Closing Bell - Closing Bell: Final Two Months of Trading 11/3/25

Episode Date: November 3, 2025

What will these final two months of trading hold for investors? We discuss with Trivariate’s Adam Parker, NewEdge Wealth’s Cameron Dawson and Invesco’s Brian Levitt. Plus, Amazon surged following its first-ever deal with OpenAI. Big Technology’s Alex Kantrowitz breaks down what he thinks this partnership could mean for the AI arms race. Goldman Sachs’ Tony Pasquariello reveals his message to investors as we kick off a new trading month. And, star analyst Dan Ives tells us why he’s raising his price target on Palantir ahead of that company’s earnings in Overtime.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, Brian, thanks so much. Welcome to closing bell. I'm Scott Wobner live from Post 9 here at the New York Stock Exchange. This maker break out begins with all AI all the time. It's again at the center of this market today. NASDAQ is the leader. Take a look at this scorecard. There it is with 60 to go in regulation.

Amazon, the big winner surging after announcing OpenAI will invest $38 billion into AWS. Market likes that. Stocks up near 5%. Invidia having a good day as well. Also among the day's top performers. It's up about 3%. How about Tesla, Micron, and Uber? They are nicely green, too.

Elsewhere, the deal of the day, Kimberly Clark buying Kenvue for $48.7 billion. It takes us to our talk of the tape. What the final two months of the trading year will hold for investors. Let's ask our panel, CNBC contributor, Trivariates, Adam Parker, New Edge Wells, Cameron Dawson,

and in Vesco's Brian Levitt, one and all. It's good to have everybody here. Cameron, you first. We seem to be set up pretty well for the final two months. Is that how you see it? Well, I think when we put together seasonality, which we know is typically very good in November and December, you add in the fact that there still is signs of positioning just being neutral,

meaning institutional investors are definitely not absolute overweight at this point. And now you have this earnings lift where earnings estimates continue to get revised higher, which just means that it's a good backdrop for risk-taking. So you're seeing cyclicals outperforms, you're seeing, you're sort of. still seeing high beta names, outperform low beta names. So all of this suggests that there's a continued drift and chase higher. What do you make of some of the talk about these divergences within the market? Brian, Jonathan Khrinsky, at BTIG, has a note, Brian, I'll go to you on this.

November could be a down month, he says. The S&P 500 hit an all-time high. This is last week. Yet 33% of its components are down 20% or more from their 52-week high, and 24% are within 10% of a 52-week. week low. We're all hyped up on where the hype is. Right. But everything else doesn't look that great. Everything doesn't look that great. We have to remember that we've been in a soft patch for economic activity. We knew things were going to slow as we moved into this, you know, through the

summer, into the back half of the year. That was what a lot of the concerns over, over tariffs and a Federal Reserve that didn't want to ease. So you have not had a robust growth environment And in a pretty benign, you know, in a modest growth environment, investors tend to look for companies that can generate growth. So what the hope is, as you move into 2026, some policy support from the Fed, some policy support from the One Big Beautiful Bill Act, perhaps you start to see leading indicators pick up again, and there are valuations that are more attractive outside of the big names.

Does it matter at all what I just talked about, what, you know, Jonathan Krenski says? Remember that was that day last week or the week before where you had like the worst breath day on an up day in like forever. You had, you know, the stocks we keep talking about, all AI all the time, looking great. And then a lot of other stuff under the service doesn't look so good. Does it matter or not? Maybe it doesn't. I'm not suggesting by asking the question like in a leading way, expecting you to say, yeah, it matter.

And maybe it doesn't matter. Well, I didn't, a couple months ago, you asked me a Khrinsky question. I didn't know who it was. And I said I didn't know it was. And I said I got crap about it and then I connected with him. So now I do know who he was. All I good. So I don't want the first thing I say after I know him to be critical of what he said.

All I'll say is I'm not sure that I can predict subsequent one-month market return with breadth indicators. Okay, consistently. I think what's going on is the big eight companies, you know, Broadcom plus the Mag 7 are 42% of the SEP market cap and 55% beta adjusted. So of course that it's an AI market because these stocks are massive and their volatility around earnings is massive. It's very hard to predict quarter quarter. Think about Q1. The narrative was meta's awesome and Google's missing it. Now Google is awesome and meta's missing.

So for you to consistently get in out of these, that's why we've been mostly saying let's keep around market weight and make big active bets elsewhere. I think the important thing about what Krinsky is saying, the number of companies that are lagging by 20% or more is really high versus history. So if you're a good short-seller or if you're someone who kind of has a long-only approach, you can really avoid the blow-ups, I think, better than normal. I think it's a better-than-normal stock-picking environment right now. You had made the point, Cameron, that low-quality has been leading. Does that matter? It does matter because it's a reflection of risk appetite, but it also matters because it tends to not last forever.

