Closing Bell - Closing Bell: Is AI Artificially Inflated? 10/6/25

Episode Date: October 6, 2025

Should the AI trade stand for “artificially inflated?” We discuss with Wedbush’s Dan Ives. Plus, Stempoint Capital’s Michelle Ross tells us what biotech names she is betting on right now. And, Sherry Paul from Morgan Stanley tells us how she is advising her clients with stocks at record highs. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right. Thanks so much. Welcome to closing bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This maker breakout begins with a melt-up in stocks and weather were on the verge of a major one. Ed Yardin thinks so. You'll hear from him in just a moment. Take a look at the scorecard now with 60 to go in regulation today. The S&B heading for yet another record close. Today on a flurry of deal activity, OpenAI and AMD announcing the partnership you've heard about all day. And that big merger in the regional banks face only adding to investor optimism today. gold and Bitcoin also continuing to rally. And we'll ask our experts how far those can go as well. It does take us to our talk of the tape, whether the AI trade should actually stand for artificially inflated. Another billionaire investor weighing in on that question today. We'll discuss that ahead as well. Let's welcome in now, Ed Yardinney. He's the president of Yardini Research with me once again at Post-Nine. Good to see you. My pleasure. On that issue, you say we're not seeing a bubble, but rather a bubble in bubble fears. Well, right now we've got a bubble and bubble fears, but they're clearly elements of a bubble, of a real bubble. I mean, the forward

PE of the S&P 500 is about 23 right now. And back during the tech bubble of the late 1990s, early 2000s, we got the 25. The Buffet ratios at an all-time record high. So valuation is definitely high, but we've also had some really remarkably strong earnings. And I think that that's what's going to continue to drive the market and maybe keep valuations up here. I think the market's discounting a very resilient economy. Does a possible bubble not even matter right now because earnings are good? People are just going to play the hand they're dealt for now, worry about everything else later? Yeah, I think you focus on the fundamentals of companies and most of the fundamentals are hanging in there remarkably well. Profit margins have been remarkably high in the

face of tariffs, for example. You know, corporate management has really done an astounding job of kind of dealing with Washington. You know, people get, look at the headlines and worry about how Washington is impacting the economy. I look at the other way. Look how well we're doing despite Washington. I want you to listen to what Paul Tudor Jones said this morning on Squackbox,

trying to, you know, assess for himself whether history is repeating itself or rhyming or whatever it's doing about 99 and the tech bubble, listen. Feels exactly like 1990. And I don't know whether we'll actually, replay it exactly, but I think all the ingredients are in place. And certainly from a trading standpoint, you have to position yourself like it's October 99. I don't see why you would do anything but that. And remember, the NASDAQ doubled between the first week of October

99 and March of 2000. So if it looks like a duck and quacks like a duck, it's probably not a chicken, right? All right, that's PTJ. In other words, I mean, he's saying it explicitly. Yeah. You still have to position like we're going to have this massive move in the market. Is that how you feel? Yeah, I feel as though we already had sort of a look at what this could be. And that was at the beginning of the year. Remember, the stock market was back then around 22 forward PE. And then Deep Seek came out of nowhere in January. And all of the AI stocks got whacked. But then the companies reported that they were going to continue to spend money and that everything was just fine and the market made a V-shaped recovery. So, you know, if we have a correction, it will be a

buying opportunity just the way it was at the beginning of the year. But I mean, the amount of money that these companies are spending is so ginormous now relative to what was announced even back when you're talking about, you have conversation about so-called circular deals. Yeah. I mean, I thought it was interesting. Stacey Raskon, right? He's a star analyst. top chip name on Wall Street said of Sam Altman, and he's looking at the deal today with AMD, says Sam Waltman has the ability, I think, to either crash the global economy for a decade or take us to the promised land. We're not sure of which. What do you make of that? Well, I think sometimes Sam Altman gets a little bit hyper about where this is all going,

as he's described his latest version of chat GPT is like having a PhD professor working for you, and it's not quite that good. I mean, you know, A.I. also stands for the fact that it's artificial, but it's not intelligent. It's a probabilistic model, and I think it's very, very good at some routine tasks, and it's already being used, I think, to increase productivity.

But look, I use it all the time as a research assistant, but I don't trust it. I always wind up checking it because it makes mistakes. But, I mean, are we in an either-or world when it comes to all this? It's either going to crash the global economy for a decade, all of this money that's going to be going towards nothing like was promised, or we're going to, in fact, get to the promised land? Well, look, as I said, I find myself using AI as a research assistant.

