Closing Bell - Closing Bell: Microsoft’s Antitrust Investigation & Amazon's Invent Conference 12/3/24

Episode Date: December 3, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Guys thanks so much. Welcome to Closing Bell. I'm Scott Wobner live for Post 9 here at the New York Stock Exchange. This make or break out begins with the look ahead for your money as one strategist takes his target for stocks next year to the highest on the street. Wells Fargo's Chris Harvey joins us momentarily on why he says another great year is in store for your money. And later the mentalist is back. O's Perlman is here with a new trick to no doubt leave us wondering, how'd he do that? We'll see it in a little bit. In the meantime, let's show you the scorecard with 60 minutes to go in regulation. Outside of the mega caps, not a lot of green on the screen today. You'll see the S&P is barely positive. NASDAQ's outperforming. Apple hitting a new all-time high today. Otherwise, S&P sectors are split.

We will watch everything over this final stretch. It does take us to our talk of the tape. Lofty returns in the new year. That's what our first guest is predicting today. Chris Harvey of Wells Fargo right here at Post 9. Welcome back. Thank you. That's a big setup for you, man. It's a big setup. 7,007, not 7,000 and not 7,005, 7,007. Big James Bond fan. It's 7-007, just so you know. All right, 7-007. Why'd you come up with that and how? Well, we came up with that.

The market multiple is 22. We saw 16% growth for next year and the year after that. That's matching what we expected the S&P to do next year. And so really, we're not talking about multiple expansion. We're talking about EPS growth and EPS growth going higher. You have a good economy of tight credit spreads you have less regulation fundamentals are improving and rich continue to get

richer so this is all based if not maybe not all but substantially based on what people expect to be uh... eight trump policy bump for the market yeah i was like it is it's that it's the fact that you have

a strong economy. Credit is widely available. M&A is going to come back next year. IPOs are going to come back. The title of our report was Good Year, Bad Vintage. We think markets will go higher, but this is the year where people go too far

out on the risk curve, too far down the capital structure, and systemic risk goes higher But while that's occurring equity markets usually go up While people are taking on more and more risk, so let's rewind for a second. All right Systemic risk goes higher. Yeah in what sense is just too much risk taking there's too much euphoria Through through where do you see that most acute? So we're starting to see valuations or leverage multiples go higher. We're starting to see people move further out on the risk curve.

For the last year and a half, people have made a lot of money buying strength and selling weakness. Momentum, as you've talked about in the show, very strong factor and continues to be. And when you do that, you continue to push your bets and push your bets. So this is an environment where people will continue to take on more risk. Because why? We're also going to a period where there's less regulation, where I think the economy's stronger. And furthermore, I think the market's getting healthier. With less regulation, you should have a broadening out of the market. You should have better breadth. And for a while, I think people are going to make a fair amount of money. Just you have to be careful toward the end of the year, because when we look

back at 25, from perhaps the approach of 26, 27, we're going to say that was a year that people got too aggressive with risk. So you think the market goes even higher than your target, but then towards the end of the year, sort of has a moment where it pulls back to get to where you think? That's possible, right? We could have a bit of euphoria. I'm not really sure how it plays out. We think that $7,000 is a pretty good target. It better not be $2,700.

But if you go back to 2019, you go back to 1995, two years where you had tight credit spreads, you had the Fed easing. We had much higher returns than we have at 16%, or the expected 16%. Okay. So it sounds to me you want equal weight, right? You play for the broadening, play the big game, right? And you don't necessarily want to go all large cap. Right. Under your scenario, small cap, mid cap? Mid cap,

mid cap, I'd say. Not somewhat small cap. Small cap still is just not a great risk reward. It's more of a broadening out and equal weight. So S&P equal weight should make sense. Mid cap growth, as I've talked about many times, still makes sense. And we like the barbell between banks, communications, and Staples. I mean, that's a pretty concentrated breakdown of what you want to do, right? I mean, 40-40-20? Yeah. Banks, comms, services, and then Staples? It's worked pretty well for us.

Why so concentrated? Well, you know, we've set up a barbell for many years. For the last two years, we've had a barbell. It's been communication and defensives. This year, we've broadened it out to more cyclicals. On the defensive side, we like staples. Staples are really unloved, underappreciated. We think the fundamentals are turning, right? But we want exposure to banks and financials. We love that space. We think there's a real revaluation. There's been a big revaluation. Well, that's the thing. There's been a big, right? There has, and it's

going to continue. You don't change 15 years of upward regulatory pressure in 15 weeks. You're going to have more multiple expansion. You're going to have positive EPS growth. Capital markets are going to improve. It's going to be really positive for the group. Not a straight line higher, but it's going to be really positive. So when I look, I've said this already, I say Goldman Sachs up 56% year to date, JP Morgan up 44%. Right. You're like, yeah, but, I mean, that's just getting started? That's just getting started. We've had a very difficult environment for M&A, M&A activity.

