Has Ferrari Lost Its Mind?

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Travis Hoium, Matt Frankel, and Lou Whiteman discuss:

• Ferrari Luce.
• The market thinks the Iran conflict is coming to an end.
• Is AI compute spending slowing down?

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A full transcript is below.

This podcast was recorded on May 26, 2026.

Travis Hoium: Can Ferrari go all-electric? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman, and Matt Frankel. Guys, one of the big items over the weekend that I think we got to start with is Ferrari introducing their all-electric Luce, if I'm saying that correctly. We have a Pizza Luce down the street from me. Probably not related. But this is something that we've seen at least the guts of, Jony Ive’s company LoveFrom design, some of the internals. We saw a little bit of that, but we actually saw the outside reaction from the media, from influencers, and people like that. Matt was not all that positive. What do you think about Ferrari making this step into the EV space?

Matt Frankel: Well, I could have told you before they made this product announcement that the market was going to react negatively because it's going to be really tough for Ferrari to differentiate itself in the EV space. The company's own executives seem to think that this is the feature of the company, and I don't buy it. People buy Ferraris for specific reasons. One, they sound different than every other car on the road. They have racecar-like handling, which is almost impossible with an EV because your batteries weigh 2000 pounds, there's a lot. People who buy Ferraris don't care about being able to drive 3,000 miles in a clip. The average Ferrari goes about 2,000 miles a year, or being able to.

Travis Hoium: They're not actually for driving as much as they're probably very fun to drive. I've driven one once, but they are more of a showcase than anything else.

Matt Frankel: I think I was there when you drove your Ferrari.

Travis Hoium: Yes, that's right.

Matt Frankel: Being able to carry five passengers in their luggage, no one buys a Ferrari for that, especially a $600,000 upscale version. With EVs being able to do zero to 60 in 2.5 seconds is not a differentiator. You can do that with a Tesla Model S Plaid for one-fifth of the price, less if you buy one used. It's not as much of a differentiator as it is when you're buying a sports car. A Ferrari sports car is noticeably faster than a Camaro. It's not noticeably faster than my wife's Cadillac EV because it has instant power delivery. I feel like the market's reaction is correct and that the EV focus is a bit of a misstep for Ferrari. The company’s, the plug-in hybrid they released not long ago was a big success. I think, that's really the direction they're going to end up going.

Travis Hoium: Lou, what's so interesting about this is the design is so different than most Ferraris. We've seen this before, if you remember, Porsche, when they came out with their SUVs, that was actually a huge success for them. Financially, that arguably saved the company. But this one almost seems to go a little further in that direction. I said in our show notes that it reminds me of Apple's unapologetically plastic iPhones. It has that sheen to it. It just seems like it's so far off that, that's what's throwing people off. That's all said. I still like it.

Lou Whiteman: Matt saw this reaction coming. I didn't because, to be honest, I'm surprised investors care. This, to me, feels like a placeholder. You're a European automaker. You're an automaker in general, but especially a European automaker; you have to have something in this segment, period. Just so the politicians don't bug you when you call them up. I don't think this is a needle mover. Ferrari, if they really want to move the needle, they should start fulfilling some of their wait list, which has been their problem. But look, I'm not going to say that there isn't a market for five passengers with luggage. I wouldn't have thought the Porsche Cayenne would work, either. There are people who will pay ridiculous amounts to brag about what they're really when they're just buying a Cayenne looks like Kia, if you ask me, in a lot of ways. But there is always a market out there for this, maybe. But for the most part, they're not trying to differentiate there. They're not trying to do anything more than check the box, get something in this market, and then let it evolve from there.

Matt Frankel: Ferrari's big differentiator is that they have the best-in-class margins. They don't lose money on new models. They do a great job of keeping demand just ahead of supply, even on all their new model launches. Lou said they have a giant wait list for most of their models. The Porsche Cayenne was not a $700,000 vehicle; it's a big thing to point out.

Travis Hoium: Much more mass market than Ferrari has ever been.

Matt Frankel: I don't have the number in front of how much they spent developing this. But I think the investor reaction is that it won't produce the margins that Ferraris used to, that they're not going to get the ROI on that spending that they do on the plug-in hybrid, which sells for, I think, $800,000 and has a long wait list. That's really what we're seeing here, that they're not going to get the ROI on their spend, not just the look of the vehicle, but just that they're not going to make their money back.

Lou Whiteman: This is such a R&D intensive industry. Again, I don't know how they can avoid it. Nothing Matt said is wrong, but I think it misses just the reality if you have to be doing something here, and doing it on their terms. I don't know. If the market was surprised by this, I think, the market's got better gripes with Ferrari right now than this. I'll just say that.

Travis Hoium: Then maybe their F-1 team did have a pretty good weekend at least with Lewis Hamilton, so maybe that's not something that they're griping about. Lou, Mercedes also came out with a concept that's not as close to production as it seems like the Luce is. But is that something that is not quite as off the traditional style of a Mercedes vehicle? Is that maybe going to be a little bit more successful? Or does that even matter? Is it just this placeholder that you need to check the box, and say you're involved in EVs? But you're not necessarily looking to sell a lot of these?