And so in the past, I used Google Search and just picked up articles. Now I'm kind of integrating that into my business. And so I think that's obviously creating more demand for the cloud. That doesn't justify you, your anecdotal evidence doesn't justify, you know, billions and billions and billions of dollars. I don't think I'm the only one doing it. I think everybody is assessing to the extent to which AI can be helpful in their business, I am and everybody else is. And I think that at the end of the day, we'll find that it's very good in some applications. And it's, you can't really trust it in others.

But then we may also make quite a bit of progress in the technology. So it's not going to be exactly like 1999. And I don't think it necessarily is like 2000 and 2001 when the dot-com bubble blew up. And a lot of those were solar finance. You're right. There's a lot of circularity in their relationships here. But it's real money. I mean, these companies have the cash flow.

And they're well managed. They're not making these investments willy-nilly. I mean, they're clearly seeing. But they're making bets. They're making bets like the rest of us are doing as well. They're just doing it on a grander scale. What they have is they have a tremendous insight into the capacity of their infrastructure. And if they see that their infrastructure is continuing to beat more and more demand,

then they are going to be right and expanding. Sure. But the point is, the minute they don't, the garage door is going to come down, right? And investors are going to be the ones that are left holding the bag. Well, you know, it's kind of odd, isn't it? It's got that not too long ago, these companies weren't doing much capital spending. They were generating a tremendous amount of cash, and everybody felt that that was the right way to do it. And now all of a sudden these companies are spending a tremendous amount of cash,

and people are saying, well, right now it looks like it's the right way to do it, and it might very well be the right way. But look, when they stop spending, their profits are going to be even better, right? I mean, it's kind of like the Amazon model. Yeah, the profits may be better, but this whole. thing seems predicated on CAP-X, the CAP-X keeping up. We, as investors are betting that all of this CAP-X is going to lead to something great. If it turns out that they say, well, you know what, we probably spent a little too much.

You know, it's going to happen the minute someone says that. You know, we could get the dark fiber effect that we had with the Internet, where, you know, we put in all this infrastructure for the Internet, and not all of it was needed. But I think in this case, the companies are seeing the demand. And it's demand from people like myself, anybody that's got a business or for work as you're in the Internet. All right. So one last question back to the market. If PTJ says position yourself like you're going to have this meltup, like you're in October of 99, not the spring of 2000, right? What does that mean?

Like where would you be positioned then to take advantage of that? Only in the mega cap tech? I mean, you know, if this is going to be like 1999, followed by the sell-off in tech, it lasted a long, long time. I don't see it being anywhere like that at all. I would stay with the market. I think any sell-off is going to be a buying opportunity, just the way it was at the beginning of the year. Ed, we'll leave it there. That's why you raise your price target back to $7,000.

Round-tripped it to $7,000. But here we are. Ed Yardin, thanks for being here. Thank you. I appreciate you coming by. AMD, stock of the day, no doubt. The company striking that deal with OpenAI. McKenzie Sagalos joins us now with more.

Hey, Mac. Hey, Scott, yes it is. And now that OpenAI has skin in the game on the AMD trade, that is a good thing for Sam Altman, too. Open AI secured warrants to buy up to 160 million AMD shares. It's just one cent apiece. That stock surged from $165 to over $200 today. It is equity that AMD is essentially handed to OpenAI for free.

As long as deployment milestones are met, it is part of a broader shift, performance-based equity, as the new model for chip deals. We saw it with Invidia, but Open AI structured this one differently. Instead of paying up front, it is tying ownership to infrastructure milestones, aligning incentives so that if AMD delivers the compute, OpenAI shares in the market value that it helps generate. But the deal is also fueling new debate about whether this tight loop between capital, chips, and equity is sustainable, or if OpenAI is becoming a single point of failure in the AI economy.

Now, this all comes as Altman tries to turn ChatGBT into the next App Store, opening it up to outside developers, embedding instant checkout and launching a new directory, which is basically OpenAI's version of the Apple App Store. Now, the goal now is real applications, recurring revenue, and a cut of every sale. Scott? Mackenzie, thank you, McKenzie Segal. It's a real question, of course, what all of this means for NVIDIA. Christina Parts of Nevela says that side of the story for us. What do we think here? Well, the muted NVIDIA reaction today in the market tells you everything about NVIDIA's grip on AI infrastructure.

