Closing Bell - AI, Memory Trade Takes A Pause 5/12/26

Episode Date: May 12, 2026

Olaolu Aganga, Head of Portfolio Construction at Citi Wealth, breaks down positioning and where investors should focus next, plus what she’s telling clients. Commodities take center stage with moves across copper, oil and agriculture shaping the broader trade. The show also explores emerging markets for power and energy infrastructure along with pressure in athleisure as Under Armour struggles. Mike heads to the dashboard to track wage growth and what it signals for the economy. Beeneet Kothari of Tekne Capital Management explains why Asian markets are hitting new highs and makes the case for Chinese tech as a key opportunity. Kate Rooney reports on Sam Altman’s testimony and ongoing scrutiny in the AI space. Angelica Peebles examines uncertainty around the FDA and what it means for healthcare and biotech. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing an end to the training day at the NYSC AAR, ringing the closing bell and at the NASAC selective insurance doing the honors. Welcome to closing bell overtime. We're live in studio be at the NASDAQ market site. I'm Melissa Lee along with Mike Santoli. Stocks making a late day comeback. The doubt 50 points, the S&P 500 with only a small loss, NASAC's still down nearly 1%. The groups are the most momentum over the past six weeks, turning much lower today. We'll have much more on that coming up. On our radar at the close. As many investors question whether the tech rally can last, We'll hear from someone who says yes, but look outside the United States, and we're digging

into today's CPI report and how inflation is hitting the consumer. Plus, the FDA commissioner resigns, leaving the agency in limbo. What does it mean for drug development and approval? Well, much more on that straight ahead. But the market actually was really interesting. You know, it opened pretty downbeat in terms of the momentum sectors like semis, but we really saw that turnaround, that really the big coming in late in the day. Yes, a little bit of muscle memory for sure.

It's one of those days where you feel like the riptide warning flag should have been out on the beach because anything that was up big was actually for sale heavily in the early part of the day. And it was a little bit defensive. What didn't get a reprieve even when the laggards were leading is consumer exposed cyclical. So still a little bit of heaviness there for reasons we can talk about rates up, oil up, and all the rest of it. But everyone kind of knows that semis are way up on a pole here. And there's a lot of air under them. And if they start to crack, watch out.

On the other hand, you know, they haven't had more than like a 5 or 7% pullback along the way. And that was a few weeks ago. So I do think, you know, people are, the bid is going to die hard. Yeah, yeah. That is true. Invadi, I think, will be a chart that we'll be looking at. In tomorrow's session, today was really interesting action in that it hit high. Yes.

And then went down by a percent or so pretty much quickly after that and then caught a bid. So that was sort of the poster child of this movement in today's session that sort of bid for semi-euvre. we saw Philly Semiconductor index down as much as 6% and the lows now finishing down by 3%. It's a 20% drop for the socks to get to its 50-day moving average. So just to think about that. So, you know, it's really not really cutting into muscle just yet. But NVIDIA is also acted as a defensive member of that group as Apple has for the rest of the NASDA. Let's get some more on today's tech pullback.

Christina Parts and Novels is looking at the big movers. Christina. We're going to be talking about semis and AI themes that just, like you mentioned, got hit hard today. Some investors really pointing to overbought technicals. Mike alluded to it. Others flagging the so-called AI dividend tax out of South Korea, where the Cospi fell as much as 5% after a top presidential policy official floated

a citizen's dividend funded by AI profits. It did close about 2% lower. Mizzouho, though, thinks the biggest driver is this morning's hotter than expected CPI print. Rate cut expectations continue to plummet, and that's hurting high beta tech. The chance of two hikes this year is now greater than the chance of even one.

Uncut, according to Fedwatch. Qualcomm had its worst day since 2020, down roughly 11.5% Intel closing about 7% lower after more than doubling just in the past month, so maybe some profit-taking. Memory names, Sandus, Western Digital, optical connectivity names like Lumentum, really among the biggest laggers on the S&P 500. You guys talked about Invidia being that defensive play. Well, was among only two names in positive territory in the SOX ETF. Wells Fargo and Susquehanna both raised price targets ahead of earnings next Wednesday. Wells Fargo going to $315.15.

Going to $275, both pointing to, of course, stronger data center demand. Last but not least, it was a mixed bag for quantum. You can see quantum computing on your screen, you know, up 2% after earnings beat and ramping small batch manufacturing at its fab, but then both D-Wave and Raghetti, D-Wave posting their earnings,

both falling about 7% today. Guys? Christina, thank you. Well, Bond yields, continuing their move higher following today's CPI report. the 10-year yield getting to its highest level of the year. Let's bring in Rick Santelli from Chicago with more on these moves. Hi, Rick.

