Closing Bell - Closing Bell Overtime 5/27/25

Episode Date: May 27, 2025

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.

That bell marks the end of regulation. Performance Good Group ringing the Posen Bell at the New York Stock Exchange. Austrian Reporting Services doing the honors at the NASDAQ in a big rally on Wall Street as the president delays tariffs on the EU and consumer confidence comes in much better than expected. Tech was the leader as the Big Mag 7 stocks jumped. Tesla up more than 6 percent as Elon Musk says again he'll be shifting his focus away from politics back to his companies

a move higher in the chips every member of the SMH in the green led by Marvell Arm, On Seme and Microchip the ETS snapping a seven day losing streak retail rallying as well the specialty names leading VF Corp, PVH, Capri and Wayfair up more than 4% gold falling 2% today and yields closed lower as the dollar posts its best day since May 12. The airline stocks in the green. Southwest getting an upgrade today. Jeffreeze as the company ends its free baggage policy.

Stock up more than 5%. Now let's get into today's rally. Stocks posting their best day in two weeks with every S&P sector closing higher Tuesday's move follows a losing week on Wall Street with the major averages all sliding more than 2% So should investors trust this rally or proceed with caution? Let's bring in aerial investments vice-chairman Charlie Brinskoy and fun strat head of research Tom Lee guys welcome Charlie you like small cap value here versus large caps, but this is a day when a lot of risk,

tech and big tech are rallying. Why is that gonna stop? Well, because over the long run, valuation and multiples have been very good predictors of small cap versus large cap. If you look at a three by three matrix of small, medium, large, value, core and growth, the one sector that's currently trading at a PE below its historic average

is small cap value. Large cap growth is trading at the biggest premium to its historic average of any of those buckets. And historically again, that predicting PE, relative PE has been a very good predictor of future performance So I acknowledge right now Large cap growth has got all the momentum but on a valuation basis small cap value is the one attractive area Tom Lee you don't completely disagree, but I think you mostly do you still like the large caps You still like tech as well now the small, your small cap call has not worked yet. So why do you think on the flip side here, large caps and tech can continue to perform?

Well, I mean today S&P and tech, I mean they're up over two and a half percent. It's not because the tariff headlines were better over the weekend. It just shows you that most investors and many large investors are dramatically underweight equities and this is a bit of a panic buy into the market. And I think when they look for, when we think that this is what's taking place, that means leadership is going to come from the large liquid sectors. And that's why we think the MAG-7 is going to be leading. I mean, financials, industrials as well, but a lot of washed out stocks, like stocks that

really got beaten up early in the year, didn't make new lows in April, were the MAG-7. So I think that's where the leadership is coming from, John. But I agree with small caps that when investors finally start to focus on fundamentals and small caps will rally in, I don't think it rules out small caps having a huge second half. Okay, hold on.

We've got Okta earnings rolling in. Stock is down big. Steve Kovach has those numbers, Steve. Yeah, John, shares are down about 10, 10 and a half percent on these results, despite beating on the top and bottom lines. Let me give you those results first. EPS coming in, 86 cents adjusted, Street wanted to see 77 cents. Revenues a beat here by 8 million bucks, 688 million, Street wanted 680. As for guidance although it looks pretty good on the on the

numbers wise there's some commentary here that might be why we're seeing a drag on the stock. They're saying in the release quote, we're now factoring in potential risks related to the uncertain economic environment for the remainder of fiscal year 26. Just as a reminder, we're currently, this is for the first quarter of fiscal year 2026. But again, guidance looks pretty much in line

or above estimates, despite that commentary seems to be sending shares down 10.5% John. For the quarter Steve, but if I look at the full year revenue guidance that was expected at 2.86 billion. It is lower. Yeah and what they're saying here 2.85 to 2.86 it looks like that full year guide is lower right? That's right, that's right. Q2 looking good but the rest of the year because of this uncertainty they're driving it down a little bit so yeah now you see shares taking a little bit of a leg lower as we're talking here, John.

Got it. Steve Kovach, thank you. And Okta CEO is going to break down these results exclusively with Jim Kramer. That's coming up, Mad Money at 6 p.m. Charlie, coming back to you here now on the value front, how do the U.S. budget deficit and the bond market factor into your medium term strategy given what we see going on in Congress? I would say short term, it's very hard to predict when these budget deficits are going

to show up in a big way. But in the long run, what can't go on forever ends. And these kinds of deficits that we're running right now can't go on forever. Very hard to predict when it's going to end, but we are in unprecedented levels of debt right now. We are unprecedented levels of deficits. This is going to be inflationary. Deficits are by definition inflationary.