InVIDIA Broadcom, they both fell roughly 1% or less on the news, but this isn't zero-sum. Open AI is essentially throwing everything at the wall with a multi-pronged silicon chip approach. They've got a $100 billion deal with NVIDA, a $10 billion order with Broadcom for custom chips, tens of billions with AMD, and they're even testing Google's TPU chips. So Open AI is essentially hedging across every possible supplier. structure too that McKenzie showed us just shows how badly AMD wants in. Issuing warrants for up to $160 million shares, or million shares, I should say, means AMD is betting its own equity to win this customer. For NVIDIA, this validates that inference is where

competition can emerge. Inference workloads are more straightforward than training, and AMD's Rockham software stack has matured enough for production use clearly in this case of OpenAI signing on. But NVIDIA still dominates the whole pie. Model training. Controls the software ecosystem with CUDA and holds essentially over 80% of the AI chip market. But, as you can see on your screen, a less than 1% dip on the news that your biggest competitor landed a massive deal. Well, that's the market saying Invidias, moat remains intact. Yeah, or elites mostly. Christina, thanks, Christina Ports of Nevelos.

Let's bring in now star analyst, Wed Bush's Dan Oves. Good to see you. I appreciate you being here. You say that any lingering fears around AMD should now be thrown out the window. Is that right? Yeah, I mean, look, for Lisa Sue and AMD, I mean, this brings them right into the AI revolution. And I think that wasn't factored into the stock. You know, it's part of why it's in the Ives, AI 30. I think this is actually just the start for AMD, because this next stage of the AI revolution takes hold.

Open AI, what they're doing here, I think other companies are noticing. And I think there's just the start of more tech players making these moves. What's it mean for Nvidia, do you think, big picture? Look, there's still only one godfather of AI, and that's Jensen and Invidia. I think what you're seeing is this is a validation moment for AI in terms of where use cases are going, and it's my view. I mean, Nvidia's a $250 stock as this all plays out. Now, Grant, muted reaction today, but I think it shows this AI arms race is playing out. And you're talking with Ed about where we are in 1999, Scott, I think, and I've talked, we're in a 1996 moment today, not in 1999 moment.

I mean, what kind of moat premium, if you will, you think is in Nvidia's stock? Look, I think there's a moot premium that's in there, but in the reality is 90% of the AI spend they're going to get. Now, granted, ultimately, AMD could probably get 10% of it, maybe now that's more 15, 20%. But the reality is demand the supply is still 10, 12 to 1 for Nvidia chips. And that's a real moat. And that's why I think this is going to be a $5 trillion mark cap. And ultimately, you're going to see more and more tech players. Stocks are going to continue to move higher than the street is still massively underestimating the spending on the AI revolution.

Why are you so convinced that we're in 96 and not 99? When you hear somebody like Paul Tudor Jones say it feels exactly like 1999, I don't know whether we'll actually replay it exactly. but I think all the ingredients are in place. Because some of them I saw that cover tech stocks back in the 90s to where we are today, spending all my time around the world in Asia, seeing the chips, seeing demand. We're in the second inning of a nine-inning game. I'm not saying you're not going to have some froth that's out there, but I think the street's still underestimating the spending probably by 30, 35%.

And that's what Open AICs, that's what AMD sees, that's what the Godfather, Jensen sees. And I think you're, and that's why Nadella, and I think from Palantir to others, this is just the next phase of the AI revolution. That's why it's 1996 as his fourth industrial revolution plays out. If you're right, I mean, then there's like Lisa Shallott of Morgan Stanley who suggests we're in the seventh inning because the AI spend all this CAPEX. You can't possibly be in the second inning with the kind of money that's being thrown around. I read the quote earlier from Stacey Raskon of Sam Altman, Open AI, has the ability to either crash the global economy for a decade or take us to the promised land. I know what side of that argument

you're clearly on, but there's a credible argument to say that you're underestimating where we are in the cycle. Yeah, and Scott, to that point, I'd say, look, 3% of enterprise in the U.S. have gone down the AI path. None in Europe. You look at Asia X. China minimal. Sovereigns are just starting to play out like we've seen Middle East and UK. Think out as more and more enterprises, rest of the world plays out. Guess what? For the first time in 30 years, the U.S. is ahead of China when it comes to tech. So it's U.S. tech that's going to win. Now, granted, the circular in terms of open AI, Nvidia, AMD, and some of the worries there, look, I just view like this, for open AI, for every dollar they put into AMD, they'll get

$12 to $15. Invita the same thing. And I think that's why this is more of a 1996 moment and in 1999 moment, despite obviously a lot of the worries. And that's why we think, NASDAQ 25,000, NASDAQ 30,000, these are going to be some of the conversations over the next one, two, three years. Let's leave it with looking at Apple for a minute. I know it's a turn, but the stock is approaching a closing high, a closing record high. It's not going to get it today barring a turnaround. But nonetheless, it still feels like the odd person out in this conversation. What really changes that? Yeah, I think it's about Google and Gemini because once they won DOJ from a Google side, now that creates, could that be a candlelight moment, you know, between Cook and Sundar? Can you actually now start to see a deal on the table as well as also this is an upgrade cycle that under the radar, no one was expecting.