Hi, Mike, indeed. You know, we started out with CPI for the month of April, and pretty much every component other than the headline was higher than expected and higher than the rearview mirror. And it was only because the headline number was so high last month up 9-10s that up 6-10s, well, that's still a very warm number. And if you look at the chart, a couple of things, this is important. You know, pre-COVID, we are much lower in inflation, so we never really got back to where we started.

In the entire low, since 2022, when we had the high watermark on year-over-year core, so strip out food and energy to make it a little cleaner. The lowest reading has been 2.5 at the beginning of this year. As a matter of fact, all of last year only had two readings below the reading we had today at 2.8. Now, I understand that if you don't look at core, we're at 3.8, and that was on the warm side as well. But do keep in mind that many other countries like the UK and the EU group do have bigger issues with the energy spike prices. If you look at a two day of tens, it's not only CPI, it's all the other issues. UK yields soaring well over 5%. Highest yield close going back to 2008, 2011 for boons, ours.

Well, look at a year-to-date chart. We finally usurp kind of what had been the high yield close at 4.44 due to the conflict. Now we kick it back to mid-July of last year since we've closed at these levels. And it certainly seems, though, global yields are given our yields a little extra push to the upside. Melissa, back to you. Rick, I'm just wondering, because, you know, you have divergent messages here. What bonds and rates around the world are telling us versus what the U.S. equity markets are telling us. I'm guessing, I'm going to guess your answer that you think the bond market is right, but what do you make of this divergent message?

I think that there's so much underlying strength in U.S. economy for a variety of reasons that even the negatives pushing yields up, like potential inflation in the energy complex, is somewhat overlooked. And I do believe a portion of our interest rates moving higher has to do with a better than expected baseline issue for what the U.S. will look like post-conflict. Eric, thank you. Let's say in the markets, tech was the worst performing sector today with chip and memory stocks pulling back from a massive rally that brought in the AI trade beyond the Mag 7. Names like Qualcomm, lower by 12%.

It's worse stayed more than a year. Intel down more than 8%. And some of the air coming out of the red-hot memory trade are investors simply taking profits after a record-setting run? Or are they growing concerned that the rally may be overheating? Joining us now is City Wealth Head of Portfolio Construction and Analytics, Alalu O'Ganga. Alalu, great to have you with us. Thank you guys so much.

It sounds like you believe in the AI trade, but do you believe in the AI trade as, you know, in terms of semiconductors and Mag 7, or do you believe in other parts of the AI trade? So I think broadly the AI and the CAPEX related to AI started with technology, but we're definitely seeing it expanding and expanding across the board. Earning seasons come out, about 90% of companies, as you know, have reported the earnings growth 25% year over year. So financials, we're seeing that expansion there. We're also seeing it in health care. Some of the areas that we like that are tangential and expansion to AI is physical AI. So we're seeing AI in robotics in warehouses and that deployment happening. So again, broadening out from technology.

And then in addition to that, we're seeing it in manufacturing. So expanding manufacturing capacity. So AI is doing a lot to bolster a number of different sectors. And what we like is the breath that we're seeing expanding across a number of different companies. It certainly seems like the theme is expanding out, but does that potentially leave an investor who just has been passively owning the market, you know, kind of overindexed to this one factor? So right now, the U.S. has been strong, frankly. The conflict in the Middle East is still ongoing. It's left a divergence geographically, so there are some areas that are a little more exposed, as it were.

For us, broadening not just AI in the U.S., we have global views that we think are lasting and enduring. So energy security and infrastructure, so those companies that can benefit from the CAPEX spending with regards to energy and the grid and energy independence. So if you've missed this particular wave, there's some themes that we believe will be playing out over some. time, frankly, that we need to focus on, that we think we have durable earnings there as well. Globally, though, are you concerned about the areas that will feel the inflation from the energy shocks the most? And are you funneling money away and more towards U.S.? Yes. And we made some changes in our portfolios over a month ago, frankly, as we were looking at a number of different macro indicators and some of our high frequency and technical indicators, we made a geographic shift. We moved away

from European equities, we moved into the U.S. So that regional exposure, even though some can talk about valuations for us, valuations is one component of what we're seeing in the price action, but really it's durable earnings, and we're seeing that play out. So we made that move away from some of those areas. Emerging markets, there's some that we selectively liked, that we selectively liked that are also geared towards technology and AI and that CAPEX spending. So some divergence, some geographic areas that we like across the board,

but U.S. over Europe. I do wonder, though, as we talk about it, it starts to seem as if it's very difficult to get diversified. If you wanted to, right? Taiwan, larger market cap than China. It's almost all because of semiconductors and such. And you can go down the line, Korea, of course, as well, famously speaking. So are you saying kind of lean into that because that's where, you know, the positive impulses in CAPEX, or do you look for a waste of rebalance out of that?