When the Fed starts to fund them by borrowing more or by printing press, it's going to be inflationary and then tariffs are fundamentally inflationary. So again, very hard to call when, but long term this is the real threat. Tom, security stocks have been on a nice run in general, but as we see Okta sort of pulling in the full year revenue guidance here, even though the results themselves look pretty strong. Tom, that and also the context of Salesforce doing this attempted buy of Informatica,

is this environment more bullish or is it not with the macro uncertainty? Well, I mean, companies should understandably be cautious because the tariff drama is still in play. I think investors are ultimately going to give pass to companies that don't give guidance. I mean, I don't think Okta's sort of pulling guidance means actually there's a downturn coming. It's just, I don't know how anyone could actually say what they expect for the next two quarters. But that being said, I do think 2026 is shaping up to be pretty good. So not only do I think it's a good M&A environment

next year, but we'll have deregulation, we'll have some visibility on taxes. I think the tariff dramas behind us and the Fed who's been on hold is probably gonna be dovish next year. I mean, to me, all of that means PE should be going up and I think the seven trillion of cash on the sidelines starts to get deployed.

Okay. Charlie, we've still got rates higher for at least for now, probably for longer than a lot of people would like and we've got a consumer that's overall getting pinched on the credit side. We'll see how overextended. Now, I know you like value, but value gets affected by those things, no? How should investors navigate that? Yeah, a couple of thoughts there. One, it is true that higher interest rates actually

have less effect on value than on growth because value stocks have a shorter duration. Their cash flows are coming sooner than growth companies whose cash flows are in the far distance. So higher interest rates, all else equal, have less effect on value stocks than on growth stocks, low PE versus high PE. But you're absolutely right. One of the real bear cases on value is the consumer. Today's news was very positive for the consumer confidence, but all of us who are talking to companies are still worried about the consumer.

And I will admit that is more of a headwind for value stocks than for growth. Tom, Bitcoin at around 110,000 right now, very high levels, and you think that that's bullish for growth and risk overall? Yeah. I mean, Bitcoin for the past 10 years has been not only a leading indicator, but I think a risk on indicator because it does respond to liquidity. So Bitcoin made an all-time high last week. Bitcoin peaked a month before the S&P did.

So I do think this is telling us the S&P should be making all-time highs pretty soon. But it doesn't mean I think Bitcoin's capped as well. I mean, I think we have to keep in mind that institutional adoption for Bitcoin's growing. I think that consumer awareness for Bitcoin actually is still pretty nascent. And so when we still have a visible demand coming and a fixed supply,

I think it's a lot of upside for Bitcoin. All right, Tom, Charlie, thank you. Thanks. Meantime, Charlie, thank you. Thanks. Meantime box earnings are out. That stock is popping. Deirdre Bosa has the numbers, Dee. It is surging up 15% at one point, now currently up just more than 12%.

It is a slight beat on the revenue, 276 million versus 275 expected. EPS 30 cents a share. We're not going to compare that to the street estimate though because it includes a negative impact from non-cash deferred expenses guidance Q2 revenue forecast better than expected 290 to 2 91 million the street was looking for 285 full year revenue guidance also beat 1.17 billion versus 1.16 billion estimated.

So looking good and likely on this guidance, John, is why the shares are surging up more than 12% right now. Back to you. Yeah, different story from Okta. Dee, thanks. Well, we're about 24 hours away from one of the most anticipated reports

of earnings season, and that is Nvidia. That stock was higher today by more than 3%, up 25% this month, but flat for the year. You've still got time to buy before the big release or sell. Well, what should you do? We've got a bull bear debate on Nvidia when overtime's back in two. Welcome back. Let's turn to what could be the week's biggest stock story, Nvidia earnings tomorrow here in overtime.

Shares have rallied in May up nearly 25%. Market cap back above $3 trillion. The numbers are crucial because Nvidia is at the center of an ecosystem of stocks that could move along with it. Those include semi-companies like AMD, Broadcom, and chip manufacturer Taiwan Semi, data center and AI infrastructure plays including Vertiv, Dell, Supermicro, and Coreweave,

even some software names like Snowflake, C3 AI, ServiceNow, and Datadog. And Nvidia might be in your portfolio, even if you don't own it directly. The stock is the second largest holding in some popular ETS, SPY, XLK, and the Sox, and it is the largest holding in the SMH. Joining us now to set the table ahead of those results,

Ruben Royce, default managing director, and Gil Luria, head of technology research at DA Davidson. Guys, welcome. Ruben, you cover, of course, NVIDIA and a bunch of smaller stuff and semi-optical comms equipment. Is Nvidia in your view a host unto itself or which of these names tend to react the most to it positively or negatively? Thanks for having me John and yeah you said it. I mean Nvidia is part of this

massive AI infrastructure spend and build that we have been witnessing over the last several years. But certainly that infrastructure spend goes beyond one company, right? So there's a network built around these clusters of AI compute that are going into the data centers around the world and we have a lot of thematic stocks within that framework that we like, optical component companies, system companies.