It's going to be a lot better than expecting. The number is going to have to move higher. But it comes down to now, like the coast is clear. They now need to double down, ink that Google partnership. And I think that ultimately sends this stock, ultimately would have a stock with a three in front of it. We'll see. Dan, thanks, Dan Ives. Thank you.

Thank you. Joining us. The other big corporate story we're watching today, fifth third, striking that $11 billion deal to buy Comerica. It's a big one in the regional bank space. Leslie Picker following that money for obvious reasons. Hey, Les. Hey, Scott. Yeah, a big one indeed, an all-stock deal at a 17% premium from Friday's close.

although shares today trading below that, about 300, 350 basis points below that premium, that implies perhaps a little risk that this deal doesn't close, although fifth-third CEO Tim Spence was confident they'd get the approvals and get them pretty quickly. Financially, the transaction makes a lot of sense. It's accretive to EPS, and they say that with the cost savings, the combined company will boast a best-in-class return on tangible common equity of 19%. TD Cowan analysts call this one of the most financially attractive bank transaction they've seen in decades. However, Comerica's growth has been stagnant for a while now, leading some analysts to question whether it could be a long-term drag once it's part of fifth third.

Just last month, an activist called Holdco Asset Management cited 25 years worth of underperformance at Comerica as part of the push to get the regional bank to sell itself or face a potential. proxy fight, Scott. They obviously took the selling route there. Yeah. Any thoughts you might have on whether this leads to some kind of flurry consolidation, others who think they need scale now? I think so. I mean, this is something we've been hearing for quite a while. And so far, the market for regional bank M&A has been somewhat more muted than a lot of people were expected. There was the Sinovus deal over the summer. Now this one, Comerica is a company that's been rumored to be kind of on that selling block for quite some time. Now, people have been waiting for it to combine because of the necessity to get that scale and compete with the big banks at this point

in time, especially as it pertains to deposits and coming off the regional bank crisis and paying for technology for AI and fraud prevention and so forth. So bigger is definitely better. It's definitely an advantage in banking right now. They just need the regulatory approvals to get it done. So if this gets approved, it could certainly signal. that there's appetite for more out there. All right, Leslie Picker, following the money for us. Thank you. We're just getting started here on Closing Bell.

Coming up next, betting big on biotech, the sector is showing new signs of life. Stempoint Capitals, Michelle Ross, tells us where the opportunities are right now in that space. Live at the New York Stock Exchange, you're watching Closing Bell on CNBC. The health care sector coming off its best week in three years. And top technician Jonathan Krinsky of BTIG says this breakout feels different. Michelle Ross is the CIO of Stempoint Capital, where she runs a biotech fund, and she joins us once again now. It's good to see you.

Very good to see you, Steve. The reason to have a smile in this space. I'll take it. What do you think of what Krinsky says? Is it meaningful? It's very unique set of circumstances that have led us to this point. And I think what we saw even last week was pretty dynamic. the sense of how much some of these names traded up on the back of an announcement by the

administration with pharmaceutical companies. In particular, this time it was Pfizer. And it catalyzed a lot of maybe potential negativity over the years, positioning being out of favor to really see some dramatic moves. The pharmaceutical complex was up 10% in two days last week, which we haven't seen in over 20 years. What makes you think that it's not simply a moment in time, idiosyncratic based on what you said at the White House, but longer term, we got the same issues. Yeah. There were so many issues that were facing the sector for a number of years now. We have had headwinds from, you know, tariffs to MFN. That's most favored nation drug pricing. We've had lack of pharma MNA and biotech being purchased. It really felt as though there were

so many reasons to not invest in the sector as opposed to invest in the sector. And things have marginally started changing over the last few months. And it's really more not one single effect as it is the confluence of all these things coming together, including some really great to see M&A that is happening in companies that are pre-commercial. So we're seeing on that side of the ledger a lot of nice movement there as well. And you think that's going to continue? We do. We think that's going to continue in a meaningful way. But I do want to give the other side of the coin and say that in the context of the last few years

