on what number of planes they will produce. That is stemming from the 737 Max tragedies and all of the fallout from that. That is essential as a result of again when COVID hit, they mainly mortgaged every bit of kit they may discover. I imply, Tim, they had been taking the staplers off of the desk of the finance division and saying, What can we get for this?
It was most likely a great transfer as a result of they did not know what was coming and so they wanted to only be certain that they had the money to outlive. However at present, Boeing has 50 billion or so of debt, up from, say, 10 billion in 2018. They should carry that down, and the way in which you carry that down is by promoting extra airplanes and producing the money movement. I believe buyers want to know that even when all of it goes good from right here, we’re nonetheless years away from Boeing simply getting again to regular. Endurance is required, and Airbus is certainly then a cleaner story. However hey, look, that is possibly the best business plane cycle we now have ever seen within the historical past of the enterprise. Between Airbus and Boeing, the backlog is sort of 13,000 planes. That is properly into the 2030s. In case you are affected person and also you do consider that the worst is behind it, there is a fairly compelling case for Boeing to make beneficial properties because the stability sheet heals and as they only get again to regular within the face of all this demand.
Tim Beyers: I imply, you carry up a very fascinating level right here that that backlog is totally extraordinary. There are years of what you’ll hope is predictable money movement right here. However we do have this tragedy, and that’s going to be one more black mark on Boeing’s file. In the meantime, Airbus continues to do, I imply, comparatively properly. The A 320 platform, the A 320 Neo platform has been stable for fairly a while, and it appears to be like like that can proceed to be stable for some time. What do you’ll want to see, if something, from Boeing in its response to the Air India tragedy that they have not already accomplished. Is there something?
Lou Whiteman: I believe Boeing is doing what they should do. I imply, we are going to see it takes months if not longer to determine what occurred. We’ll see, it is all hypothesis proper now. If it’s a materials design flaw, I believe that that might be materials for buyers. The Dreamliner has flown for 25 years.
Tim Beyers: That is wonderful, is not it?
Lou Whiteman: Yeah. Nicely, and that is an fascinating level, too, to not sidetrack, however one in every of my largest fears about Boeing long-term is that is their final clear sheet design. They haven’t sat down a bunch of engineers in a room and designed a airplane for the reason that Dreamliner. They’re in no place to do it now. However ultimately they really want that mid market, that 757 alternative now. They should in some unspecified time in the future. Tim, folks retire. By the point they do a clear sheet, it may be all a bunch of folks that mainly haven’t got that institutional reminiscence. I imply, that, to me, is frightening. I believe, hopefully with Air India, it was a tragedy No, whoever regardless of the finger pointing finally ends up, however I do suppose that that is heading in the right direction to be a extra typical tragedy with this, and it should not do not suppose stunt the turnaround, however, I imply, we’re speaking years for this turnaround, anyway. There’s a lot that may simply go mistaken within the enterprise cycle and all issues that I believe buyers have to get take into accout earlier than they only get too excited.
Tim Beyers: Up subsequent. A little bit trivia. Little Airline Trivia. You are listening to Motley Idiot Cash. Lou, we have got just a little Trivia recreation that I wish to play with you and all of our listeners right here. Get your guess in. We might like to see what you guessed in depart a remark under in no matter wherever you hearken to your podcast, simply tell us what your guess was. However, Lou, you are a very long time follower of this trade, and I do know you’ve got received some actual historical past associated to this query. Let’s discuss it. My query for you is, what number of towers assist information plane throughout the US airspace? Is it kind of than 550?
Lou Whiteman: See, 550 appears so particular there, and I thank Tim that you just’re taking part in a recreation with me right here, which you are in my head. [inaudible]
Tim Beyers: I by no means try this. I might by no means attempt to trick you, Lou. No, go forward. Preserve going.
Lou Whiteman: I’ll say in your a part of the world, you may nonetheless see, like, the way in which we did it earlier than once we truly once we first began aviation, once we put big big arrows within the floor, so the pilots may see these from the bottom. I believe 550 is shut. I might most likely go over, however I do not know. It feels actually near 550. If it is precisely 550, I’ll be irritated with you.
Tim Beyers: It’s over. It is 648. It is 648. You bought that proper. The explanation I needed to kick this off and as we shut down the present right here, only a fast dialog in regards to the long-term alternative right here. The best way that we handle air site visitors right here in the US is historic. Lou, any ideas about what’s the investing alternative right here? Since you would suppose after some time, I imply, absolutely, we will get to the purpose the place we’re utilizing satellites. We will use extra superior expertise to route planes extra effectively. Proper now, we route planes in response to the place the towers are, not the quickest route. That’s placing, so your ideas on this, Lou, earlier than we shut up at present’s present.
Lou Whiteman: Now, positively. I imply, we’re utilizing Home windows 95 and in some circumstances, DOS methods, which I am sufficiently old to do not forget that, however to not get pleasure from it. Look, I used to be telling you that I used to be truly in 2001, I used to be at a listening to the place they had been speaking about simply this modernizing air site visitors management. I am fairly positive most I might have to search out my notes, however we’re nonetheless in that course of. It’s occurring. It is gradual, it is costly. It is not on time. But when you consider this, 5, 9, a minimum of. You want redundancies. It is advisable get it good. You may’t shut down the air system for six months to do a clear reboot. It is only a actually difficult drawback. Satellites are a part of the difficulty. I do not suppose that it is only a clear one vendor factor. There’s a variety of firms from L3Harris to Leidos and a number of the contractors which might be concerned. However actually, it is not a lot of an enormous authorities boondoggle undertaking. It is simply in one million completely different locations, again filling, digging via, making an attempt to determine it out, it’s only a tedious gradual course of that requires a ton of funding, and people are typically nightmares when annual authorities budgets come round, so we’ll get there. It is simply actually laborious.
Tim Beyers: A Rule Breaker alternative to come back? We’ll see. But it surely hasn’t occurred but, however we will control it. Lou, thanks for being right here.
Lou Whiteman: At all times a pleasure.
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Thanks for listening Fools. I am Tim Beyers, for Lou Whiteman. Dan Boyd is our engineer. We’ll see you once more subsequent time. Transfer on.