Low-quality is a here-for-a-good time, not-for-a-long-time type of trade. And we learned that in 2020, 2021, and then these reversed completely in 2022. And so this market coming off the April lows has been absolutely defined by speculative, low quality, very high beta. Companies in the NASDAQ composite with no revenue, not just no earnings, but no revenue are up 57% this year on average. That's a function of clearly we're swimming in liquidity, but we also have to realize that when this reverses, eventually, because it always does, when this reverses, there will be. significant downside in those areas. But only in those areas. I mean, that, if you want to talk about like similarities and differences between 99 and that period in the run up and the creation of the bubble and then

the blow up, that's an area that maybe you could point to. What Cameron just said, all these companies, they don't even have any revenue and they're up that much. Like, when do you have to pay the Piper and show some revenue before you, you see those declines potentially hit the market? I mean, I agree with Cameron that at some point you will see it happen, and it'll happen with somebody stubbing their toe in this, or it becoming clear that artificial intelligence perhaps doesn't provide the capabilities that many expected to. I don't, that's not my forecast, but at some point, you'll have a trip up in here, and then the AI trade will, will extend once you have some type of correction. Are you at all worried about either the lower quality, in quotes, nature of the move, or as I said, and Krinsky lays out the divergences that we've seen, that you have an extraordinarily top-heavy market.

I think we all know the reasons why. The question is, does it make a difference? Does it lead to more fragility under the surface of a market that thus cannot afford any hiccup whatsoever? Well, the top-heavy names are well-funded, well-capitalized, cash-generating businesses that historically have had pretty good moats around their business. Now, the challenge becomes as they all start to compete in the same space, but as we see in the earnings, the earnings continue to be quite strong. So I'm less concerned about what's concentrated there.

I'm also less concerned if you want to compare valuations between the late 90s and what you see today. I mean, you had the NASDAQ trading at what, you know, 60 times priced earnings compared to 30 times price today. I mean, it's not in the same vicinity of what we see. saw in the late 1990s. But yeah, at some point, these low-risk names will see a correction to Cameron's point. That's just how it goes. I think quality matters, especially in the smid-cap and lower. I think what Cameron's talking about is if you're a smit-cap growth PM,

you can't beat the index because everything that's outperformed is profit-less is, you know, really low quality. But in the S&P 500, you know, we just said the biggest eight names are so huge. Quality doesn't really matter that much today, only because size and growth matter. And so once you account for that, there's not that much left over for quality. The other thing I'd say is that in the market, the going from low quality to high quality gets more multiple expansion than just maintaining high quality alone. So the market's telling us, I agree with Cameron's conclusion, that earnings expectations could be too low or that there's a chance that things get

better maybe because that's why low quality stuff works. People are saying, hey, I'll buy something that looks bad and gets better as opposed to just paying 30 times for something I know that's awesome. So you also, I mentioned companies lagging, but there's also a lot of companies that are beating their industry by 20% or more versus history. So it's a great stocking environment.

I think all we're saying is that there's eight massive companies. So yeah, if $4 trillion goes down 10%, that's $400 billion, and there aren't a lot of other things that can go up $400 billion to make up for it. So that's what will happen when we get, you know, when the market sells off,

it'll be the AI stuff that sells off. Well, I mean, a lot of them are going up today. Well, certainly, I'll come back to you guys in a minute, because I do want to touch on Amazon. We mentioned top of the show, surging following its first ever deal, with Open AI. And speaking of Open AI, an exchange over the weekend between its founder, Sam Altman, and our friend Brad Gersoner on the BG2 podcast went viral. Watch this.

I think the single biggest question I've heard all week and hanging over the market is, you know, how can the company with 13 billion in revenues make $1.4 trillion of spend commitments, you know, and you've heard the criticism, Sam. We're doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I'll find you a buyer. Revenue is growing steeply. We are taking a forward bet that it's going to continue to grow and that not only will Chachapiti keep growing, but we will be able to become one of the important AI clouds that our consumer device business will be a significant and important thing,

that AI that can automate science will create huge value. So, you know, there are not many times that I want to be a public company, but one of the rare times it's appealing is when those people that are writing these ridiculous open AI is about to go out of business and, you know, whatever. I would love to tell them they could just short the stock and I would love to see them get burned on that. We might screw it up. Like, this is the bet that we're making and we're taking a risk along with that. A certain risk is if we don't have the compute, we will not be able to generate the revenue or make the models at this kind of scale. If you guys were, you know, are doing in excess of $100 billion of revenue in 28 or 29, that you at least would be in position.