So diversification from an equity standpoint, yes, we're. We've talked about AI. We've talked about robotics and physical AI, energy infrastructure. So that's a different area there. But as we think of diversification is more in a portfolio context. So I've heard some of the segments where they're talking about bonds. And, like, frankly, we like gold. I mean, put gold into the portfolio.

The correlation between stocks and bonds is low. It can be volatile in the shorter periods. But over sustained periods of time, gold is an area that we really like. Are you worried that ultimately all of this revolves around the AI trade remaining hot? I mean, you can like the energy infrastructure in terms of the power grid, build out, etc. To support AI data centers. But that trade goes a little bit south and all that CAPEX gets scuttled. There is no doubt that AI is transformative, absolutely transformative.

But what it's doing, and as we go through a lot of the earnings report, what it's doing is making companies more efficient. It's really allowing for margin expansion. It's allowing for greater durability across the board so those that can invest. in it are really transforming their existing businesses. So AI is more powering and fueling a lot of the growth. So a facilitator, now there are some companies, maybe a smaller handful that can be direct beneficiaries as the providers of it. Hence, you know, we're talking about some of these sectors and some of the names. But overall, we see this expanding across the board as AI empowers and expands a lot of the earnings. I thought maybe it's telling that when you mentioned bonds,

you quickly said we like gold. Does that mean, you know, I mean, essentially could you seeing rates go up. We've gone from a world where we thought we had fed rate cuts coming to now we might have to pricing the possibility of hike. So where does that leave you? I like how you caught that one. We've debated duration in our investment committee meetings. And Kate Moore very much challenges us to think outside of the box and like where we could go wrong. We also made moves and some adjustments in our fixed income portfolio. We reduced our duration, frankly, to your point. The odds, we came into the year where everyone was talking about rate cuts. and now that is really off the table, at least in the U.S., in Europe and UK.

That's a different story in pivot with regards to rates. But we've reduced our duration, frankly, because the odds of rates going lower from here, at least this year, we view as unlikely. So we made that adjustment as well. Where are you in credit broadly? We trimmed some of our credit exposure. We had exposure to EM and more higher yielding credit. We took that down, went higher up in credit,

and shorter in duration. And in terms of one factor that I think is kind of shadowing this market to a large degree, is this wave of new issuance that we're going to be getting. It might kind of swamp the indexes for a little while. Is that a healthy thing? I mean, does the active capital markets, or do you want to be wary of what that's going to mean, all these, you know, AIIPOs, etc? I mean, right now it's very much a wait and see.

I have to say very much a wait and see. We are seeing the wave, as you mentioned. Healthy capital markets, yes. but, you know, it is a wave of issuance. So we're quite mindful of that. The conflict in the Middle East is still ongoing. There's a teeny bit of a pullback that we've had today, but it almost seems like markets and investors' gentlemen

has looked past that to some degree, and it's really supporting and fueling a lot of growth. And, of course, there's issuance data that's coming out. We are watching it and just seeing how the broader market absorbs all that. Sure. Lalo, thank you. Thank you so much for that. All right. on commodities now as copper having another good day. CME copper hitting an intraday high and

settling at a record. It is now up 10% in the past week. Freeport McMoran rising for the third straight day and moving to session highs as the company's CEO is speaking at a metals conference and saying copper demand is being driven by electrification, data centers, and grid investment. And in a new note this morning from Chris Verona of Stratigas, he says FCX and other miners are on the cusp of breaking out from 20-year basis, silver also higher today, and it's up 18% in just the past week. Silver, of course, had quickly become a little bit of a speculative gauge as opposed to, you know, industrial demand and things like that. But broadly speaking, even X oil commodities are on the rise. It shows you that we have this high nominal growth,

supply chain issues out there. You know, interesting. Maybe we would expect rates to be even higher than they are, given all that. But, um, uh, I do define it fascinating. People want to talk about the investable themes as opposed to being afraid that it's an inflation push. Right, right. And, you know, we're talking about all the exposure that you have to AI data centers and ultimately coppers. Yeah, exactly. Exposures.

Exactly. It all does. You can't get away from that theme. For sure. There you have it on your screen. That's Chicago, the CBO closing bell, ending the regular training day for options. Coming up, a trio of AI stories. Goldman plans to add agents to its human assembly line, how Amazon employees are running up the score,

and how compute is becoming a commodity. You're watching Closing Bell overtime live for the NASAC market site. AI has revolutionized every industry over the past few years, some in more obvious ways than others. Goldman Sachs, president and COO John Waldron, this morning telling our Carl Continia how AI is changing Goldman. I often describe Goldman Sachs as a human assembly line. So if you think about what's happened in manufacturing in the world, it's become much more robotic. It's become much more automated. The banks really haven't been on that journey to the same extent because we're kind of information companies.