with very little M&A in the space, it's actually allowed some of the strongest new biotech companies to actually emerge as the leaders in the space. We had a group of companies that really led us over the last decade. We talked about biotech had a genomic revolution of sorts, and there were a core group of companies that really were setting the stage as what people in the broad market would look to as the leaders. In the last two to three years, you really did see a number of companies, new companies, that were seeing approval of new drugs, phenomenal launches, great growth, and they've

actually emerged and have become, I would call it. call it the new leadership that's submerged in the space. What role do lower rates play? It is something that, you know, we had called out, many people have called out as, you know, the move for not just biotech but for the smid cap complex. There's been a massive underweight, not just in biotech, but I would say you see it in the rustle as well. But that's your favorite, right, the smith caps?

Smid caps are my favorite. There really is a fair amount, I'll call it like a coiled spring phenomenon where you're seeing is that in the context of a lower rate cut environment, these companies can now raise cap They can grow unimpeded in certain ways. And we're seeing it as those companies are releasing clinical data sets. The complete movement of the stock to the upside is more than many expected. That coil spring phenomenon really playing out. Let's talk about, speaking of coil springs.

Let's talk about a stock, Unicure. Is that what it is? It is. It's up 200% in a month. There must have been an event. There was an event. So Unicure released three-year data of their gene therapy program for Huntington's And Huntington disease is a fatal dominant gene.

Ultimately, these patients have very few options for treatment. They were dosed with a gene therapy, and we showed a 75% reduction in the effect of that damaged gene to those patients over time. So you're seeing something for the first time that is truly unique and absolutely game-changing for patients in the space. You're seeing an actual effect to the disease happening. to the disease happening. So how does somebody that does what you do,

look at a chart like that, and I'm assuming that from, let's put it back up, guys, please. From the winter, it's in trial, and that's why it's a straight line across, and then there's a result that results in a move like that. Are you still staying in the stock? I am. I am.

So ultimately, it is a platform technology, what they are doing in Huntington's disease and the total demand that will be there once this ultimate application is approved, has tremendous potential, multi-billion dollars just in Huntington's disease alone. When you look at the valuation of the company, the potential of what this could mean globally for these patients, it is still actually very attractive to be owning a unicure at this point.

And I think to your point on how do you time these, there's a cadence involved in investing in biotech, which a lot of sectors don't have. And it's the additional component of looking at the space of timing when and how you think there's going to be a dramatic move or shift in the stock price. But you're not just playing, I guess part of my question was, you're not just playing for the event itself, right?

You're playing for the post event. Absolutely. Which you could actually get. That's why if you would have said, well, yeah, well, we're selling because the stock sort of paid off how I thought it would. The fact that you're not is as telling as the other way. You bring up a great point. It is something that is dramatically returned to biotech of the last couple months.

You can purchase these stocks after the event has played out and see tremendous return potential. Unicure was one of those names. You could have bought it that morning on the open or pre-market early days and still had ultimately 50, 60% return from having that full data set, having heard the company discuss it. There are a multitude of ways to make money in biotech, and that's been a fairly new incorporation of a way to really do some great outperformance in the space.

What about Abyvaks, which is up 1,000% year to date? Presumably they had their own event. They did. And actually just released a little bit more data today on that. They have a new product, Phase 3 data, in an ulcerative colitis drug. First, new technology of its kind. It works in the most severe patient population, those who we call are refractory to other therapies. It is a game changer potentially in the space.

We think it will work not just in ulcerative colitis, but in other areas of autoimmune GI, so you can look at potentially Crohn's disease and others. and see this as something that will expand over time. This is another great example of a name you could buy or could have bought that morning on the first data set in the 50s. It's close to $100 now. So there's this unique dichotomy of being able to see a compounding of your investment after that data card has turned.

Okay, let's go one more to a stock that's lagged year-to-date. It's done well lately. It's Scholar Rock, S-R-R-K. One of my favorites. What do they do? Scholar Rock has also a late-stage drug. They have shown their data set. we are awaiting FDA approval in an indication called spinal muscular atrophy.

It is a rare disease. It is a neuromuscular rare disease and indication. A number of children and adults are afflicted with it. This is also a major modification to the way these patients are going to be treated. And we think that this has tremendous potential in terms of sales and growth rate over time. Really interesting conversation. I enjoyed it. Michelle, thanks.

Very good to see you. Michelle Ross joining us once again on closing bell. Still ahead, a rundown of what to watch for from Constellation and OT. But first, Morgan Stanley, Sherry Paul, she maps out her market playbook for you. The bell's coming right back. We are back, stocks, gold, and Bitcoin all looking to extend their record closes today. So where is the best place to be positioned if the market is, in fact, going to have an end-of-year melt-up? Let's ask Sherry Paul.