What? How about 27? Yeah, 27. Even better. All right, that was an interesting exchange. It certainly got our attention, and I know a lot of yours, too. For more on all of that, let's welcome into the conversation, CNBC contributor, big technologies, Alex Kanchowitz. It's good to have you on.

I'm curious, your reaction to Sam. throwing some shade at the prospective shorts when and if they ever do become a publicly traded company? There was a lot of substance in that answer, but I think the casting aside the question at the beginning was frankly ridiculous. I mean, it is a very fair question. Open AI is planning to spend more than trillion dollars on data centers. The latest reported number we have is $13 billion of revenue this year. And so I think it's a totally fair question to ask, how are you going to get there? For Sam to swat it aside and say, you know, this is something that the shorts will be proven wrong on and I'll find someone to get your shares. I mean, he is the CEO of a company that's reportedly valued at $500 billion, which is my IPO at a trillion dollars as soon as next year. So he has to have a little bit more discipline when it comes to questions like this. I mean, it is interesting, too, that he corrected or tried to anyway, Brad, about the year in which they would, you know, have that number in terms of their revenue.

But it did strike many that he came off as defensive by answering the question, which you suggest, is just a simple question that if he, frankly, was in front of anybody, whether it was a tech investor, podcaster, journalist, he'd be asked that same question. And I will say, Sam does get like this when people ask him business questions. He tends to want to refocus the conversation back on technology. And given the technology that he's building, I understand that. However, that worked up until a point that might have worked when. opening i was a smaller startup or even just until the point it is now but now it is a company this

week basically or last week kicked off its march towards the public markets it is going to IPO in the next coming years and so if you're a company that wants to be on the public markets there's a certain amount of discipline that you need to have when you talk about these numbers and that is not going to work for a very long time uh the way that it might have worked up until this point for sam it's kind of like yeah it's like dude you're a 500 billion dollar company Exactly. Like, get used to these questions. And if you think these are tough questions, wait until you actually hit the market.

It may be a trillion dollars. Which brings me to the last question for you. What about the idea of a possible bubble, but in the private market? Well, that's why I think that it's important for Open AI to be on the public market. I mean, a lot of the risk that's been involved right now has been in the private markets. And it's also been taken secondarily by some companies. Now, we think maybe they're investing their profits, but we're not entirely short. and it's, of course, booing a large part of our economy and stock market.

So from that standpoint, if Sam does put open eye on the public markets, will at least have a little bit more rigor into this conversation, and the risk won't be potentially overinflated in the more opaque private markets, and it will be out there for everybody to be able to see, investigate, and then make decisions about how to invest accordingly. I'll give you a bonus question because I lied. That was my second to last one. My last one was your reaction to what you got today with Amazon.

Amazon, AWS, this first ever partnership between the two. It's very interesting because, again, Anthropic was a big part of this Amazon build-up. Anthropic and Amazon have been trying to figure out how to build for AI development for a long time. And, of course, Anthropic and Open AI are archedemesis. And now OpenA.I. is going to go work with Anthropic, but also Anthropic is working with Google. And Google has its own model and its own right. So I guess this is going to continue for a while. The AI build out will have this frenemy style approach.

But eventually, I just don't see how this continues to continue to move forward in harmony. Alex, good to have you. We'll see you soon. Thanks for joining us. I appreciate that. That's Alex Cantewitz. We'll go back to our panel. You have thought on all that?

I just feel when I listen to this, I think all the stuff that I used to believe, it's like minus one times that. I used to not like it when management teams criticize the sell side. Like, who cares? He's now proactively before he's public, create exciting short sellers. On the other hand, he said we're going to do, I think what he said, is, you know, we're going to do $100 billion in $27, and people pay $12 to 15 times that if they were what grades going. So he just told you the IPO's $1.5 trillion, not $1 trillion. I mean, you know, like, I'm in a pretzel. Like, he gave totally diametrically opposed things at the same time. I've never heard it.

You know, I made the same joke last week when InVIDIA, I'm like, well, why can't Open AI invest something in TriVari? Like, everybody is $38 billion for everybody. So, like, there's all these data points that historically would have made me very cautious about somebody this promotional. But on the other hand, like, if they're doing $100 billion revenue from 13 last reported in 27, the thing's trading more than a trillion in this market. It's like Oprah throwing around the $38. Yeah, I'll take $30. Yeah, I'll take the trillion. You get $38.