And you mentioned software. I cover EDA companies. And we also think that that's a fundamental building block of semiconductor designs. And we've seen an accelerating rhythm or pace of semiconductor designs being driven by AI infrastructure spend. And so, yeah, there's a big ecosystem here.

And we think NVIDIA numbers will be very important as we think about the overall ecosystem as we look beyond the first half of the year into the second half of this year. Gil, you've got a hold, I believe, on Nvidia. Why? Especially after this past quarter's results when we heard Meta and some others saying they're still opening up their wallets wider to buy stuff that's got to include Nvidia chips. Yeah, so we think the current stock price balances the bull and the bear case. The bull case is the one Ruben presents where if everything is fine, Nvidia should continue to grow and therefore it's probably trading at a pretty good multiple that could keep going from here. The bear case has to do with what the outcome is for China. We really don't know how severe the restrictions are in terms of Nvidia's ability to sell into China. China

is at least a quarter of where ultimately Nvidia chips end up. And all we know right now is that they had to stop selling H20s. We know the US government is restricting the sales there. We know the government is trying to prevent the sales of Nvidia chips into Singapore, Malaysia and other countries from arriving in China. So if China sales slow down from here, it's not going to be enough that Nvidia's large customers continue to buy. Amazon, Microsoft, Google, their buying is starting to plateau. Meta and Tesla are continuing to buy. But if there's weakness in the China revenue, if there's weakness in some of those other Neo clouds

that have to raise capital at extraordinarily high rates in order to buy GPUs, there may be downside to estimates. I would point out that NVIDIA estimates were adjusted up all the way to February for two years, and then in February, the numbers started getting adjusted down. If the earnings tomorrow lead to further earnings adjustment down, it's gonna be hard for the stock to outperform.

Ruben, we tend to spend a lot of time on NVIDIA's near-term chip sales and maybe not as much on how much its software moves and systems moves are actually locking in a loyal customer base that's going to be less likely to move even as competitors try to provide a different kind of value, at least on the price line. What are you listening for on the call? How much value do you ascribe to evidence of that ecosystem growth and loyalty extending? Yeah, it's developers, developers, developers, right?

And Nvidia has the widest ecosystem of developers built around their CUDA, which is essentially CUDA software, which is essentially the operating system of AI today. And so I think that's one part of the framework that we'll be listening for, but certainly networking, as I mentioned, is becoming much more important

as a part of this AI infrastructure build. And Nvidia has a lot of proprietary networking interfaces that just last week at Computex in Taiwan, Jensen Wong talked about opening up a little bit of that technology into the broader ecosystem of, you know, compute AI compute that goes beyond GPUs. And so yet another way to potentially monetize this vast portfolio of technology

that the company has built up. But to Gil's point, certainly China is something that investors are going to be watching for as a potential risk. But I'd also mention that in addition to hyperscale spending, which continues to trend upward, not at the rates, obviously, that we've seen potentially over the last two years. But we are starting to see sovereign nations, sovereign governments, and other entities starting to come into the mix here the Saudi and Arabian Public Fund Humane talked about a big build with Nvidia we saw the UAE version of Stargate being announced last week so I think

there's a lot of spend coming and we're just now ramping the initial Blackwell infrastructure out there in rock-scale designs and I think that's got a lot of legs behind it as we look into the second half of this year. Gil, is Broadcom any more attractive given that it's approaching all-time highs, a market cap back above a trillion? So the point about Broadcom is that they are gaining share. Right, if Nvidia has almost 90% share of the data center GPU market right now,

but Nvidia's largest customers are diversifying away from Nvidia. Amazon and Google make their own chips and are ramping up that production with Broadcom's help. And then you also have Microsoft and Meta, even Tesla to some extent, testing their own chips and trying to ramp those up. And the big Chinese customers, who are very big customers of Nvidia, like Alibaba, Tencent, and ByteDance, they're now looking at Huawei chips. So Broadcom has an opportunity to grow its share

as it helps other companies make their own chips. Okay, we're gonna have that report right here in overtime tomorrow, Gil Rubin, thank you. Thanks John. Also tomorrow, don't miss Jim Cramer's interview with NVIDIA CEO Jensen Huang, that's 6 p.m. on Mad Money. Well, shares of Vale Resorts are moving higher after hours after it announced its former CEO

and current executive chair Rob Katz will be returning to the CEO role. Katz is replacing Kirsten Lynch, who has stepped down as CEO from the board. The company also reaffirming its full year guidance. All markets rallying today, the NASDAQ leading the charge, all the MAG-7 names in the green.