What goes with M&A activity? IPOs. What goes with IPOs? Trading, trading activity. So we're not there yet. Furthermore, as you start to deregulate, as the banks need less capital, there's more capital available, there's more risk-taking, more opportunity. So we don't think it's over. We think it's just beginning to get started. The other thing to think about is the momentum trade, the face of the momentum trade is now financials. If you look at the MTUM, the momentum ETF, one of the biggest, if not the biggest sector right now is financials. That wasn't true a year ago. A year ago, 40% of it was tech. Now tech is something like 20 percent. So it is broadening out. So we're going to broaden out our conversation. You're going to do me a favor and put your earpiece back in so

you can hear one of our guests because they're all remote. All right. We'll just do this as we go. We'll bring in Mike Rode of American Century Investments, Ayako Yoshioka of Wealth Enhancement Group. It's great to have you both with us. Aya, I think you heard everything that Mr. Harvey had to say. What do you think? What do you think? How's it going? So, you know, in terms of our outlook for 2025, you know, we do expect earnings growth to do a lot of the heavy lifting going into next year. I mean, it's hard to argue for further multiple expansion from here, but I also said that probably two or three points ago. You know, I do think that seeing the broadening out of the market is what everybody wants to see. We are seeing strength from financials and we do like names like JP Morgan within that space. We do think they can continue to run in 2025.

Mike, I mean, you know, the point I think we maybe we debate the most is you can get to lofty targets with great returns next year without multiple expenses and do it through earnings power. Right. You believe that? Yeah, absolutely. And if you look at the earnings growth expectations for next year, it's the highest in small caps, followed by mid cap, followed by large cap. Now, the Magnificent Seven are still growing pretty fast, the highest, but that growth is slowing. So our research shows that dollars follow earnings acceleration. And so where you're seeing the biggest acceleration is in small caps. So if you agree with everything Chris had said in terms of the economy doing very well, M&A picking up, deregulation. Small caps should be the biggest beneficiary of those tailwinds.

Can you have both? Earnings acceleration and multiple expansion? You can. That's going to be tough, especially where multiples are. I think you can have multiple expansion as you move down the capitalization. Valuations in the mid-cap and small-cap space, not that they're depressed, but they still have room for multiple expansion as you move down the capitalization valuations in the mid cap and small cap space not not that they're depressed but they still have room for multiple expansion i think you have room for multiple expansion on the financial side so selectively the answer is yes aya then the risk though is that earnings don't live up to the hype i mean chris needs

earnings to work and work really well to get a 15% gain next year. Earnings-wise, we are going to get mid-teens growth. And, you know, whether it's from the Magnificent Seven or beyond, I think the nice thing is that the 493 are going to do a lot more of the heavy lifting. I think, as Mike talked about, that gap between what those large tech names have brought to the table in terms of earnings growth versus the 493, that's going to narrow. And we like that broadening out. And we do think that we could get to that mid-teens growth in 2025. You believe, Mike, that the earnings story can power the whole market? We'll see.

I don't know if it'll be 15 percent. Probably not. Usually the street's a little bit too optimistic. But going from two years of negative growth for small caps to flipping positive, I think that should be a pretty powerful driver. And then it goes back to the valuation point. What's your starting point? For small caps, you're basically in line with the historical average. Large cap growth is trading at a 33% premium to the historical average. So you're starting at a really high point. There's a lot of good, very high expectations built in. Look at NVIDIA put up a great quarter.

They're looking for 50% revenue growth. The street is for next year. That's some really lofty expectations. I think you want to look in areas where expectations are lower or there's a bad outcome already priced in. And small caps, even mid caps,, there's a lot less expectation there. What's the risk to your story? So the risk to the story is multiple, is that we're right. Credit spreads are really tight.

Liquidity is abundant. And people do go too far out on the risk curve and too far down the capital structure a lot faster than we thought. The other issue is if you look at low volatility, defensive sectors, they've underperformed by a massive massive move right it's 60 if you look at low volatility it's underperformed about 60 percent in the last five years going to the great financial crisis that was something like 20 25 that screams complacency the other issue is we're seeing more and more fear of litigation on the tech side and if that that

starts to pick up a little bit that's going to weigh on those names which will weigh on the tech side. And if that starts to pick up a little bit, that's going to weigh on those names, which will weigh on the market. And that's a significant fear. The kind of risk-taking you talk about, will the bond market allow that? You know what I mean? I think so. Yeah. I mean, the bond market is already uneasy with the level of the deficit.