Totally. Well, I'll try it. We'll take some of that. We don't even need a trillion. We'll take a billion. You know, so it's crazy. But I think if the growth rates like that in this tape, it's going to be worth a lot. And I think more than the numbers you guys are saying.

You guys think about private market stuff at all? I mean, we've certainly seen a huge run-up in the valuations within private markets, and we've been benefiting from that with venture-type of investments. But for us, I think the biggest concern or the biggest watch item is that you have all of this public market businesses where you have effectively capital-light monopolies. We're using all of that cash flow to now invest in capital-attensive competitive businesses. And to us, that spells degradation and return-on-invested capital. And so I don't think that that's something necessarily that the market is contemplating at this time.

Let's spin it forward and talk about something we haven't at all as we think about what could happen in the next couple of months, the final ones of the year. Did Chair Powell throw a wrench into any of the Bull's plans last week? He was decidedly hawkish. I don't think so. I mean, the Federal Reserve is kind of driving in the fog right now. We're still waiting to get information through this government shutdown. But my expectation is the Federal Reserve is going to still bring interest rates lower more towards what we would consider to be a neutral rate. I'm not necessarily sure I care whether it's December or whether it's the meeting after that.

Ultimately, they're going to look to bring rates towards what we would consider to be more neutral would give you at least 100 basis point spread between the funds rate and the 10-year treasurer. What if the schedule is pushed out even further because of the shutdown? certainly. But also because they want, and he's probably not the only one, it sounds like, they just want some more information on inflation. They don't feel confident enough to start saying, yeah, well, it's more likely that we're going to continue this path of cutting rates. I would be a lot more concerned if inflation expectations were breaking out in the bond market, and they are not. They continue to be remarkably stable. When we saw the markets get into trouble in 2022, it was when inflation expectations broke above two and a half heading towards

3%. If you look at the three-year, the five-year, they've been remarkably stable. And the Fed's comforted by that. If we continue to see weakness in the payroll numbers, you'll see from private sector reports, the Federal Reserve is likely to continue to ease. Look at that. Austin Goolsby, he's on the tape right now, as a matter of fact. The threshold for his Chicago Fed Press. The threshold for cutting in December is higher than in October. Does that make you think any differently about the fuel behind this rally? Not really. Not really.

I agree with my University of Michigan go blue. You go blue colleague over there. I don't think it matters unless there's a complete shift to the sentiment about the distribution of outcomes for the Fed, unless we think we're really, really toward the end of it. And we're going to anticipate that eventually they're going to start hiking. I think people's view is going to be that pillar that the Fed's kind of on my side, there. So I don't think it really matters that much. And they have this excuse of a data vacuum from the government and other stuff in the interim. So I'm with you. Scott, it seems to matter a bit

more right now for small cap stocks than it does for right the big big large mega cap names. So anytime this happens, we'll see an adjustment of rates. We'll see small cap get hit. But ultimately, I believe we know the direction of where the Fed funds rate is going. Lastly and quickly, I mean, the 10 years ticking above 4.1 percent, it might change the near term narrative for rates. Well, I think that rates are very sensitive to economic surprises, and that's hard to say, given the fact that we haven't had economic data, but look at Atlanta Fed, GDP now printing at 4%. So if you get better economic data, rates will likely move up. If weaker economic data, you'll see downward pressure on rates. All right. Everybody, thank you. Good to see everyone. Everybody here at Post 9, Adam, Cameron and Brian. We will see you all soon. To Sima Modi now for the biggest names moving into this close. Hi, Sima. Hi, Scott. Let's start with IDX Laboratories leading the S&P 500 today after strong third quarter results, raising.

its full year profit and revenue guidance. The pet health care company is on pace for its best day since August, up 14%. Meantime, Moderna shares on pace for their worst day since September. The move comes after a sharp move higher last week following a stat news report that the drug maker had held talks with a large drug maker on a deal of significant scope, including a potential buyout and the company is set to report earnings on Thursday. And rounding out with shares of Adia, which are currently trading down by 60% at the company announced it is suing AMD, alleging patent infringement. Adia CEO said in a statement, AMD's products have made extensive use of Adia's patented

semiconductor innovations, which have greatly contributed to their success as a market leader. CNBC has reached out to AMD for comment. Scott? All right, Seema, thank you. Sima Modi. We're just getting started. Up next, Goldman's Tony Pascarello. He joins me right here at Post 9.

