AI Data Centers Are Eating the Land Market: Real Estate's Next Big Disruption

SPEAKER_1 (0:01)

This is InvestTalk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

Justin Klein (0:16)

Good afternoon, fellow investors, and welcome back to another edition of InvestTalk. This is our Wednesday, September 16th, 2026 edition. Happy Fed Day to everyone out there. I'm Justin Klein, and my goal here is to help you become a better investor over the next hour or so by answering your finance and investment questions, bringing you data, perspective, develop over 25 years of investment experience, and unpacking what's going on in today's market. I talked about Fed Day. It was a very interesting Fed meeting and Fed announcement. We'll talk a little bit more about that and much, much more as the hours or minutes, excuse me, go on, the full hour takes hold. So that's what we are here to do, help you become a better investor. And to that end, quick heads up, make sure to mark your calendars. On October 24th, it's a Saturday.

And yes, Saturday does sound different. Usually we do webinars midweek, but we're doing this in person. You are invited to the KPP, sorry, the InvestTalk Retirement Summit. It's an in-person event.

It's free of charge, but seating is very limited. So if you are going to be in the Southern California area in late August or late October, excuse me, you might want to grab your seats and get ready to attend. We have a lot of topics to discuss. We're gonna talk about real estate, taxes, investment, planning, trust planning, all of that, and how it all wraps up into your retirement plan and your retirement journey, whether you're 22, 62, 82, it's gonna apply to everybody. So we are here and excited for that event. Once again, coming up on October 24th in Irvine, California, right? Right in our office complex. It's gonna be from 9 a.m. to 1 p.m. Pacific time. Now in just a bit, we're gonna talk about today's marked performance and run down the show topics for the hour. But as usual, we'll tackle this first caller question now.

SPEAKER_3 (2:26)

Beer Company stock ticker Sam. Just wondering if I should invest now or do a fractional share possibly. I'll listen to the show and do you guys have a great show?

Justin Klein (2:36)

Thanks. Looking at SAM Boston Beer Company. This is a name that had been booming during the seltzer boom. Remember the seltzer boom, I believe, if I remember correctly. They have one of the big seltzer brands. Is it White Claw? I believe it's White Claw, if I'm remembering correctly. But they rose to prominence because they were the Boston Brew Company. That's Sam Adams.

Yeah, so they, I'm sorry, they own Truly. That's the brand name. Truly. They own Twisted Tea, Angry Orchard, Sun Cruiser, Dogfish Head Craft Brewery, as well as Sam Adams.

Its market cap now is $1.7 billion. It used to be much, much higher. It's, where did it, where did it top out at? Wow. Yeah, it topped out over $15, $16 billion market cap. Now it's at $1.7 billion. So it's down about 90 percent in value.

Not shocking. Return on equity is negative. Free cash flow still is positive, about $200 million, at about a $1.5 billion market cap. So it's actually a pretty good free cash flow yield. The issue is, let's look at that free cash flow. Yeah, I guess it has rebounded nicely from the COVID lows.

Hmm, this is an interesting one. Cause the profitability still is pretty poor. Earnings though are expected to continue to rise from $8.96 this year. That is now 9%, but then up to $10.25 next year.

Let me see what they're doing with this cash flow. They are probably buying back shares. Yeah, they continue to buy back shares. That's really what's driving bettering for share growth because revenue growth is flat.

Actually, it's flat to negative. This year, earning revenue is supposed to be down 2% after being down 2% last year and then flat next year. So the technicals, as you'd imagine, on something that's been down 90% in five, six years, are not great. Continues to trend lower. I do like that free cash flow yield, but I am a bit worried about the melting ice cube of revenue, and so I would continue to hold off on it. I do like that they're buying back shares. I do like that they have a good balance sheet. But what are you going to pay for something that's in an industry that is struggling? I would want to see some semblance of a bottom in alcohol sales, beer sales, Boston beer sales mainly, and then I might get excited about it, and I want to see that chart turn bullish, which is not there yet. I'm passing or keeping Sam on the sidelines, at least, and continue to watch it. Now, yesterday, we had a great show. Luke talked about the gold's big comeback and why the world's largest money managers are loading up again. He also answered questions about Linar, and if you happen to miss it, go check out every InvestTalk podcast wherever you get your podcasts. Now, we have a lot of ground to cover over the next 45 minutes or so, and time for many we'll get to all of it. Our main focus point is about AI data centers that are eating up land, the land market. We're going to dig in to what makes certain pieces of land, especially in rural areas, more valuable, and what that might mean for the REIT market and the real estate market more broadly. Well, there's other topics on the docket. One is this recent report about OpenAI going or raising money at a $1.2 trillion valuation before they go public. But I want to connect it to a recent headline about AI killing humans by 2030