Now, we've come off the boil a little bit because maybe we're trying to price in higher growth, which takes the edge off where the deficit is and the cost of funding it. Rates have come actually in. Was the bond market going to be the bigger story in 25 or the stock market? So there's a couple of things there. If we look at the deficit, one of the things that I think people are underappreciating is the capital gains tax. We had a big year in the equity market. Typically, when we have a big year in the equity market, we see capital gains start to go higher. That could shrink the deficit unexpectedly, or more so than a lot of people think. That will take some pressure off of bonds. The other thing that we're seeing in bonds is we're seeing inflation expectations

or break-evens toward the higher end of the 20-year range. So there's a lot of talk about inflation and tariffs and all this other stuff. It's already priced in there for the most part. Now what you have left over is real rates, and in an environment where the Fed's cutting rates, it's hard to see real rates expand from here. So we're not too worried about rates going higher because inflation expectations are already

toward the high end of the range and because we're still in an easing cycle. Should we be worried, Mike, about rates going lower fast enough? In other words, we're already resetting our expectations for the Fed, both in timing and size. How much does that matter? I think it comes down to growth.

As long as the yield curve is steepening or steep, upwardly sloping, it should be a tailwind for many businesses. So whether the Fed cuts three times next year, five times, if the underlying economy is strong and inflation is sticky because of that, I think we're okay. And I think that's the viewpoint of the Trump administration. Hey, growth trumps everything, no pun intended. And I think that's what it'll come down to, earnings growth. And if the Fed cuts less because the economy is good, that's okay. Well, I mean, that's the story you're going to hear out of D.C., out from the White House.

That's going to be the narrative. Whether it lives up to the hype, Aya, I guess the proof is going to be in the pudding. Do cuts really matter? And how much so at this point? I think, as you said, Scott, a lot of it has been priced in. And so I'm not sure if all of the cuts will matter. I think it will be more about the commentary that the Fed provides about their outlook and what the triggers will be as they either change the pace of the cuts or find a spot to stop. I think that's going to be more of the narrative in 2025.

What's the sector like? What's the outlier sector that that maybe could do better than you think? Is it health care is the worst this year? So what do you look at and you say, well, it's not one of my favorite, but I got my eye on it because it actually might be the outlier to watch. It's materials. Material is washed out. It's been left for dead. It's a play on housing. It's also a play on China. There's a lot of short interest over there, and that short interest could turn very, very quickly. And if you're looking for a place where you could see a big reversal,

I would say it's the material space. How would you answer that? Yeah, I'd say within materials, I think packaging is a really attractive area, but I would say two sectors, healthcare and staples, have been absolutely forgotten this year. And then with the fears about the RFK nomination, they've been pretty easy areas to

short in this vacuum of news. And so a lot of those stocks are extremely cheap, all time low representation in the broader market. So that's probably a good setup for next year. I jokingly want to say, what about mega caps? Because I feel like everybody is no one wants to pick the mega caps next year. Might they just surprise us? You know, they could. I think, you know, when it comes to the mega caps, I think a lot of them are already owned. So that might be the issue going forward. So I think you want to balance it out with what you already own and what has worked with things that can work going forward. All right. We'll leave it there. Aya, thank you.

Thanks for being here. Mike, we'll talk to you soon. And Chris, thanks for coming by. Mr. 7007. All right. We'll hold you to that. All right. Let's send it to Seema Modi now

for a look at the biggest names moving into the close. Hi, Seema. Hey, Scott, 45 minutes left in trade and shares of U.S. Steel falling as much as 8% as President-elect Trump repeats his pledge to block the Bond Steel's planned purchase of the company once in office, posting to Truth Social that he's totally against the deal

the first time he's mentioned the potential takeover since his election victory last month. And then there's shares of Credo Technology Group, up 46% after the data infrastructure networking company raised its revenue outlook and posted a big second quarter beat. The CEO is saying the firm is experiencing greater demand driven by AI deployments and deepening customer relationships. We're looking at the stock up about 260 percent this year. Scott. All right, Seema, thank you very much. Seema Modi, we're just getting started here. Up next, the CEO of AWS joins us live from Amazon's annual AWS reInvent conference,

and that's coming from Las Vegas. We are live at the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Amazon hosting its annual AWS reInvent conference this week in Vegas. Joining us now first on CNBC interview is AWS CEO Matt Garman along with our own Kate Rooney. Kate, take it away. Scott, great to see you.