What is his message to investors as we kick off a new trading month? You'll hear it first next right here. at the New York Stock Exchange. All right, welcome back. We stick with the AI trade. Do you, even as the market has gotten increasingly top heavy? You do. That is the call today from Goldman's head of hedge fund research. Tony Pascarello. He's here at Post 9. That's your basis of the call. It's like, I know it's so top heavy, and I know it makes some people an easy, but you've got to stay with it. Is that like a decent way of summing it up? I think it's fair. There's no doubt the market's top heavy. There's no doubt it's concentrated. We know this, right? Ten companies comprise 25% of global equity market cap. And it's been narrow, right? So here we are, November. You look back since the start of September. Equally, S&P's dead flat. Some is up 25 or 30%. I'd say two things about this. Number one is, if all someone does is kind of lament the fact that we have a top-heavy market, you've missed an incredible opportunity set for the past three at 15 years. They are out there. They are out there. Because we've heard about it. We've heard about it for the better part of that. period of time. That's right. And the second thing I would say is we talked about this last time I was on the show. If you go back to start 2009 and again, NASDAX up 16 of 17 years,

and you ask, why did that happen? Only 10% of that is valuation. 90% was earnings growth or dividends. So quite literally, the stocks at the top of the index have earned their place and I'm just not willing to shoot against the revenue story. Because the most important point I think you make is the one at the very end of the notes that I have from you to our producers. Does this history book tell us that highly concentrated markets have to end badly, and you say no. So I think any basic study of breath, and people throw this term around, it's not obvious to me, it's some particularly high quality lead indicator. You can look at long periods of market history.

You can remain concentrated for a long period of time. It happened in the 90s, it happened in the 70s, and the history book doesn't tell you this portends a big sell-off. Sometimes it sets up a momentum reversal, some of the kind of rotations we've seen, but it doesn't tell you the market has to tip over necessarily. When you have a day like we did, as I was discussing with the panel earlier, where you have like the worst breadth ever for an up day, somebody like you looks at that and what's your conclusion to that? Well, it is, again, through the prism of an equal weight index, it's obviously unequivocally bad news. I think the key is you just need to keep your eye on the ball, which is U.S. mega cap tech.

Then I would take a step back and I would say, okay, if I want to be negative, if I want to take that as a signal to be negative the market, I'm going to show you. shoot against four big forces. I'm going to shoot against the Fed, so I'm going to violate rule number one. I'm going to shoot against an expected cyclical upturn in the economy. We believe that's coming in 2026. I'm going to shoot against all of this capax. As we know, that train just picked up more speed last week. And I'm also going to shoot against the flow of funds, which is every day we walk in the office, retail buys the market, and corporates by the market. So, Scott, you know I've been around a while. It's really hard to pick tops. For my money, Again, keep your eye on the ball and stick with the freight train that is U.S. Mega Cap Tech.

You weren't thrown at all by Chair Powell last week? I think it was a concession to reality, which is he has a very split committee who's operating without a whole heck of a lot of data. Our view is it's still highly likely they cut in December that makes 75 for this year, 175, including the adjustment cuts of last year. Let me ask you a question. Why do you think it's highly likely? When he says it's not a foregone conclusion, and went out of his way to follow that up with far from it. Sure. Well, I think he was smart to buy himself five or six weeks of optionality because a lot, every day is it's on ecosystem. Now a lot can happen in six weeks. But I think the point is this. We're at three and seven-eighths.

I think most people assume neutral is call it 3%. Everyone's worried about the labor market. So I don't know if it's Powell or the next person. I presume the next person will be on the margin more dubbish than he will. But what I'm saying is this is our forecast. There's a lot of roads that points of them getting to 3%. What do you make of the lower quality stocks doing well, the higher beta, but lower quality? Does that concern you at all?

I think some of it is symptomatic of positioning. I think what we've seen in the ferocious rallies from these stocks is, again, people were short that. The systematic community was short that when the retail investors sinks their teeth into these, as we saw in 2021. You need to be very careful. It's not a high-quality signal, but again, it kind of flares up every now and again. And I don't think it changes the big ball that I laid out originally. If the Fed is going to change the schedule even a little bit, does that screw up the cyclical trade in any way, these other areas? I mean, obviously it's having an impact on the Russell.

I think we would both agree with that. Yep, that's fine. But what about the rest? I think it's a question of why. If they skip December or they ultimately don't get the 3%, why is that? If that's because inflation comes back around, I think that's a problem for risky assets. If it's because the labor market's actually not as bad as we fear, then I think cyclical assets are fine with that outcome. How would you assess sentiment based on who you talk to?