And it's been harder. We can't put robots in our so-called manufacturing facilities. We don't have that. But we now have tooling with generative AI that I think is giving us the ability to automate our processes. So our human assembly lines will become more digitized. Digital agents will be our robots. Baldwin said AI will automate some jobs, but also said he expects it to create new ones, so he couldn't say the net impact. Separately, a new twist on a story we've been covering here on CNBC.

It's called token maxing, basically. It's using AI unnecessarily to boost scores. Now the FTs reporting on Amazon employees using the company's mesh claw tool just to maximize their usage and move up the company's internal leaderboard. So we have Goldman talking about real usages of AI and the benefits. and then you got the fake use of AI that Amazon seems to be measuring. And it's also so hard to tease out exactly what the impact is over and above what you'd otherwise expect in terms of businesses always doing more to automate. Right?

Software always gets better, faster, cheaper. You know, in the late 60s for a while, the New York Stock Exchange used to close on Wednesdays to catch up on paperwork, like literal paperwork. I mean, obviously we've always tried to automate the processes better, the back office. But it is interesting. And the token maxing thing, I mean, I think nobody quite. knows what the real level of demand is. No.

For burning through all these. We don't know how, I mean, any query that you do during the day, what percentage is actually work-related? What percentage is just for fun or running an errand or something like that? You have no idea the usage. And so I think it's so early in these stages in terms of figuring out how it's going to be monetizing. And when your boss says, you know, you want to use co-pilot, we want to make sure everyone's

using it. Right. Experiment with it. So, sure. We'll have an incentive. Yeah. It's not helping us write a story. But, yeah, we'll experiment with it.

Not yet, no. All right. There's futures contracts for oil, agricultural products, metals, and soon AI computing power. CME group announcing today it is partnered with GPU market intelligence firm Silicon Data to create a compute futures market later this year. Pending regulatory approval, of course. The new futures contracts will allow traders, financial institutions, AI builders, and cloud providers to manage volatility and price risk in the compute market. Makes sense. It does. It really does make sense. If you let the companies have the ability to, say, hedge to smooth out the volatility in compute power, that's a pretty powerful. If you're a provider, you want to sell it forward, you're going to lock enterprise.

And, of course, just to be clear, this will be based on kind of a price index of what it costs to rent the capacity. It's not like, I don't think you're taking actual delivery of computation power. Probably not. But it's, no, it is useful. That's what you need is a natural two-sided market. Hedgers and speculators can make the market more efficient. for us, too. To see the future, the forward curves. Exactly. Right now, there's these over-the-counter benchmarks. Right. Exactly. Coming up, a look at how inflation is affecting consumer buying power,

plus the latest reports of companies cutting jobs and blaming it on AI. Overtime, be right back. Welcome back to Overtime. Two companies in the software sector announcing layoffs today. First, Zoom Info Technologies will eliminate 20% of its global workforce as part of its new restructuring program. Shares sinking after the company cut its full year of revenue guidance, the stock hitting an all-time low. And GitLab shares also in the red today, the company will reduce its workforce and reinvest the savings back into the business to, quote, accelerate the company's unique opportunity in the agenic era, adding that it will be rewiring internal processes with AI

agents. The news comes as it reaffirmed its first quarter in full year guidance. As companies cut jobs, it can put pressure on wages. So Mike's taking a look at CPI and paychecks. Yes, so the new CPI data this morning, a little bit warmer than anticipated, but clearly shows an upturn in headline inflation, 3.8% on an annualized basis. When you compare it to the latest reading on average hourly earnings growth, 3.6%, it does show that real wages by that measure has barely dipped negative again. So you see here, this goes back into 2010. And the most notable

swings, of course, were around the pandemic when people had massive stimulus. And then down here, that's the inflation bulge. So it does help explain very depressed consumer confidence at a time when jobs are pretty, job growth is pretty good recently and of course when GDP's been growing. Don't know if this is going to be the trend right here. Obviously headline, it's going to be sensitive to oil, but it does sort of show also why the consumer parts of the market have struggled. Yeah, I mean, it will be interesting to see what, for instance, the retail companies will say during earnings season, whether this is translating into any sort of pullbacks after the quarter close and into sort of the recent weeks. Yeah, I mean, or if it just kind of

of exacerbates the K-shaped dynamics that we've all become used to it. Yeah, because it's not showing up in the headline data, that's for sure. Time now for CNBC News Update with Julia Worson. Julia. Hey, Melissa, President Trump's plan to put weapons in space, and what he calls a golden dome for America is estimated to cost $1.2 trillion. That's according to a new analysis from the Congressional Budget Office and is far more expensive than the president's original price tag estimate of $175 billion. He directed the space-based system to be built.

