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Table of Contents
🔥 Here’s What’s Happening Now
Another ugly day for momentum stocks as we had the largest momentum to value rotation in a month. With Jackson Hole looming I’d be adding to hedges here just in case.
This is an interesting idea, normally I do ratio spreads the other way, short an at the money put and buy 2 out of the money puts. In this way if the market goes up you break even, if the market goes down a lot you have unlimited upside, you only lose if the market goes down a little. I like that trade because you are hedging against a major drop…..
In this idea you are hedging against a small drop, and would lose money if there is a large drop. Not sure I’d put this on ahead of Jackson Hole though…..
Specifically, Jacobson encourages traders to buy $570 puts in QQQ that expire on Oct. 17, and that they fund the trade by selling twice as many $515 puts in QQQ. The trade should make money if the index falls by roughly 2% and no more than 11%, he said. The $515 level is the ETF’s 200-day moving average, which he believes will act as a floor in the event of a pullback.
Again, this could be normal movement from momentum stocks where investors have large profits, to value stocks. However, when this market ultimately tops you will see momentum to value, then value to cash.
Whenever we see a move like this the value guys come out to claim that value is back. I wouldn’t fall for that. Successful value investing requires finding stocks that are undervalued, meaning Wall Street has missed them. In an age of the internet, Bloomberg, and now AI, good luck consistently finding gems others have missed.
I do run a “value” strategy where I use RSI to find stocks that have sold off. It picks the lowest volatility names so it favors value type stocks, but it’s not a value strategy. It also has profit targets and stop losses, so once a stock has recovered it moves on to the next, and it it keeps going down it gets out.
Unlike value, which I would argue is no longer an edge, RSI is a behavioral edge that has persisted for decades.
This market has become thematic, and I don’t believe it’s going to go back to the way it was.
I also don’t believe this, the Russell 2000 is one of the worst indexes out there….
Could you select small cap stocks and beat the S&P? Sure. Beyond that the Russell 2000 is a trading vehicle, not a long term investment.
🧠 Why Voice AI is inflecting now
One of the great things about the AI theme is that there are so many investable sub themes. One of them is voice AI. The opportunities here are virtually unlimited, from just talking to AI like you talk to a person (Star Trek stuff) to using AI to analyze someone else to determine if they are telling the truth, embellishing, nervous, etc. Today we take a deep dive on voice AI……
Latency & accuracy finally good enough: End-to-end neural ASR+TTS and multimodal LLMs cut error rates and hallucinations, while on-GPU streaming inference shrinks response latency to “human-like” ranges.
Unit economics beat labor: A “voice agent” that answers 24/7 at sub-$1 per interaction with >60% call containment is compelling vs $2–$6 human handle costs in restaurants, retail, and SMB service.
Omnichannel pressure: Brands need consistent chat/voice/app experiences. Contact-center suites are integrating LLMs quickly (automation + agent assist), pushing adoption through incumbent stacks, not skunkworks pilots.
Edge/embedded upgrade cycles: Cars, kiosks, headsets, handhelds add NPUs and better mics—meaningful TAM beyond call centers.
Where adoption is real (and measurable)
Restaurants/Drive-thru & QSR: Order-taking, upsell scripting, call overflow. KPIs: containment %, order accuracy, AOV lift, after-hours capture.
Contact centers (banking, airlines, retail, telco): Call deflection, IVR modernization, agent assist, after-call summaries, QA. KPIs: AHT↓, FCR↑, CSAT/NPS↑, labor hours saved.
Automotive: In-car assistants (navigation, comms, commerce), OEM upsell paths. KPIs: attach rates per model, monthly active voice users, partner rev-share.
Hospitality/SMB services: Always-on scheduling, FAQs, payments; huge long-tail where missed calls = lost revenue.
Economics (rule-of-thumb)
Voice agent COGS: $0.20–$0.80/call (usage + inference) depending on stack and containment; often priced at $1–$2 with rev-share on transactions.
Payback: Weeks to a few months where call volumes are non-trivial, especially in QSR and clinics.
Choke points: Telecom reliability, PCI/PHI compliance, brand-safe guardrails, and integration with POS/CRM.
First-order winners (direct exposure)
Platforms & suites (enterprise distribution muscle)
Microsoft (MSFT) – Nuance + Copilot for Service; entrenched in healthcare/CCaaS; fastest path to at-scale rollout via existing contracts.
Alphabet (GOOGL) – Contact Center AI (Dialogflow/Agent Assist), strong ASR/TTS; deep GCP ties with large BPOs and retailers.