Head of hedge fund client coverage at Goldman Sachs. That means you talk to the best and biggest investors in the world. I know some of them that you talk to. How would you assess that? I think within the hedge fund community, people are long. People have skin in the game. If you said, hey, on a scale of down, 10, up to and calibrate that, I'd say it's probably a plus six. plus seven in the hedge fund community. So not over the skis, but certainly involved in the rally.

I don't buy this broader argument that this is some underloved, hated rally. That's Tom Lee's been making that argument, including right here with me, I think, just this past Friday. I look at U.S. households. You can see this at the single stock level of the market. Again, some of that manifests in those popular shorts. You can see at the fun level of the market. So every week, about 15 to 20 billion flows into equity mutual funds and ETS. And then I look at the options market, held huge sway in recent months. Going into last week, the cost of upside insurance was more expensive than downside insurance. That's a tell about retail risk appetite. Have you put to bed any concerns you had about trade and tariffs? Has it become a non-factor for market performance

at this point? I think so. I think it's been several months. I mean, it does. It flares up every now and again. We saw some of that escalation into the Apex Summit. So on a random day, on any given Sunday, can reappear. I think the big ball is the economy performed much better than expected to the worst of it. Now that's behind us and it's generated revenue. And you think it's going to continue to pick up into the new year for all the resournings can continue to grow. You're going to have the Fed as your friend with schedule or not doesn't really make much of a difference and then all the cap-ex behind AI. I think that's right. Again, not an undemanding setup. I don't think risk reward is as good as it was three months ago or six months ago. I don't think this is location necessarily

to add a ton of risk, but the Fed is easing rates, so financial conditions are easy. Growth should pick up speed below trending Q4 because of the government shutdown to basically trend next year. And that's the CAP-X story and then basically the flow of fun story. Why wouldn't you pick up a ton of risk heading into the new year? What's that thing that prevents you from wanting to do that? Just were up a lot? The stocks, their valuations at that end of the market have gotten a little rich? I think that's right. I think that's right. Now, I've kind of have this mantra of I want to be responsibly bullish. I'd be lying if I said, On certain days, I didn't think to myself, damage the torpedoes, I should have just been irresponsibly bulged because your NASDAX up seven months in a row.

But I'll choose the, I'll stick with the plan, responsibly bullish for now. Friends, don't let Friends buy Nvidia at $206 up, up to 52% over the last 12 months. Tony's good to see you. Good to see you, Scott. Tony Pascarllo of Goldman Sachs. Still ahead, star analyst Dan Ives. He's here. He ups his price target on Palantir ahead of earnings after the bell.

He'll get you up to speed on that report coming up. Coming up next deal of the day. The big money details behind a $40 billion tie-up in the consumer space. And later, we'll get you set up for Uber earnings. They are tomorrow before the bell. Closing bell will be right back. Welcome back now to the deal of the day. Kimberly Clark agreeing to buy Tylenol owner Kenview.

Bertha Coombs has the details of this merger Monday deal, Bertha. That's right. Scott, Kimberly Clark offering $40 billion, just over $21 a share for Kenview, $3.50 of that in cash. But Kenview trading nowhere near the offering price as investors weigh the pros and cons of a potentially combined company. Kimberly Clark's CEO, David Shoe, says it would be the largest pureplay consumer wellness company with $32 billion in annual revenues with 10 major billion dollar brands, including Kimberly Clark's Huggies and Continental, and Kenvue's Johnson's and Thailand. But those two brands add litigation risk. Kenview is being sued in the UK over its baby powder when it was spun off from J&J two years ago. J&J assumed responsibility for U.S. and Canada litigation, but not other countries. Kenview maintains its powder is safe and no longer contains talc.

Meantime, Kenvue's Tylenol the target of a lawsuit in Texas over allegations the pain reliever is linked to autism, a notion promoted by President Trump last September flanked by Robert of Kennedy, despite scientists calling those claims baseless. Still, it has weighed on the company's stocks. And today, Kimberly Clark actually hit a new low on this announcement. The companies say they expect the deal to close in the second half of next year, Scott. All right. Bertha, thank you very much.

Bertha Coombs, as we watch the activity on those stocks. And don't miss an exclusive interview, by the way, with the CEO of Kimberly Clark. It's coming up this evening, Mad Money, 6 o'clock. in time amid some doubt, frankly, in the analyst community as to whether this transaction can work, whether it can work. And that's why the stocks are reacting perhaps the way they are. Up next, we're tracking the biggest movers as we head into the close. Seema Modi is standing by again with that. Hi, Seema. Got 19 minutes left in trade and crypto companies are redefining their role in the buildout of artificial intelligence. We'll unpack that story after the short break.