in an executive order he signed his first week back in office. Memphis Grizzlies forward Brandon Clark has died. The team announced his death today but did not provide a cause. Clark spent all seven seasons in the NBA with the Grizzlies but missed much of the past few seasons with injuries. Brandon Clark was just 29 years old. And Waymo is recalling 3,800 robotaxies to fix software issues that could allow them to drive onto a flooded roadway. The recall is voluntary. according to the National Highway Traffic Safety Administration.

Waymo says it's working on additional safeguards, including where the robotaxies can operate during extreme weather. Back over to you. Julia, thanks. The NASAC 100 is up 150% in the three-and-a-half-year chat GPT era. Those games have many wondering if there are more gains ahead in AI. Our next guest says yes, but you may have to look outside the U.S. That's coming up on overtime. Welcome back to closing bell overtime live from the NASL market site.

Stocks bouncing off their lows of the day. Now closing higher by 56 points, but the low of the session, it was down 450. The SP500 with just a small loss and NASDAQ also bouncing off its lows, but still lost 7 tenths of a percent. Sox, which had been the hottest, mostly getting hit hard today. Qualcomm down 11%. That's its worst day since 2020. Intel also down 7%, but it's still nearly doubled in a month. InVIDIA, though, up slightly.

the only gainer in the SMH today. It has become something of a safety play within chips. The red hot memory and optical names also lower Sandus, down 6% Lumentum, down 5 after it soared yesterday following its addition to the NASAC 100. Well, despite that AI trade seeing a pullback today, investors' attention has been focused on names like Nvidia, Qualcomm, and Micron. There are plenty of ways to play the AI theme around the globe, especially in Asia. And we're not talking just Samsung and S.K. Heinex in Korea.

Joining us now is Benik Kothari. founder and CEO of Technic Capital Management. Good to see you, Bene. Thank you for having me. So where do you most, what are you most excited, I guess, about how the AI theme is playing out? And of course, at a price, right, where the valuations still don't reflect it. It's Asia. So 90% of the spend from the hypers here ends up in Asia. These economies in Asia have been building a manufacturing powerhouse for the last 30 years. This didn't happen overnight. It didn't happen by accident.

But they are now in a position where we need what they have and there's nowhere else to get it. So I think the fact that all the AI market cap sits here, but all the money is going over there, that's the opportunity. So when you say that money is going over there, do you mean specifically Samsung, S.K. Hynix, TSMC, because ultimately they're making chips for companies that are based here. So how do you parse that when you say 90% goes to Asia? It's going into a few economies specifically. A lot of capital is going into Taiwan. A lot of it is going into Korea.

However, those are two markets where I would bet that over time, we can figure it out. Intel is trying to build a TSM competitor. Memory is not only sold in Korea. But there's two other economies that do things that other people can't do, one of which is Japan. There's a number of companies in Japan. And another one is China. But even outside of that, we own a company called Bezzi in the Netherlands. This is the ASML of packaging.

We own another company in Asia called J-SAT Group, another packaging company. We think one of the things that's happening in semiconductors is there used to be a tightness in the front end, which is TSMC. That tightness is quite well known and quite approaching a resolution. The tightness now is in back-end packaging. And that's where we think the next bottleneck occurs, and there's a number of companies around the world that you could own. Are we seeing, I mean, is it effectively an entirely independent buildout of AI capabilities in China, and is it different in terms of the mix? And, you know, how is that, I guess, exploitable by an investor? In the short run, it is entirely independent.

I think the fact that you've got the two largest countries in the world building independent supply chains makes no sense. And I would bet coming out of this trip that our president is on, we're going to start approaching a more economical resolution of these two supply chains not being so independent. But in the short run, it's going to be that way. And China represents about 20% of global AI CAP-X, and yet it represents 5% of global AI market cap. The winners in China over the last five or 10 years,

Baba, 10 cents, so forth, are probably not the winners over the next five or ten years. We saw that here in the U.S., I think the same thing's happening in China. And there's a number of semiconductor companies. We last year purchased shares in a company called ACMR, which is an American company that also has significant China business. So just like we have applied materials, lamb, they've got their own stack,

and those companies are very, very mispriced. When you say that the tightness in the front end is near resolution, Does that mean what we're seeing in terms of the run-up and memory, for instance, is overblown? Are we in bubble territory? Because it sounds like you think it's going to be over. That tightness is going to be over soon. I think we know how this ends. We don't know when and how much higher we need to go before it ends.