Lou Whiteman: Same answer, but I do think there's probably more opportunity for sales there, just because of the nature of their customer. Look, I looked through that one, too, and that looked like my neighbor's Audi. I don't know how you really differentiated something more. To be honest, you know what differentiated itself in the market? Was it the Cybertruck? Maybe differentiating shouldn't be your number one goal. Look at the two? I think the Mercedes can sell more, but I actually think Ferrari could turn theirs into a higher-margin thing, 20% or so of that high margin is a customization. That has always been Ferrari's superpower. They designed Luce for that. If the world moves towards EVs, and they have at least a concept in place that they can get some of those Ferrari-type customizations modes on, I think this could be a success, but no, I mean, again, I don't think you can invest on it today. I think you invest on whether or not they can fulfill their backlog.

Travis Hoium: The people who are giving Ferrari flak today are probably also not the people who are going to be buying a Ferrari or making those customizations. The answer is going to be, who's the billionaire, the several-hundred millionaire who is willing to drop 800,000-$1 million on a new electric vehicle to differentiate themselves from the crowd? I think those people will be out there. When we come back, we're going to turn ourselves to why the market is up today, and that has to do with Iran. You're listening to Motley Fool Hidden Gems Investing.

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Travis Hoium: Welcome back to Motley Fool Hidden Gems Investing. Markets are up at least a little bit today. Nasdaq’s up over 1% as we're recording, and oil is down 2.4%, Lou. The reaction is due to a new peace-ish deal in the Middle East; it seems like we're going back and forth on this on almost a daily basis, but the market continues to react. I wanted to get your thoughts on whether this is something? Is this nothing? Is the current situation where oil prices now $94 a barrel, at least WTI? That seems like it's going to continue to trickle its way through the economy. How should investors be thinking about this back, and forth with the stock markets, and the real data that's coming out, that's showing that gas prices are high for longer than we expected, and inflation may be a little bit sticky?

Lou Whiteman: It seems like the difference this time is both sides seem to think that they're talking this time. Previous announcements of peace, maybe, were more one-sided. I do think we should wait and actually see what happens before we assume, but the market doesn't agree with me there. The market is up on this assumption. It would help. It definitely would help. You've mentioned oil prices are trending down. But more importantly, what we've learned from this is oil prices don't matter so much as the refined products, and the products that come out of oil. That's going to take time. Gas didn't spike up. Gas has trickled up the last few months. I don't think there's any reason to think that same thing won't happen on the way down. There's plenty of unknowns here. Even if the strait is actually opened, we still need ship captains to test that the strait is open. Look, we talk about this like a commodity. There are human beings about to sail through that, so it tends to open up slower. If the Red Sea is any guide, it tends to open up slower than what you think. How much damage was there to the infrastructure? Normalization on oil flows is going to take months if not years. I don't think the economic impact on reopening will happen any faster.

Matt Frankel: An immediate knee-jerk reaction is what we might see if we get a deal. Just looking back, when we had that two-week ceasefire deal that was announced in April, oil prices crashed by about 16% the next day. But lower and go back to where we were are two very different things. As Lou mentioned, the numbers over 800 tankers that are stuck in the Strait of Hormuz that need to get moving. Supply chains, shipping routes, energy infrastructure, that's not just going to snap back overnight. Economists widely expect oil prices to stay above pre-war levels till the end of the year, even if a deal is reached, and same goes for inflation. I don't expect it to snap back to 2% immediately. Not just because of energy prices. Peace deal is a positive catalyst for lower inflation, but it's not deflationary. It's really important to differentiate between those two terms.

Travis Hoium: Matt, this reminds me of when we talked about inflation coming out of COVID being transitory. What do you do if you're the Fed, if inflation is transitory? It turns out it was transitory, but that transitory lasted a while. It was not a spikes-up for six months, and then comes back down to where it was. I think, it was like a two-year span. We raised interest rates tremendously. Is this what you would expect to see? Maybe this is the beginning of the end of this conflict, and the economic impacts, but we're going to be feeling this for quite a while.

Matt Frankel: I'm pretty sure Jerome Powell wishes he could take that word back transitory when he said it. We still have not gotten back to the 2% target. It's worth mentioning. Even now, inflation was the highest it's been since 2023 last month, and it's not just energy. There's a lot. There are other contributing factors as well. When we came into 2026, I thought tariff uncertainty was a thing of the past, and then, boom, it just shot back up. It's not just the energy price inflation. But I think it's going to take a little longer to cool off. I think the Fed is going to be a little bit more deliberate in acknowledging that it's going to take a little longer to cool off than they had been before. I still think over the next two years, the general direction of inflation and interest rates is lower, but it's going to be a much more steady and slow decline than a lot of people think.

Lou Whiteman: It may be lower from the peak, but I don't, I question what the forces are that's going to really put pressure on rates, and put pressure on inflation. Wouldn't it be great, Travis, if we could just go back to talking about things like the deficit, and stuff like that is driving things. But it is really, really hard to see the bond market believing that we are in a above-average credibility market, even if all of these external factors go away overnight, I think, more normalized inflation relative to the beginning of this decade should be expected. Is it down from the highs? Probably. But we aren't going anywhere near to lows. If anything, I think we should learn to live what we've had the first few months of the year. I think, this is going to feel more normal than a few years ago.