Thank you so much. And Matt, it's great to see you. Thank you for being here. This is your first reInvent as AWS CEO, so a big milestone for you. Yeah, it's very exciting. I'm happy to be here. You had so many Gen AI announcements. We're not going to get through all of them, but I wonder if you could sort of summarize what it means for AWS and what you think it means in terms of potentially driving spending on AWS,

at least in the near term. Well, look, a lot of what we talked about today was how do we help customers really get into their generative AI apps into a production environment. And we see a lot of customers that have proof of concepts out there. And so we built a platform and a bunch of capabilities to really focus on production use cases.

And how do they take customer data, real enterprise, valuable IP, and pull it into these use cases so that they can actually start to drive real enterprise value and not just kind of flashy chat bots on websites that weren't really driving ROI for customers and so a lot of what we announced today and what we're talking about this week is helping customers do just that. Productivity seemed to be a big theme there at least for developers what do you think this is gonna mean for fortune 500 companies when do you think this will start flowing through to the bottom line and maybe eventually

improve margins for other companies? Yeah, I think there's a huge opportunity with generative AI to improve productivity. And I think, you know, if you initially looked at where, say, developers were, a lot of the initial productivity tools were around code suggestion. But the real value is if you take the whole end-to-end development lifecycle and make it so that developers can be efficient at everything that they do. And then we also do that for everybody, right? It's for marketers, for finance people, for sales folks.

If we can make their everyday lives more efficient, take away all of those mundane tasks, those repeatable tasks, those automatable tasks, and let all employees focus on the creative value creating type of activities that they do every day. Typically, in a week, you might only get to do those value creating activities like five, 10% of the time, and the rest of the time you're doing pulling data, different sources, trying to look up information, doing kind of monotonous, if you're a developer, you might be doing code documentation

or other things like that. Our view is that we can automate a lot of that and let people be more available to be doing the hard, interesting, creative work that is kind of core to what your individual company might be. And Apple was on stage as well during your keynote. You guys have had this longstanding relationship, but it's not a relationship that either Apple or Amazon talks about all that much. What is the strategic importance of Apple, especially now that they're publicly using your chips? Yeah, we've had a partnership with Apple for more than a decade. And they're a fantastic partner.

They push us on a lot of more things. They push us on scale. They push us on new capabilities that they need, on security that they need. And so they're a fantastic partner to learn from. But we also love partnering. They came to us and and said how can you help us with our generative ai capabilities we need infrastructure in order to go build and they had this vision for building all the apple intelligence and stuff some of the things you heard talk on stage today and they've been great early adopters from some of our technologies including tranium 2 which is our our brand new ai chip and they've been early beta testers of that as well and um and i think that's a it's a really symbiotic relationship where we learn a lot from them, they push us and they get a ton of value and using AWS in the cloud.

What does market share look like? Are you starting to feel like you're taking market share from folks like NVIDIA? Well we don't really think about market share that way. I think we think about where it is in the cloud and we're so I mean today if you look at AI, it's not really an NVIDIA versus us. NVIDIA is a fantastic partner of ours and will be for a really long time. But we think that the industry

is going to benefit from choice. And we think that they're, just like there's lots of different database options, lots of different storage options, in the AI space, I think customers are going to want there to be a lot of different compute options. And so it's not all going to come from one provider. And so we thought we could jump in there and build a platform with Tranium that can give some variety and choice in there and hopefully help some customers save some money.

And speaking of variety, you guys through Bedrock offer multiple different models. You guys did also have an announcement on your own Gen AI models, Nova. What has demand looked like for Amazon's models versus Anthropic and others out there? Talk about sort of the difference between offering your own models, building your own, and offering other choices. Well our own models just launched today so I'm not really sure what the demand is yet but there's been a lot of buzz and people are excited about trying them out. But broadly speaking, and this is one of the things that gave us a lot of

confidence is customers really are latching onto this idea of choice. And when we talk to customers, many of them are using different models. They might use open models, they might use image models, they might need a model to do movie generation, they might need a model to do reasoning. And we actually see that rarely is someone just using one of them. They're using a lot of these in parallel, and they're testing. And so we thought, from models that we'd been building internally at Amazon, and our Nova models,

that customers would appreciate that additional choice. And in particular, I think the Nova models were really good when customers are looking for models that are of very low latency, and quick response times, and low cost, and they're very capable models as well. So we're really excited how customers respond. But I expect that they'll also be used in conjunction with all the other models that we offer in Bedrock.

One of those that you do offer is Anthropic, a major partner you guys doubled down another $4 billion investment last week. What's the return gonna look like on that? And why not at this point just try to buy the company? You guys keep putting another four billion dollars in. We love that team. It's, you know, I think we like investing in them,

but we like partnering with them as well. We learn a lot from them as partners and as customers. We announced today that we're jointly building what we call Project Rainier. It's the largest compute cluster that anyone has ever built. It's five times the number of exaflops used in the cluster that they use to build their current generation of models. And those models are the best in the world today.