We're now the closing about market zone. CBC senior markets commentator, Mike Santoli, here to break down these crucial moments of the trading day. Plus, Sima Modi back, counting down to Palantir's numbers, hitting just a few moments from now. Wedbush's Dan Ives is standing by right here at Post 9 to tell you what he is expecting from that report. And McKenzie Segalis, pushing ahead to Uber results tomorrow morning.

Your first take, Michael, on this market day is what? It's kind of like the same take about AI. I mean, it's about AI. It's a continuation of last week's tone, which was, you know, you get a couple of the big consensus AI winners that are supporting the S&P. The rest of it's kind of ragged below the surface. Pretty hard to escape the kind of mini slow-moving growth scare that's hitting parts of this market. Restaurants have been doing nothing but going down. We know about that.

So the wear and tear of soft labor market government shut down, we don't really know if we're getting a Fed rate hike. I don't think it's a panic. It's definitely still in the context of rotating. but another weak breath day that doesn't really seem to matter for the index trend. Yeah. Back, you want to tell me about Uber and the expectations there? So, Scott, the street is bullish on Uber's Q3 print with both Bank of America and UBS calling for a modest beat, fueled by a strong ride share demand and more users actively booking trips and placing food orders through the app. Even as DoorDash continues to take share, Uber's delivery category is expected to stay resilient.

An autonomous driving, it is now central to Uber's long-term. vision. Last week, Uber and NVIDIA announced plans to build 100,000 nearly driverless vehicles starting in 2027, a clear sign that company sees a future beyond human drivers. And while the AV race is heating up, UBS says the Robotaxy threat remains muted for now. Plus,

with rising membership in Uber 1, analysts say its margins and user growth could both improve those shares got up nearly 60% year today going into earnings. All right. Speaking of earnings, Thank you, Mackenzie Segalis. We do have Seema Palantir on deck. And the stock just hit a new all-time high ahead of the report, which is out in a couple minutes, Scott. It is now the most expensive stock in the software sector at 82 times forward sale.

So the bar is really high. Wall Street is expecting a nearly 70% jump in quarterly earnings, fueled by defense spending and bigger government contracts. Key topics will look for clarity on from CEO Alex Carp. Impact, the government shutdown, how is addressing privacy concerns, and whether Palantir is planning to use the roughly. roughly $6 billion of cash on its balance sheet, RBC Capital thinks retail investors may start to become frustrated by the absence of some form of capital returns. Scott. All right, Seema, thank you. I said Dan Ives was here. In fact, he is. So there's a lot

to live up to. The valuation's big by any metric. The analyst community is expecting a lot, whether it's at the high end of expectations or even the whisper numbers above that. So how do you assess it? I mean, look, I just continue to view it. It's the gold standard when it comes to AI use cases. Look, from all of our work, 70% to 80% of every AI use case, Palantir is ultimately involved with. And when you put in, like, you're talking about in terms of the AI trade,

pieces to the puzzle, I think this is going to be a trillion-dollar mark cap the next two or three years. So in terms of the actual quarter, U.S. commercial business, that continues to really be the story here. Because, you know, as you start to look, this is going to be ultimately a, one, two billion dollar business. That's what I think valuation just over the next year. You miss what I view is really a transformational, almost historical growth.

No, but that's a lot of hyperbole around a story that you're obviously positive on. I mean, I'm talking like, obviously the expectations are, you need to see like the growth rate. Like how high does the growth rate have to be relative to where the valuation is, relative to a stock that's already up 170 plus percent year to date? Like the new orders, like what kind of growth do they need to show their superlatives aside, what about the stuff that matters most? I think U.S. commercial business is really what I view is it can be an 80, 90, 100% growler. And I think when you start just to put numbers around that, I mean, Scott, this is something

that was $25, $50 million that I believe now could be on a trajectory over the next 12 months to be a billion dollars. So when you actually put that together, that means the valuation is one where you go from two, three billion of free cash flow, what could ultimately be seven, eight billion of free cash on next few years. That's how you're going to justify the valuation. I think also with what CARP talks about, not just on the government side, but on U.S. commercial. Well, the commercial is 45% of their sales at this point. Does that take the onus off of their reliance on government spending? Yeah, I'd say 45% of revenue, 80% and 90% of the valuation.