She's private wealth advisor and senior portfolio managing director at Morgan Stanley. Welcome back. Thank you. So how do you feel about this market at a time where I think it's almost daily we're having a conversation about AI bubbles or not? And you're having some of the most successful investors in the world weigh in on that topic. What do you think? Well, look, I mean, we've had 30 new all-time highs, you know, this year alone plus. Yeah, I think actually now we're at 31 maybe today.

And, you know, where do we start about all the good things that are coming, you know, in terms of the investing climate? We've got $5 trillion sitting in cash. got pretty low unemployment. We've got earnings revisions, you know, moving upward. We've got a tax bill kicking in in January for corporate tax cuts and deregulation, M&A activity kind of heating up. And so, you know, you put all of that in the context of AI innovation and as an accelerant to all things, then there's still room to move here. And just because markets are going higher doesn't mean they're not going to continue to do so. Wow. You sound like you're talking by like a super meltup.

I mean, Paul Tudor Jones was basically saying that too. He just said it's going to end badly. Well, you know, look, I mean, you know, I think that there's some people talking that way, but I mean, I've been watching the playoff games and you don't know how many runs you're going to hit in the last inning. I mean, it could be, you know, a monster last two innings here. So I think it's hard to say that and it's hard for people to hear that because they're waiting for the shoe to drop.

But we just don't have those conditions for the shoe to drop. No, not yet. I mean, but so if if we're, if we're not, if we're not, if, if, if, if, if we're We agree with you as an investor class. We say, you know what, I totally agree. I mean, it may end up badly at some point, but not for the next however long. So I'm going to play the cards I have in my hand. What does that mean for where I want to be?

Well, you know, for individual investors, and remember, like, I work with people that live in their money. And so they're always wanting to know, like, what do I do now? And so for investors that have really benefited from this market over the last few years, we're taking money off the table and we're funding life goals, like college plans. and wedding accounts and taking tax deductions and donor advised funds and taking gains in a way that can materially benefit that overall life money plan and for new clients that were onboarding that have missed the market for whatever reason because indecision is a killer of returns and so as inflation we're building portfolios that are well allocated across

what I call the idea maturity time horizon because we're also not only at all-time highs but we have all-time correlations happening in the market and so this principle the mathematics of diversification are also stretched. And I think that's where your bubble folks get a little bit hung up is on P.E.'s in correlation. And they're missing the moment on like, wow, we have an idea here that is going to accelerate and consolidate very rapidly over the next few years. You don't want investors to miss that. No, but you have to be cognizant of what you think is already in the prices of some of these

stocks. And they've already gone up so much. The numbers are so large, both in returns and in investments. from these companies and needs to pay off. Well, you heard that two years ago in 2022, when people were looking at the PE ratios of a lot of what now we're calling the AI innovator stocks and going, wow, these are stratospheric type PEs.

And what happened was the earnings came through and we saw the PEs go down. And so for even, you don't want to get too myopically focused on PE ratios in these radical moments of innovation because the trend could be a J curve at the end, this explosive sort of setup. And that doesn't mean that everything

you should have, should be an AI, or you've got to get every last penny off the table in terms of your returns, which is why I also suggest that, you know, that right now in a fast market, like your best friend is rebalancing. I mean, you should have a strategy that has bandwidth, that has an allocation that you're taking money off the table, re-laddering it into a portfolio in a way that you're not too over your skis in anyone long. You like what's largely, I say largely worked, tech industrials and financials. We spent many months talking about record highs in all of those areas. So you want to stay large in market cap?

Yeah, large balance sheets. Balance sheets give you dynamitism. That is, I think, and liquidity. It's one of the most crucial ingredients to be able to capitalize on radicalized moments of change, which is what we're in right now. And that's why I like the big caps. All right. We'll leave it there.

Sherry, thanks. You're welcome. Sherry, Paul. Morgan Stanley up next. We track the biggest movers into the close today for Stina Pards and Nubelos, standing by with that. Hi. Well, we have a rare earth miner surging on government talks. A major retailer gets hit with a downgrade and an EV maker, guess who drops a cryptic hint? We've got those stock movers next. We're less than 15 from the bell.

Let's get back now to Christina Parts of Nevelos for a look at the key stocks that she's watching. Top of your list is what? Let's start with critical metals. Those shares are soaring after Reuters reported the Trump administration was in talks to take an equity stake in the miner. The company is developing a rare earth's project in Greenland.