But memory is not hard to make. Whether we can make enough memory today or tomorrow or the day after, nobody knows that. But we know how this ends. So I think the risk reward is not skewed in your favor. I think there are many, many other parts of the supply chain where that risk reward is very much skewed in your favor. You know, China becoming independent. I think you're in a window here where this is sort of the last chance to buy China at these levels. I think the tariff tensions are old news.

I think the antagonism between U.S. and China is even in the rearview mirror. Stephen Miller, I noticed this morning as his Twitter header, has a picture of him shaking hands with President Xi. this is our deputy chief of staff of homeland security, the last person you would expect. So I think China is not Russia, China's not Iran, it's not North Korea. I think the market's going to start piecing this together. And more importantly, there is a massive buildout happening. If you take the five biggest semi-cap companies in the West, ASML, LAM, applied materials, Tokyo Electron, and Clack, they've got a combined market cap of $1.5 trillion.

45% of the revenues comes from China. Those same companies in China are worth about $150 billion. This all makes sense, but there's a national security component to all of this, which is why there are two separate AI buildouts. And this is why Jensen Huang maybe that's why he's not going to China because he's not going to be selling his chips over there. I mean, how do you remove that? I mean, intellectually, I understand what you're saying.

It makes complete sense. But national security is a whole other element, and that's politics. I think politics, at least in our case, country has a tendency of taking a good idea a little too far. I think the idea that, I think there is a way to be much more nuanced about the national security concerns vis-à-vis semis. I think our approach to approaching, to resolving that has not been very nuanced. It's been a blanket ban across a lot of things. It's understandable why that happened, but I think over time, these things will resolve themselves in a much more nuanced way. You know, the fighter jets are not

using advanced two nanometers high bandwidth memory. That's going to make our chatbots. So I think there's got to be a lot more nuance that's going to happen. That's what Jensen's trying to do. Whether he succeeds today or tomorrow, I don't know. In the meantime, they're going to build, we're going to build. In the long run, this is going to resolve itself. I think you just can't wait for that. They're going to build, but the fact that they are attempting to build in a much less capital intensive way, I mean, that might mean that the overall opportunity isn't as big, is it? It's, they can only spend so much because they can't buy our expensive stuff. But the way you make money is, you know, you buy a dollar for 10 or 20 cents.

Their dollars are a little bit smaller, but you can buy them for 20 cents. Here, the dollars are trading at 80 or 90 cents. And I don't know if it's a dollar. Right. Because the NASDAQ, as you pointed out, is up hundreds of percent. These semi-stocks are up thousands of percent. So I just think your risk reward is skewed, but there's more going on. You know, right now we're excited about Anthropic and Open AI.

tomorrow we're going to be talking about SpaceX. Just like there's no scenario where you've got Open AI and Anthropic worth a trillion dollars and public stocks that don't benefit, there's no scenario where you've got SpaceX worth $2 trillion or $1 trillion, and there aren't public stocks that benefit. They happen to be in Asia.

We own a company in Taiwan called WNC, which is a sole supplier to SpaceX. Feneit, great to see you. Thank you. Thank you for having us. Open AI CEO Sam Altman taking the stand today in Elon Musk's lawsuit against the company. The trial is just one of the legal headaches. Altman is facing with his personal investments, now facing scrutiny from Republicans.

Kate Rooney joins us with Altman's legal woes, Kate. Hi, Melissa. So we did hear from Sam Altman today in this trial. He was inside the courthouse here in Oakland. His narrative really centered on Elon Musk's attempt to control OpenAI, especially in the early days. He testified today that merging OpenAI with Tesla came up multiple times in the company's history. Musk at one point wanted a 90% stake in Open AI. That changed at times, but Altman said it was always a majority that he was looking for.

Altman also said that Musk was, excuse me, Altman was extremely uncomfortable at the time with those attempts by Musk, according to Altman. During that testimony, Musk thought that the AI lab would fail. He lost confidence. He put a 0% chance at one point of Open AI succeeding. And then he left the board. Altman says to start an AI effort within Tesla as Alman put it in. today, Musk abandoned Open AI, quote, we were left for dead, says the lawsuit right now is

driven by jealous attempts by Musk to, quote, beat us down while he was building a competitor, which of course is ex-AI, Musk's AI company there. He is suing Open Eye and Altman on grounds that he was deceived. He's accused Altman of betraying Open AI's founding agreement and to, quote, steal a charity. Cross-examination guys got extremely tense between Sam Altman and Musk's attorney today, Altman's personal investments were a major focus. He said earlier today, Altman said that he has a direct interest in Open AI through a startup incubator Y combinator, no dollar amount attached to that guys. But lawyers pointed out that that was not brought up in front of Congress when Altman actually testified last year. It does come, you mention those financial

woes. The Wall Street Journal now reporting congressional Republicans are investigating Altman's personal investments and then possible conflicts of interest in having OpenAI actually back the companies that Altman is invested in. And during that testimony, he said earlier his stake in some of the companies doing business with Open AI amounts to roughly $2 billion. You've got Helion Energy and Reddit among those names. He is also an investor in Cerebrus. At one point we heard, considered a potential merger with Cerebris. That company, of course, set to go public this week, guys.