And we're building a cluster next year that's going to have hundreds of thousands of Tranium 2 chips and deliver five times the compute power. So I think they're going to be able to build some really cool models out of that. And we're excited in that deep partnership because AWS customers get to use those models too as part of Bedrock. And so we think there's a lot of benefits there. Quick last question. There has been this criticism that Amazon is behind in AI. What is your response when folks say that to you? Yeah. You know, look, people said that, I think particularly a couple of years ago ago where everybody rushed to slap some Gen AI thing out there really fast. And they were hurrying to get a chatbot out there. And we took a different approach.

We really wanted to focus on getting a platform that would integrate with us. Because we have enterprise customers that are building their businesses on top of us. And so we wanted a platform that would integrate with their enterprise data, that would be secure from the very beginning, and would let them really build a wide swath of applications that they need. And so very methodically and intentionally, we built a bunch of capabilities and features that allow you to do just that. And now when you look at Bedrock, you see that a lot of the production applications that are starting to roll out

are all being built on Bedrock because of that. And so people may have thought we were ahead or behind. We're willing to take that criticism because we really believed in the strategy that we were going after. And now we see that growth starting to happen. Matt, it's great to see you. Thank you so much for your time. Yeah, thank you for having me. We'll send it back over to you in the studio. Thank you for being here.

Yeah, I appreciate it. Yeah, it's great having you guys. Thank you so much, Kate Rooney. Let's bring in Amazon shareholder now and CNBC contributor Malcolm Etheridge of Capital Area Planning Group. It's good to have you as well. What do you make of what you heard? Yes, Scott. I'm very encouraged as an Amazon shareholder in everything that I just heard from their new incoming CEO, particularly in the realm of chips, right? So when we heard about the Tranium chipsets, I mentioned to you last time I was on with you that one of the biggest threats to NVIDIA and NVIDIA shareholders alike is one of the big four companies that relies on NVIDIA chips suddenly decides to start working on their own and

then strikes gold. And it sounds like what we're hearing from the announcement, initially at least from the announcement with Apple and Amazon, that other companies are seeing value in these chips that Amazon is out there providing so much so that they're now on Tranium 2 and allowing them to test on those. And so I think that that is probably one of the biggest, most interesting and probably more important developments from this conference so far, because if Amazon is able to position itself as the provider, the number two or number three, even behind AMD provider of those chips, that could be a whole other business line in similar fashion to AWS, where that part of the company sort of carries the water for the e-commerce business. You suggested Amazon's underappreciated when compared to the other mega caps. In what way?

Yeah. So I believe that, you know, coming into this year, we were talking about all the other mega caps and then Amazon, so much so that, you know, the share price was under pressure. I know that since then, you know, call it three months ago, maybe it's actually started to take off and has jumped ahead of the likes of Microsoft and I believe Apple as well. So it's starting to get some love, but I bought shares of Amazon back in August at roughly 167. Even then, shareholders or investors were saying that Amazon is sort of behind in AI. We just heard Kate with the interview

talking about how people are still saying that Amazon is behind when it comes to AI, but I think that they're making it very clear that their plan is to become the everything store of AI, not necessarily be the dominant large language model, even though we didn't get a direct answer to the question, why not just buy Anthropic outright? So maybe that is a development later to be seen. But I think that Amazon's strategy wasn't necessarily obvious to everyone the same way that some of the others were.

But I think that now it's becoming more clear just how they will become the uh everything store here i'm glad you went there because i was going to ask you about that when mr garman was asked about that and the perception that they were behind in ai he's like no just we just took a different approach and they i guess have increased the way they've taken that approach by continuing to invest in Anthropic. Yeah, I think that Amazon's focus is not necessarily on having one best offering, right, with a large language model, a chat GPT, for example, or a Claude or something similar. and mid-tier players to come in and build on their chassis so that all of those web service credits will continue to be built up and bought up coming from AWS, which allows them to stay

the number one player in the cloud services model, which they built and pioneered 15 years ago, right? So they initially built it as an in-house tool and then all of a sudden realized there was potential to sell it outright. I think that maybe that's the same strategy that they're taking with AI, and it's just going to take some time before it's obvious to us mere mortals. Yeah. Malcolm, thanks for joining us.