However, senior administration official told Reuters there's nothing close with the company at this time. shares are still up. Look at 47%. Abercombe and Fitch, sinking today after JPMorgan downgraded the retailer to neutral from overweight, the firm citing a hangover effect related to outsized promotional activity in the first half of the year, and that's why J.B. Morgan slashed their price target to $103 from $145, sending shares almost 8% lower. Then you got, did you guess it? Tesla? That was the name of the company, the EV-1.

And shares popping after the company posted a teaser video on X yesterday. The video ends with the date 10-7, indicating an announcement tomorrow, that would be October 7th. Speculation is that the EV maker is gearing up to release a new car. And that's why you're seeing shares up almost 5%. And last but not least, this is new. Shares of app-loving falling right now as we head into the close after Bloomberg reported that the company has been probed by the SEC over data collection practices. Shares are plunging now 17. percent, Scott. And this news just came out. Yeah, thank you for that. Christina Partsendalos. Coming up next, what's watch for when Constellation Brands reports in overtime. Plus,

JPMorgan Asset Management's Mirra Pandit. She is standing by at post nine with her own market playbook. We'll do that in the zone next. We're now in the closing bell market zone. CNBC senior markets commentator Mike Santoli and JP Morgan Asset Management's Mira Pandit are here to break down these crucial moments of the trading day. Plus, Kate Rogers tracking the action in food stocks today and Brandon Gomez standing by with what to watch for from Constellation Brands in OT. Mike, begin with you first. What do you make of the action today? Shows both the power and the limits of yet another massive AI infrastructure announcement.

Obviously, you know, AMB's adding more market cap than Nvidia is detracting, but it's a relatively mixed and uneven performance. I think it mostly tells you where the field position is. I've already priced in a lot. The index has definitely. been churning to new highs successively. You know, it's very much a growth over value, kind of high volatility over stable volatility-type stocks, and frankly, low-quality over high-quality. So that's the phase of the rally we're in.

I don't think it means that there's some kind of monumental comeuppance on the way, but it does tell you maybe the threshold for really pleasing this market in the same way has gone up. All right. Kay Rogers, what's happening in food stocks today? Hey, Scott. So Bank of America out with a note this morning on the restaurant sector saying that macro pressures are broadening across the space and noting that younger workers in particular are feeling the pressure, writing, quote, unemployment is higher for recent college grads than for workers overall, a dynamic that contrast with pre-COVID trends and one that appears to be accelerating. Now, analysts say that full service concepts are actually more insulated because they have higher incomes and their consumers are older. Take a look at shares of McDonald's. Yum. They're up on the year. Wendy's in Shake Shack, though, lower significantly year-to-date.

As for the casual and full-service names Darden's slightly higher, while Blumen Brands and Texas Roadhouse are lower. And finally, the pizza names just slightly higher on the year. B.O.F.A. downgrading, rather, sweet greens, Papa Johns to neutral, Shake Shack to underperform and Uprofen, and Upgrim. Back over to you. Okay, Rogers, thank you very much to Brandon Gomez. Now, what to look for from Constellation and OT. Tell us. Hey, Scott. Yeah, the Corona and Medella Brewer reporting after the Bell, Wall Street, bracing for a soft quarter. Consensus points to $3.38 a share in EPS down 28% year every year. Revenue roughly 2.5 billion,

but beer remains the backbone here, expected to see net sales of $2.3 billion, while wine and spirits remain under heavy pressure with projected declines. Now, remember, the company cut guidance just last month, so some of this may already be priced into shares down around 14% since then. The conference call is tomorrow morning at 8 a.m. Eastern, but investors will no doubt be listening for any updates on raw material costs, continued tariff impact, softer consumer demand, especially among core Hispanic consumers, which the company previously has said accounts for about half of its beer sales. Scott. All right, Brandon. We'll see what happens.

Thanks very much. Brandon Gomez said Mirup Pendant joining Mike Santoli here for the conversation. It's good to have you back. Record closes on track for the NASDAQ and the S&P. Mike said growth over value. Is this the way it's going to be for a bit? Don't fight the Fed. Don't fight fiscal.