What is a talk hate on the impact this will have on a road show, you know, Open AIs IPO? Yeah, that is the big elephant in the room, I would say, Melissa, for Open AI at this point. Company is set to go public, and there are the legal merits of this on one side. But Open AI's leadership right now, Sam Altman, of course, the face of this company, looking to take the company out a road show as early as this year from what we're hearing. So that really, as we talk about this legal case, that is one of the big hangups. And, of course, we'll see what happens with the actual liability here. But the remedies that Musk is asking for, one of those is actually removing.

Altman as CEOs. So it is a major hangover. We're expected to hear the result of all of this, you know, with the next week or so. You can probably hear the protesters behind me. I see them too. Oh, there we go. Yeah, they are. It's been all week. This is the other, outside of the courtroom, we've had some drama inside. We have a lot of protesters, a lot of strong feelings about Elon Musk and AI. I'm sure. Kate, thank you. Kate Rooney. Up next, details on the major shakeup at the top of the FDA and the impact. that it could have on drug approvals.

Plus, we'll break down the big impact. Just one stock has had on dragging down the health care index this year. Closing bell overtime. Be right back. Welcome back to overtime, the health care sector on the mend for today, at least, significantly outperforming the broader market. That's welcome news for health care investors. It's just one of two S&P sectors in the red this year.

Big reason for that. Eli Lilly, it's the largest holding by far in the XLV ETF, outweighing Johnson & Johnson by 4.5 percent, significantly higher than the other top holdings. Abb, the United Health and Merck, and that's why Lilly's more than 7% decline year-to-date isn't being offset by some of the big gays investors are seeing in some of those other names. Obviously, Lilly had been a champ in the GLP-1 space, and then this year it's really fallen on hard times. It's the launch of its oral GLP-1 has not really been appreciated by investors.

For sure. Started showing through in terms of what people were expecting the uptake to be. Also a reminder, I mean, that the concentration of the market is present on a sector basis, too, in a lot of sectors. If you just look at, you know, consumer staples, it's all Walmart and Costco, for example. So it's definitely been swung around. But on the other hand, I mean, medical devices, I think, are hitting new lows, too. So there's stuff that's plaguing other parts of health care that's keeping it, I think,

from, you know, from acting as a little bit of a catch for the rest of the market. Well, speaking of health care, the head of the FDA was scheduled to testify before the Senate Appropriations Committee tomorrow, but now he's out of a job. Angelica Peebles has the details on this, Angelica. Yeah, Melissa, that's right. Marty McCary is out as the commissioner of the FDA, and top food regulator Kyle Diamantus will step in as acting commissioner. I talked to a senior administration official who said there isn't one issue that led to McCarrie's ouster,

but it was really the results of many issues over time. And one that we haven't talked about as much on this show is abortion. So there's this one influential group, and they had been calling for McCarry's resignation after reports that he slow-walked a safety review of the abortion pill that's myth of Pristone. And that group today saying that it looks forward to a new FDA commissioner who will put an end to mail order abortion. And despite some of the recent controversial drug application denials that we've seen, my sources

on the pharmacide say that they're not that thrilled about a shake-up right now. And that's because the industry is in the middle of these negotiations to reauthorize Padufa, and that determines the fees that drug makers pay in exchange for their FDA reviews. And there's also the question of who's next, right? That administration official telling me that it's too early to name. many potential replacements, but they hope to name a permanent successor within a matter of weeks. Remember, that is a Senate confirmed position, so they still have to get through the Senate, and that, of course, is always precarious guys.

Padouf is a big issue, Angelica, but at the same time, you did see biotech sort of a little firmer today on the back of this news, just because the notion that there have been so many, you know, you turn reversals by the FDA under McCarrie, you got to think that maybe the next guy might offer some more stability or some more clear. lines to approval. I mean, repulamine, as we saw before, is up 9% on the back of this. That's certainly the hope is that you will see some more consistency going forward, but you also still have big outstanding questions of who is going to lead those centers because you have vacancies. Well, you have acting people leading the centers for drugs and the center for biologics.