Travis Hoium: We are stock investors, but just a reminder that bond investors run about 10 times more money. The bond market is much, much bigger than the stock market. It is important from time to time to listen to what they're telling us with what's going on with rates, and it seems like those expected rates are going higher, at least later this year, something to keep an eye on for investors. When we come back, we're going to talk about a potential slowdown in AI spending from some of the big tech companies you're listening to Motley Fool Hidden Gems Investing.

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Travis Hoium: Welcome back to Motley Fool Hidden Gems Investing. AI has obviously been the talk of the market over the past few years, and this year, it is what's driving a lot of stocks higher, particularly in semiconductors, and all the big capex spending. But over the last few days, and particularly over the weekend, we got some indications from some pretty big names in artificial intelligence that maybe the payoff that they were looking for is not necessarily there. Matt, Uber, Valve, and Duolingo were three of the companies that have at least given us indications. I think Uber was the most vocal, but indications that we're spending a lot of money on AI. We don't know that there's a real ROI there. Are we at a new phase where the token consumers, which are these companies, are questioning, "Is there really a payback here?"

Matt Frankel: To be clear, if we see more CFOs and COOs start to question their AI spend, that's a generally good thing. No one wants the companies they invest in to waste money. It's a good thing overall. Uber just added a little bit of context. Their COO publicly admitted that the company cannot show a clear connection between how much they're spending on AI tokens, and how much value they're getting out of it. Just the numbers. Uber has about 5,000 engineers, each of which are spending about $500-2000 a month on AI tools, depending on what source you're looking at. That's millions of dollars a month with no clear payoff yet. This is not to say we're in an AI spending bubble. It's the use cases for AI are different, depending on what your business is. For example, financial services that's an area that I follow very closely. If you can use your AI tokens to automate document processing, to automate loan approvals, things that you would normally have to pay somebody to do, you can more clearly show an ROI on what you're doing. There are applications in the retail space to automate certain processes, logistic space. Basically, if you can use your AI tokens to automate processes, reduce labor costs, and show clearly what you're going to do with it. It's a much better use case than just to help write code, and things like that, that don't have a clear immediate payoff, and that's what we're starting to see executives question.

Travis Hoium: Lou, we've also seen the word “tokenmaxxing” be something that people have talked about. When you put incentives in to say, use more AI, and maybe you'll get the promotion. Maybe you'll get a raise, show me the incentives. I'll show you the outcome, and maybe that outcome doesn't lead to a lot of ROI.

Lou Whiteman: Not everybody here can be right. I don't think we know what part is wrong, and that scares me as an investor. Matt's right. It might be that just this is a good tool for some things, but not everything. But we just had a company file on IPO saying their enterprise AI total addressable market is about two-thirds of total U.S. GDP. Again, something can't be right there. Or just AI has to get cheaper to fulfill the goal.

Travis Hoium: We talked about this last week. It's actually getting more expensive. Tokens are getting more expensive.

Lou Whiteman: Not only is it getting more expensive, but the AI hyperscalers are companies that have traditionally enjoyed a mid-teens return on invested capital. Right now, their return is negative. They have to either figure out how, at some point, hopefully, the build-out won't go on forever, but it is going to go on for a while. At some point, they're going to have to figure out how 15 X the revenue they are bringing in here somehow on the same cost basis, or all of this can't be true. We can't have this just as select, but not everything, but it's going to take, it's going to eat software. We can't have it. Well, it needs to get cheaper, but the hyperscalers need to generate this ROIC. We don't yet know which way it breaks, but mark my words, something is going to break here. Not everything the market believes right now, and not everything we are seeing as a trend can be true at the same time. There's a tension there. That tension will resolve itself at some point.

Travis Hoium: Definitely something that we're trying to figure out exactly what's going on. We've covered this a few times on the show in the different angles with the build-out, with what is the ROI? What are customers saying? Where is the real payback? I think, we may be entering a different phase. We saw last week some of these hyperscalers increasing their prices. That's telling you that they're thinking about the economics of their business. Now, you hear Uber say, "You know what? Maybe we're spending too much on tokens. They're thinking about the economics of their business. That can be good for some of those players, but there's definitely not going to be some players that aren't going to like this willy-nilly spending. Something we'll be definitely covering in the future.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards; it is not approved by advertisers. Advertisements are sponsored content, and provided for informational purposes only. To see our full advertising disclosure, please check out our shows. For Lou Whiteman, Matt Frankel, and Dan Boyd behind the glass, I'm Travis Hoium. Thanks for listening. We'll see you here tomorrow.

Lou Whiteman has no position in any of the stocks mentioned. Matt Frankel, CFP has no position in any of the stocks mentioned. Travis Hoium has positions in Duolingo and Uber Technologies. The Motley Fool has positions in and recommends Apple, Duolingo, Ferrari, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.