Don't fight AI. When you have this trinity of catalyst for the market for the next couple of months, it's really hard to want to back off at these levels, even though valuations are pretty much as high as they've been in many years, if not since the coming out of the pandemic, also since the early 2000s. But I think the reality is when we think about AI and we think about some of these big announcements, as long as companies are maintaining their revenues or growing them, as long as that cash position from a funding source for a lot of these investments is still intact,

then that is a good sign of the health here. But I do pay attention to some of these circular announcements where it sounds like there is a lot of, again, that circular economy here between some of these big tech names. So we want to make sure the way that we're assessing these companies stays true to form, and we don't start sliding into announcements of future deals that may or may not happen.

Sure, but I think the prevailing thought from most people who've been coming on the network, even those who are concerned about some issues like you are. It's like the music's going to play, and you have to be on the dance floor while the music's playing, because you can play for a long time before there's a record scratch. Well, this DJ has a lot of different genres. It's playing right now, and that's the good news. It's been so concentrated in AI over the past couple of years.

But this year, if you look at what we've seen so far, if you look at the best 50 performing stock so far year to date, nine out of 11 different S&P 500 sectors are represented. Only one Mag 7 cracks that list. And so we're certainly seeing that broadening out of AI into areas like industrials and utilities, but we're also seeing beyond that other names doing well. And it's not just a one trick pony anymore where it's just about the U.S. and there is no alternative.

There are alternatives overseas. There are alternatives when you think about the capital structure and the credit markets of some of these same companies to take advantage of those profits. So there are some options out there for investors. All right. So this is the house music stage of the rally. We'll figure out what's next. To Mirra's point, outside the U.S., there are a couple of interesting calls today. Upgrades to global equities, upgrades to emerging markets, U.S. stock market trailing the rest of the world by the largest margin in a long time. I mean, the Japan market overnight was up several percent. And I think what's interesting is if you try to read it for what signal it might be sending, I mean, right or not, the, the, the Japan market overnight was up several percent.

And I think what's interesting is if you try to read it for what signal it might be sending, I mean, right or not, the global markets are suggesting there's this kind of reflationary, reaccelerationary theme going on in markets. Copper running. Emerging markets is really kind of quasi-AI story as well. I mean, Korea is one-third. Samsung and S.K. Heinex, it's in the EM. China, obviously, been running there, too.

But more to the point, I mean, Miriam mentions fiscal. everywhere, you're seeing fiscal expansion. And so you can tell a story of this bull market as massive amounts of capital, a trillion plus unleashed from Mag 7 balance sheets to invest in AI infrastructure, and a similar amount released by global governments, whether it's Germany with half a trillion euros for military or it's Japan, I expect to do the same. So how far that goes, how long that lasts, whether equities are the way to actually, you know, harness that are all good questions.

But I do think it's interesting that we're in this moment where it's really hard to pull the investors off of the idea. The Fed is leaning lower into what might be the makings of a reflationary trend. Yeah, like everybody's cutting rates. So the first central bank to hike versus the first hyperscaler to cut their spending outlook. We'll weigh which is going to be the end of this whole party. I don't know. How are you thinking about that, though? Some of the risks that do stand out there to say, okay, maybe it's time to take.

a breather. When I think about the economy overall, I would say when we think about growth in particular, you can sometimes see that from an inflation standpoint, if you think about tariffs folding in here, sometimes that can be a bit of a transitory factor, whereas labor market weakness rarely is. So weighing how long that growth is boosted and supported into next year relative to when it starts to fade out, and if inflation does properly fade out or not. And we're in this tug of war here between inflation being hotter and the labor market

being weaker. So these are some of the risks to the economy that can then permeate company earnings and company spending patterns as well. I think also the market is implicitly making a pretty big bet on the idea that very soft labor conditions are not reflective of the broader economic fundamentals. And the weak housing market is not going to really hamper, you know, the kinds of macro fundamentals that feed into S&P earnings. That's implicitly the way the market is playing this. And we'll see if that has to get tested along the way. Well, that's why some are talking about the possibility of an everything rally, right? Because you don't have, you're not having these deep economic fears based on certain things like what's happening in housing.

So it's gold up, Bitcoin up, stocks up, emerging markets and international stocks up, and maybe not just the hyperscalers and the AI trade up, but do you feel like there's going to be a big broadening meltup into the end of the year? Just because it's an everything rally doesn't mean we need to own everything. I would be careful around some of the areas that are melting up. Some of the low-profit areas, some of the areas that really don't have a lot of legs to stand on. So we do want to be mindful of where we're putting money to work. Just because it rallies doesn't mean you want to rally behind it. And one interesting thing is the dollar is up today,

and that has not typically gone along with everything else going up. That's true. The bell is going to ring in a new record close for the S&P 500 and for the NASDAQ as well. And it was right, send the O's team with John Ford.