And so who is going to take over as full time in leading those? And of course, who is going to be at the top of the FDA? Is it going to be someone who people see as more of a mainstream? stream pick or is it going to be someone who's more aligned with Maha? It's hard to say at this point, and that's what everyone wants to see. And in terms of the people who are the companies who have already seen some of these reversals, you know, the question is, are they really going to go it again? Do you think that someone's going to come in and say, you know, forget those other decisions. We're going to come in and that's going to be my first action is to approve, you know, to reverse those other reversals, if you will. So there's a lot to be seeing what actually happens,

who they pick and how they sort of fill out some of those holes at the top. Angelica, are there kind of categories of treatments or things lined up that are basically in play right now in terms of waiting for approval or waiting to submit where it seems like the stakes are particularly high in terms of what choice is made to head the FDA? I don't know if I would call it specific drugs, but the thing that I'm watching is what happens to these new commissioners priority review vouchers, right? These are the national priorities, this new program that McCarrie set up last summer. And it was a pilot program. They actually have a meeting scheduled on the books for June where they'll talk about how that program's going and what happens. And, you know, some people would say it's a good idea to try to, you know, get some of these approvals of these drugs on the market faster. But I think the sense is, you know, where's the line, right?

What are these priorities? And it's been seen as potentially a political tool, right? You saw with the GLP1 drugs, for example, Lily got that faster approval in exchange for that deal that it struck with the administration. And so that to me is a big question mark. Do they move forward with it? Do they tweak it at all? And so anything in that bucket, whether we see that move forward, I think it's something that I'll certainly be watching.

Angelica, thanks. Angelica Peebles. All right, Cisco shares have been on a roll, up 20% over the last month and hitting a new high today. But it's the big name on tomorrow's earnings calendar as well, and we'll discuss what to expect from that one straight ahead. Plus, shares of Wendy's surging on a report Nelson Peltz's try-in fund management is trying to raise funds to take the fast food company private Peltz,

trying co-founder Peter May, and trying itself own roughly 40% of Wendy's shares combined. Despite today's gain, the stock is down more than 30% over the last year. Closing about overtime, live in the NASDAQ market side will be right back. Welcome back to Overtime Under Armour posting its worst day since April of last year after missing fourth quarter revenue estimates, the company forecasting a drop in annual sales as it struggles with weak spending and macro uncertainty. Another outleisure name losing some steam today on holding, despite beating analysts' expectations for first quarter earnings. The company also raising its profitability outlook and reiterating its 2026 net sales growth forecasts,

even as it faces, quote, an uncertain macroeconomic backdrop. The company's investments in the Asia Pacific are paying off. Net sales in the region increasing 44% thanks to momentum in China and South Korea. But Under Armour is lagging behind revenue. Asia, Pacific, only increasing 13%. It is expecting only a single-digit growth rate for fiscal year 2027. So it feels like there's a lot of macro involved here. There's some sector sort of just slowness and lack of newness here. Without a doubt, I mean, under Armour, it's down 90% plus from its all-time high, which is like 11 years ago. I mean, so the mid-2010s. So clearly that brand

has fallen on hard times. What is more interesting maybe is like something like onward where it isn't more of a new entrant. It had a little bit of buzz for a while. I'm not, you know, on top of it enough to know if this is like a broad pendulum swing in fashion or away from just people loading up on this category of stuff. The concern is the U.S. business for on really slowed down. It was up 3% versus 33% a year ago in the same period. So that's a market slowdown. DTC direct to consumer was also slow. So those are all concerns. Also hampering Nike's attempted comeback. Big picture. Well, let's get you set up. with tomorrow's trade today when we'll get another key reading on inflation. The April producer

price index has seen rising 0.5% from March, excluding food and energy prices. Economists are expecting the core PPI to increase 0.4% from last month. And Cisco is the big name on the earnings calendar, and we'll be breaking down those results right here during closing bell overtime. Alibaba, Nevis, Stubhub, and Birkenstock also set to report tomorrow. Investors will be paying close attention as well as Cisco's numbers to see if it can keep up its recent momentum. The stock closing at a new high and is up roughly 20% over the last month and really so representative of these Web 1.0 hardware companies that all of a sudden are in vogue again. Obviously, we talk about Micron of Western Digital and Sandisk as well.

Yeah, exactly. I think the PPI will be very important in the context of today's CPI, in the context of all the inflationary signals. We'll see if rates will get a bid off of that as well as oil. So yeah, PPI is always useful because you can kind of project ahead to the PCE consumer inflation number and then bond markets often take their cue from there. We did finish about 5% on the 30-year Treasury today as well, in addition to 445 or so on 10s. That's going to do it for overtime today. Fast money begins right after this quick break.