Nice to have your reaction to that interview. Malcolm Etheridge up next. The mentalist, Oz Perlman, is going to join me here at Post 9. He's standing by with a new trick, also a stock market prediction you don't want to miss. He seemingly gets nothing wrong. I don't know how he does it. He'll blow our minds again next. All right. Welcome back. From professional athletes to celebrities to yours truly,

Oz Perlman, a.k.a. The Mentalist, has blown the minds of many over the years and turned a childhood hobby into a full-blown business. He's now one of the most sought-after entertainers around and has dropped by Post 9 to blow us away once again. Welcome back. What a pleasure, Scott. Thanks for having me on again. I'm really happy to have you, though. Every time I see you, I get

nervous. Yearly tradition. Because I don't know what you're going to do. You don't know. I'm going to get inside your head this time. I'm going to tell you, one of the joys of what I do is not only seeing people's reactions, but getting to travel the country. I do events all over, big and small, and I get to see places. And I'm going to tell you a place you are not going to believe me. Google this, folks. For stock picking, there is a city. I was going to upstate New York, and it is called Speculator, New York. Are you familiar? I'm not. Google this, everybody.

I want you to remember this moment. I'm telling you right now. Speculator New York. Talk about good stock pickers there. Speculator New York is a real city. Do not take my word for it. Upstate New York, Speculator New York. And I want you to remember this during my segment.

And this is CNBC, the greatest financial network in the world. We need some skin in the game to make this exciting. So I have with me, come on now, I brought a little money. Remember my dollar. Big spender. Big spender. It's a gentleman's bet. It's a gentleman's bet.

A dollar, Speculator New York, and let's get things underway. You know what? Let's pick some stocks, but I need some more people in the mix. Who else can we entice in here? We have our Contessa Brewer. Contessa. Oh, I'm just right here. Like, how nice to be brought in.

You just appeared. Contessa covers gaming. Sheessa. Oh, I'm just right here. Like, how nice to be brought in. You just appeared. Contessa covers gaming. She goes to Vegas a lot. This is perfect. Might be a ringer. This is perfect. So, you know, we're all picking stocks. The two of you, random.

Me as well, but we're going to do it in a funny way. Now, a picture is worth a thousand words. Take a look. These are 50 logos of 50 of the large cap stocks in the world. You are going to recognize them all. And I'm handing you each a marker and one of these. And you're going to look through this and you're going to be picking a stock for each of yourselves. Don't let me see it. Circle it. Wait, wait, wait until I turn my back.

Wait until I turn around and contest the same thing. Picked utterly at random. And I am going to close my eyes. Once you have each circled your stock, I want you to put it close to your chest and let me know when I can open my eyes. All right. You're good. Have you done it? Is it close to your body?

You're good. Was that utterly random? I did not tell you what to pick. Is that true? So I want to completely tell the viewer they need to know. All right. And now we need to pick one for me. And so I can't touch these because then I might do something tricky.

So these are the same companies all written down, General Electric, Intuit, Netflix. Here's what I'm going to do. I'm going to start dealing. And whenever you get an urge, I want you to stop me. I'm going to deal them face up. And the next one, I'm going to lay to the side. So Scott, I'm going to start saying them out loud. SAP, NVIDIA. I'm going to go fast. When you want to stop on the next card, sight unseen, I'm going to go fast. Chevron, Shell, Novartis, AbbVie, Tesla, Visa, L'Oreal. Now, before we go further, because you stopped me right here, I need to know that this is where you stopped me. You feel good about it. I do. But Contessa's over here and I want to unite here. I want to get two

minds at the same time. Contessa, do I put this card that Scott stopped me to the side, or do I keep going further? Go further. So just know that right now, you could have stopped me on Merc, but you didn't. I'm going to keep going fast. Whenever you want, you say stop. AT&T, Cisco goes by, IBM, Meta, Novo Nordisk, LVMH.

Am I stopping you? Whenever you want. Palantir, Are you sure? Yeah. You're stopping me right on this card before I put it aside. You're certain? This is the card. Okay, I'm putting this aside.

I'm putting it right here. It's going to stay right there. My money goes on top. Okay. I want everyone to see what could have been. Could have been General Electric, Wells Fargo, Netflix, Toyota, Adobe. Could have been Danner. Could have been any of these other ones.

Here's where this gets fun. I think I know what Contessa would have done with her stock. I think that what you thought to yourself is, what will I pick? Something that's been in the news recently? No chance. I think she said to herself, I'm going to manage up. I'm getting some good air time. We're going to go with our parent company.

Comcast owns NBC and CNBC, spinning it off shortly. Did you circle Comcast? Show everybody. Is she Comcast? She is Comcast, everybody. I want you to see that. All right. That could be a little predictable, maybe.

Can we see that? That is Comcast right there. Scott, close your eyes for me, please. Close your eyes for me. And keep your eyes closed. Come back to me, everybody, so you can see his eyes are closed. And I like to do a little voila reveal. Go back to me.