Amazon (AMZN) – Amazon Connect + Lex; clean attach into AWS mid-market and large retail.
NICE (NICE), Five9 (FIVN) – Best-in-breed CCaaS pushing GenAI/voice bots/QA; direct lever on call-center automation budgets.
Specialists (higher beta, more product purity)
SoundHound (SOUN) – Auto + restaurant voice stack; cross-vertical commerce graph (order-ahead from car → QSR). Positive revenue surprise shows traction, but it’s still loss-making—watch gross margin, backlog conversion, and net revenue retention.
Cerence (CRNC) – In-car assistants with major OEMs; wins if OEMs lean into embedded voice + commerce.
Toast (TOST), Olo (OLO), PAR Technology (PAR) – Restaurant OS vendors; beneficiaries as voice-ordering becomes a native module (attach-rate & ARPU lift).
Infra & silicon (picks & shovels)
Nvidia (NVDA) – Real-time ASR/TTS and RAG-over-voice run beautifully on GPUs; agent fleets at scale are compute hungry.
Qualcomm (QCOM), MediaTek (2454.TW) – NPUs enabling on-device/edge voice; wins as inference shifts closer to user (cars, handhelds, kiosks).
Vertiv (VRT), Modine (MOD) – Power/thermal for voice+LLM workloads in CCaaS/DCs.
Second-order winners (enablement & adjacency)
Twilio (TWLO), RingCentral (RNG), Zoom Contact Center – Telephony rails + AI add-ons; benefit as customers upgrade IVRs.
Verint (VRNT) – Speech analytics/QA; LLMs increase automatable QA share.
Security & compliance – Palo Alto (PANW), Zscaler (ZS) (data protection), sector-specific compliance vendors in healthcare/finance gain attach as voice captures PII.
Likely losers (structural headwinds)
Legacy BPOs (e.g., Teleperformance, TTEC, Concentrix/CNXC) on the wrong side of automation unless they pivot to “bots + supervisors.” Margin mix at risk as low-complexity call volumes disappear.
Old-school IVR vendors that don’t modernize—LLM agents are replacing tree-menus.
Point-solution speech startups with no distribution—ASR/TTS is commoditizing; without a full workflow (POS/CRM/search/payments), they get squeezed.
What to watch (leading indicators)
Containment rate (share of calls fully automated) and AHT deltas in CCaaS deployments.
Restaurant order accuracy vs human baseline; AOV lift from scripted upsells.
OEM attach rates (voice features per vehicle; monthly active voice users).
Net revenue retention and backlog conversion at specialist vendors (e.g., SOUN, CRNC).
Gross margin trend (signals model/inference cost discipline).
Policy & compliance pace (PCI/PHI/EEOC guidance for AI monitoring)—a gating factor for regulated verticals.
Trades & positioning
Core long basket (low-to-mid beta): MSFT, GOOGL, AMZN, NICE, FIVN — enterprise distribution plus clear ROI narratives.
High-beta satellite: SOUN, CRNC, TOST/OLO/PAR — position-size for volatility; trade around earnings/backlog prints.
Picks & shovels: NVDA, VRT, MOD, QCOM — capacity and edge inference.
Pairs / hedges:
Long NICE/FIVN vs short legacy BPO exposure (automation spread).
Long TOST/OLO vs short restaurant labor-heavy operators lagging automation.
If you want pure optionality on auto voice-commerce: long CRNC against a basket of legacy IVR laggards.
Risk checklist (why this could slip)
Brand risk from hallucinations, accent bias, or “bad bot” headlines → deployment freezes.
Telecom unreliability & call recording laws (TCPA/consent) → friction in SMB rollouts.
Model cost curve: if inference prices don’t fall, SMB unit economics narrow.
Macro: in downturns, new POS/CCaaS integrations can get delayed despite good ROI.
Bottom line
Voice AI is moving from “press 1 for…” to “talk to me like a person,” with contact centers and restaurants as the first big profit pools and auto as the sticky ecosystem play. Expect platform incumbents (MSFT/GOOGL/AMZN) to harvest most of the dollars, with specialists (SOUN, CRNC) offering higher-beta upside where they own full workflows (auto, QSR). The picks & shovels remain durable, and BPO headcount models look most exposed.
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📈 Stock Corner
Today’s stock is Palantir (PLTR)….
If you listen to the conversation below with Steven Orr, we both bought Palantir before the show. Will either turn out to be “great minds think alike” or “misery loves company”. Personally, I love to find the likely winners and buy them on dips.
📬 In Case You Missed It
Talking markets with Steven Orr….
🤝 Before You Go Some Ways I Can Help
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