PLTR, WRBY, and CHWY: Three Consumer and AI Plays to Watch

**SPEAKER_1** (0:00)
Let's discuss a trio of stock picks to consider, and welcome in our next guest, Chris Wang, who's the research director over at Runnymede Capital Management. Chris, so nice of you to join us today. Let's start with Palantir. What a week, up nearly 40%.
It felt like this was the name that kind of was the catalyst for a little bit more of a rotation into technology. Is that how it felt? What did it say that initiated that move and what was that feeling in the market?

**Chris Wang** (0:32)
Sure, thanks for having me back. I mean, definitely Palantir drove a lot of excitement in the software space.
In terms of AI, it's really been, earlier in the year, really a focus on semiconductors and infrastructure build. And now just in the last couple weeks, it's really a shift more toward software. And Palantir really showing that they can execute and build AI into a company's existing data sets and really be really transformative. One example is with CitiWealth.
They have issues with compliance personnel and cross-checking client records. And sometimes it can take days to bring on new clients. Once they plugged in Palantir solution, it actually reduced time down from nine days to seconds, and it streamlined the process that previously required up to 50 people down to one person. So Palantir took a compliance headache that used to take 50 backers, nine days to resolve and turn it into a single click. So I mean, it's really profound transformation. And I think that's really what's driving the excitement. And it's going to be the next stage of AI excitement.

**SPEAKER_3** (1:49)
And I want to take a look at your next pick, Chris, that you brought here. Warby Parker, a very interesting one. They have highlighted their square footage growth, that they're expanding their stores. But they also have this very important partnership with Google Glasses. How are you looking at both of those things when you look at your thesis for Warby Parker?

**Chris Wang** (2:09)
Yeah, I mean, I think the core business is already pretty exciting because Lenscrafter says around 1,000 stores, Warby Parker is only at 300 So there's a lot of square footage growth opportunity for Warby Parker. But the more exciting stories, obviously the partnership with Google Glasses, that launch is a few weeks away. The first iteration of Google AI Glasses will really just be audio-centric. So I don't think this is going to be the killer application yet. But people do want to see from the retail side, how AI can be built into their everyday lives. Next year, you're going to have Google AI Glasses that have built-in display. So I think that's really going to be the next step in transformation, because you'll be able to, I think they have one example of real-time translation, and it's giving you basically just closed captions in real-time of language translation. So you can be traveling the world and you don't have to learn a new language.
This is definitely going to drive traffic into the Warby Parker stores. People are going to want to try on these glasses and test it out for themselves. So even if people don't buy AI glasses, I think they're going to say, oh, maybe I do need a new pair of sunglasses or a new pair of readers. So it'll drive traffic and drive sales growth.

**SPEAKER_1** (3:35)
Moving on to another one you've got here, Chris, is Chewy. This is an interesting one. Admittedly, I don't have a pet. I haven't had one in a long time. Look, a toddler is enough in my life, but having covered this stock for a couple of years now, I mean, it feels like it was kind of this pandemic era hype growth stock that now is transitioning more into kind of like a value efficiency play. Is that kind of the story with this one? I mean, what exactly stands out to you about this name?

**Chris Wang** (4:05)
Yeah, I agree with your assessment. I actually have a child and four cats. So I get what you're saying, but I also understand pet ownership. But the pet business is a recession-proof business for the most part, and CHWY is really benefiting because they're an online duopoly, primarily with Amazon. They have 35 percent market share, and the exciting part is 84 percent of their revenue is from auto ship. So I don't think you can find another story in retail where you're getting basically recurring revenues quarter in and quarter out. On top of that, they're building a vet and health business, which they've been building out for seven years, doing it very slowly, and now they're planning to kind of ramp that up. And there's big opportunity to expand margins and drive their EBITDA margins from five to 10 percent. So you're getting a steady business, but you're also getting this kicker that can expand margins and also accelerate growth. So I think CHWY is a really exciting story in a pretty recession-proof business.