You see something just appeared out of nowhere. Scott, with your eyes closed, tell us. Pull that out of thin air. Before you open your eyes, what stock did you circle? What were you thinking of? Coca-Cola. Open your eyes. I am holding right here in my hands none other than a bottle of Coca-Cola, everybody.

Let's get in one tight shot. I seriously don't. I just don't. I know everybody has the same reaction every time. Now, speaking of everybody, everybody that's watching cares about their money. They want to see a return on investment on their stocks. And I don't care where you are in the country. If you're in Speculator, New York, do you know what you want to see if you bought

Comcast and Coca-Cola? You want to see your stocks go up. That's right. You want to see them hitting your 52-week highs. Am I right? Do me a favor. Can we get, what is, the control room, help me out. What is the 52-week high of Coca-Cola? Can we find out what is the 52-week high? Let's see if they can tell us. Do we have? We do have it. What is it? $73.53. Just so everybody at home knows, that means the most that the stock has traded for in the last 50 weeks. What was Comcast?

Can we know what's Comcast? About $47. $47.11. This changes all the time. There's no way to predict it. And what did I say, Scott? I said, Contessa, don't forget my dollar. Right.

You said that. So take a look. $1. And I want everyone to add this up. Help me out. 3 plus 1 is 4. 5 plus 1 is 6. Five plus one is six. We got 64. I was told there'd be no math.

Three, seven is 10 plus 11 is a one plus a one carry. That's 121. $121.64. Couldn't be more random, could it? No. There's nothing random. You stop me anywhere. Look at these cards.

Oh, no. PepsiCo, Danaher, AT&T, Chevron. You changed your mind in the middle. L'Oreal, AbbVie, Novartis. You saw every single one of these. You stop me on Abbott Laboratories. All right. Control room, please tell us, what is the 52-week high of Abbott Laboratories?

It is $121.64. Take a moment to let that soak in what just happened. But hold on. I told you to remember two things, my dollar, which we needed, and also Speculator New York. And there are people watching this show from all across the country, all over the world. And how do you know which city's which? What does the government do? They give each city a zip code, a five-digit code. Let me ask Siri a question.

Hold on. Let me ask. Siri, what city is located in zip code 12164? Zip code 12164 is located in zip code 12164? Zip code 12164 is located in Speculator, New York. Well done. Come on, man. How much time do you spend coming up with each new thing you do?

And then how long will you use a similar trick if you want to call it that? Too much. This is one and done, folks. This stock could change tomorrow. coming up with each new thing you do, and then how long will you use a similar trick, if you want to call it that? Too much. This is one and done, folks. This stock could change tomorrow. For you watching, that is going to be the craziest mind-reading stunt about the stock market you've ever seen in your life, because in one moment, that could change right now. Wait, but are those stocks going up or down?

They're going up, every single one. Drink some Coke, let's get some money going to Atlanta. Absolutely. Man, you're the best. Thanks for coming by. Thanks for having me. I love having you, especially when you're talking about this. You blow people away.

I'll see you in Speculator New York, gang. Yeah, you will. Now you're going to be really, really hot up there. I think I might be a Speculator famous, yes. All right. That's Oz Perlman. He is the mentalist. Wow. Thanks.

We do have some news out of Microsoft. We'll get to Steve Kovach with that. Steve, what do you got? Hey there, Scott. No magic tricks, but I do have for you that Microsoft is wondering if there's some leaks within the FTC. I got a letter here from one of the deputy counsel lawyers over at Microsoft asking the FTC inspector general. This is due to our Bloomberg report last week that there is a big antitrust investigation into Microsoft related to artificial intelligence and cloud computing and

a number of other things. And this letter from Microsoft's attorney asking the inspector general to look at whether or not this leak of this investigation is coming from inside the house, so to speak, and also noting that even though the Bloomberg report said there have been some investigative materials passed on to Microsoft, this attorney is saying, or the Microsoft attorney, rather, is saying they have not received it and have not received any information about it. I will also note, sometimes leaks like this, when we hear about these antitrust investigations, Scott, sometimes, yes, they do come from within the FTC, but another source is also when these investigations happen, they go to rivals.

They go to other cloud rivals, for example, in this case of Microsoft or other productivity rivals of Microsoft. So sometimes leaks come out from rivals of Microsoft who might want to put some damaging color on what they're doing there. But again, we have here, we've asked the FTC for comment on this, but right now the FTC, as of last week, was not commenting on any investigation going on or antitrust investigation going on with Microsoft. You see Microsoft shares down just a tick here, Scott.

All right. We'll follow it. Steve, thank you. That's Steve Kovac again. You didn't pick Microsoft. That would have been just too bad. You could have picked Microsoft. By the way, thanks, Contessa.