So when you think about government business, even though it was shut down and obviously that could be a little dent, I actually think on the federal side, that's actually going to be a beat relative to all the high AI projects that were seen from priority perspective. But what the street focuses on here, it's all about commercial. It's about this company essentially disrupting the whole software landscape. And that's essentially what Cart and Palantir have done. It's so interesting, too. like it's a retail loved almost a culty angle to this stock. How do you view that? The fact that retail is so highly engaged with this name? Look, I think retail has been well ahead of

Institutional. I mean, you know, I could go back and mean, you've talked about the last few years. Institutional hated this name, hated 20, despise of 50, you know, yelling from the mount tops at 100. I do think Institutional has missed what maybe retail saw in terms of the commercial business in terms of AIP that was really transforming what Palantir is going to be over the coming years. I do think institutional now warm it up more and more to it because the reality is that you cannot just dismiss what they're doing with essentially no direct sales force. And I think that just speaks to the demand that we've seen. You have a thought on that, Michael, this cohort, this now powerful, probably more powerful than ever, a cohort in this market that support stocks

like this come hecker high water? Right. I mean, it's obviously, it's this almost self-generating enthusiasm for a very select character of stock. So I pointed out for a couple of years now, Palantir and Robin Hood were the same chart. And that just sort of shows you they're just drawing off the same kind of self-reinforcing mechanism of, hey, we're all here loving this stock. We still love it. We love it more because everybody loves it. And I'm not saying that that's without basis because Robin Hood's actual business has been growing extremely rapidly as well, as is Palantir. But, you know, Dan, if you're right about $8 billion in free cash flow years down the road, it's a $500 billion market cap right now. That's a 1.6% free cash flow yield.

That's Microsoft today when it's over-investing in CapEx on this year's number. So, I mean, that just gives you a sense of how much credit has been given to Palantir in advance, given the trajectory. Now, look, I mean, you're giving them a ton of credit. You're talking about a trillion dollar market cap, right? Because, look, my view is that you're going to have three trillion that's going to be spent in the AI revolution. When you've had software use cases, 30, 40% of that is going to ultimately be software. Now, how much is Palantir get versus Snowflake versus Salesforce.com versus Oracle? But again, it's pieces to the puzzle. If you look, not just on hyper-scalers, but Palantir, they're a core piece on the AI use case. And I just think

what Carp's doing is unlike anything we've ever seen in software. All right. Well, we shall It's going to be exciting. Thanks for leading us up to it. That's Dan Eyes. We'll finish with Santoli as we lead up to his last word. This is an interesting day. I mean, Amazon does this deal with Open AI. Stock shoots up 5%. Invita is a big winner. Elsewhere, I mean, the deal out of the Staples space is a big number. It's interesting amid serious questions about whether they can actually make it work, because traditionally companies like that have not. It's true. I mean, I think If you're a kind of traditional consumer staples, like Kimberly Clark, in this market, you're kind of guilty until proven innocent, especially when you make a big, bold strategic move like this, whether that just means it has to shake out certain types of shareholders who are just in there for the dividend, who are just in there for the steadiness and not big bold bets. That remains to be seen.

The stock looks really cheap relative to the competitors, whether that matters or not. Unclear. Yes, Amazon just gets a little bit of the fairy dust and has momentum after its report. zero bounce in meta. It's down again today. Yeah, it is. And so every day since its report, since it's ramped CAPEX guidance. So on one hand, it's positive, right? The market is being discerning who it's rewarding, which stocks it's punishing based on their strategic position. But the question is kind of how many of those metas could you absorb, given that it has been, you know, again, this very kind of concentrated market. And maybe what's going on is the rest of the

market is consolidating and resting and skimming away excessive expectations and maybe, you know, blunting some of the valuation issues to get ready to grab the baton if, in fact, you have a pullback in AI. You have seen some technical indicators in the Mag 7 of things like extreme upside option speculation, people are paying more for calls out of the money than puts. That's this kind of thing that happens when, you know, maybe a rally is time for arrest. But again, it hasn't punctured the overall index trend, I think you can still take some comfort in the fact that we have buffers here, even if, you know, you have to be mindful of the unevenness of the action. I was going to ring us out in a minute, but Uber, speaking of stocks that had, you know,

a burst and then a little bit of a rest. This thing is running into the print. It's up three and a half percent ahead of their earnings. What are you going to see? Yeah, I mean, look, I think most of the mega cap growth cohort has delivered the numbers, whether in fact it was enough, whether the guidance was aggressive enough or not. So, yeah, I do think that's now become very much a consensus name, kind of the way Netflix became, were in hyper-confidence in their ability to actually, you know, put up the numbers. We'll see how it reacts. All right, we will.

Bill's going to ring us out, and we'll be mixed today. Yeah, I'll be down about a half percent, but the S&T will be green, as will the NASDAQ, of course, thanks to that big deal with Amazon and also NVIDIA, as we just said, into OT. Thank you.