Sure. Contessa Brewer, good sport as always. Up next, we're tracking the biggest movers into the close. Seema Modi is standing by with that. Hi, Seema. What a block, Scott. One cloud company failing to meet sky-high expectations and one pharma company soaring on promising trial results.

More of that coming up after this break. We have less than 15 before the closing bell. Back to Seema Modi now for the stocks as she is watching. Seema. Scott shares of Zscaler falling 5% with the cloud security's conservative guidance for the second quarter weighing on sentiment, as well as news that a CFO is announcing his retiring, which came as a surprise to the street. However, analysts this morning, like Piper Sandler and Wedbush Securities,

remain optimistic following Zscaler's Q1 beat. Shares still down about 7% this year. And then take a look at Janix Therapeutics, up over 50% after the pharmaceutical company announced promising phase one trial results for its late stage prostate cancer treatment. The stock has outperformed up about 450% this year, Scott. Okay, Seema, thank you. Seema Modi. Still ahead, what to watch for when Salesforce reports its results top of the hour, plus details on what's behind the big move in AT&T shares today. We're back on the bell after this break. Coming up next, we'll run you through what to watch for when Salesforce reports an OT. That and much more inside the Market Zone. That is coming up next, we'll run you through what to watch for when Salesforce reports an OT. That and much more inside the Market Zone.

That is coming up next. We're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day. Plus, AT&T, one of the best S&P performers today. Julia Borson with the details for us. Seema Modi looking ahead to Salesforce. They report in overtime today. AT&T, as we said, Julia, what's going on here? Well, Scott, AT&T shares are up four and a half percent after the company laid out its three-year plan to expand its 5G and fiber services across the U.S., saying that by the end of 2029, the company expects to nearly double its fiber locations to 50 million. AT&T CEO John Stanky is saying they expect to return more than $40

billion to shareholders over the next three years through dividends and share repurchases, including an initial share repurchase authorization of $10 billion by the end of 2026. This as the company raised the lower end of its 2024 adjusted earnings forecast and from 2025 to 2027, guided to consolidated service revenue growth in the low single digit range and forecast a $22 billion annual capital investment. Back over to you.

Okay, Julia, thank you. Julia Borson to see Mamoti now on what we need to know about Salesforce before these numbers hit the tape. Scott, just in a few minutes, we'll learn whether excitement around its Salesforce AI agent has yielded big orders from customers in Silicon Valley. Analysts at Wedbush conducted channel checks and found that AI automation offerings from Salesforce are getting a warm reception from customers looking to add more efficiency to their organizations. Analysts there reiterating their outperform rating, a $375 price target on a stock that has run 30% in the past month, outperforming the broader IGV software ETF, which has been on a tear since Trump won the election. Investors will also want to hear from CEO and tech billionaire Mark Benioff about whether he sees the M&A environment

improving under Trump and if that will lead to more dealmaking, Scott. OK, Seema, thank you. Mike Santoli, we'll finish up. Got a couple of minutes to go here. A day not so similar to yesterday? No, not really. Just sort of firm at the index level. More stocks down than up in this consolidation mode.

But really, it's also a strong trending market, but a low momentum market. That's been the case for quite some time, with some exceptions. Four of the top biggest weights in the NASDAQ 100 are up more than 1% today. Only Amazon really has any news behind that. And so it just sort of shows you when the market sort of is indecisive for a moment and needs a little bit of ballast, that's where it reaches for. Last week was strong. It was supposed to be strong. Early December, there's a high probability of ballast, that's where it reaches for. Last week was strong. It was supposed to be strong. Early December, there's a high probability of just sort of a hesitation and a plateauing. So I think everything's fitting together fine.

You know, even Treasury yields cooperating and all the rest. I think it's more building up toward exactly what can this economy deliver now that everybody's economic mood has brightened so much about their earnings? Right. According to Chris Harvey. Yeah. That's how you're going to get to seven thousand and seven. Look, it's underway on some level in terms of, you know, the broadening out of earnings growth. Most stocks really didn't grow earnings, at least the median level for like a year or two. And so that should probably change. I do understand that is the case. Still, I mean, 7000 is a pretty heavy multiple on what's now expected for 2025 earnings, which is 275.

So you kind of have to account for a lot of things staying in good shape, including the credit markets, which have been just so rock solid. I agree with Chris, though, that we do have the makings for a big burst of risk appetite explosion, a lot of deals, a lot more kind of reckless haphazard activity, a higher energy market. It's not proving itself today outside of Palantir and Meta, but we have the ingredients. All right. Good stuff, Mike.

Thanks. S&P is going to go green by a few points, it looks like. Otherwise, it's going to be a mixed day. We'll see you tomorrow. We'll send it into overtime with Morgan and John.