Up next, Mike Santoli looking at possible weakness in the broader market. Trade contributing to the gains as tariffs on the EU put on pause. Up next, we'll also show you how factories in China are scrambling to ship product during a 90-day pause in tariffs. Overtime we'll be right back. Welcome back to overtime. Shares of fair Isaac have been under pressure after the head of the federal housing finance agency criticized its cost increases last week.

But the collapse in the stock paints a bigger picture for one part of the market. Let's bring in senior markets commentator Mike Santoli for more. Mike? Yeah, one category of stocks, John John and take a look here at FICO Along with FISERV. These are both financial services kind of digital networks. Of course FICO's credit reporting Products and then if I service payment systems and other financial services software They fall into this category of what are generally called compounders Which are growth companies

that have a very wide competitive mode. Often it's like a very concentrated industry competitive set, maybe almost like an industry utility, great pricing power. Investors have loved these and put big multiples on them. But you see here, both have faltered pretty badly for different reasons, but it is emblematic of something going on in this group when there's a little bit of a glitch in the growth path, there's some regulatory scrutiny or some kind of a hiccup, you'll see them suffer. Take a look too, within life sciences tools, so this is another area very much favored

by those sort of compounding investors, growth at a reasonable price type investors. Now this obviously is because of cuts to spending on NIH and medical research and other aspects of what's happening in this particular industry. Biotech's also getting hurt. Well, these provide the tools for biotech research. And then if you look at an ETF that is meant to capture this characteristic of stock, it's

the TCW compounders ETF, you see how it really did just have a break there right at the end of last year. And so there's a rethink of just how much we're valuing these things and not all of them have suffered I mean things like Visa and MasterCard have done very well they are in this category but it is kind of interesting how it's knocked this sort of complacent part of the market somewhat off balance John. Mike I wonder to what degree those things have some similarities FICO and Fiserv you have perhaps some moats

being breached in how the finance system has worked in the past. And then overall with the Trump administration, the assumed rules for the past, you know, 60, 70 years on a number of fronts are shifting now. It's a big part of it. And it's very interesting, actually, that they would be going after Fair Isaac because that company really has kind of broadened its scope It's not you know They've made credit reports almost like kind of an identity confirmation tool They've infiltrated it everywhere and they keep raising the prices and it's all you know things like title

Insurance is also in that category mortgage title insurance at the At the same time, the administration is trying to, you know, really strip away a lot of power from the Consumer Financial Protection Board. You know, they're kind of going after this one sliver here. So it's a little bit haphazard in terms of the regulatory landscape. And I wonder how much it speaks to the overall way disruption happens.

We're used to talking about that just in tech, but there are gonna be ways of figuring out credit worthiness, we've got names like Affirm, like Klarna working on that without some of the mechanics that provided arguably monopoly-style strength to some of these names in the past. Yeah, it's a big test of just how much the actual, having the actual data in-house all the way back throughout history and having some sort of privileged access to it

like FICO does, how much that's necessary and how embedded that they are in the process of essentially evaluating credit. I know that there's players like Upstart says, AI can do it and Affirm you mentioned there. So yeah, I'm sure that's one of the reasons that people are a little bit concerned that maybe their competitive position

is not what we thought it was. Yeah, gotta keep watching all these changes. Mike Santoli, thanks, see you again in just a bit. Now it's time for a CNBC News Update with Julia Borstein. Julia? John, the Kremlin is lashing out at President Trump today after he posted on Truth Social that Russian President Vladimir Putin was quote playing with fire over massive Russian strikes in Ukraine. He also wrote that, quote, really bad things are happening in Russia. This afternoon, a top Russian security official, former President Dmitry Medvedev, responded that the only really bad thing to worry about is World War III and that he hopes President

Trump understands that. First term Alabama Senator Tommy Tuberville is looking to leave Washington and run for governor of Alabama. The Republican and former college football coach just made the announcement on Fox News, saying he wants to win the state house to focus on workforce development among other priorities in the state. And a judge issued an order this afternoon temporarily barring the Trump administration from withholding federal funding

as it tries to kill New York City's new congestion fee. The first in the nation program charges most passenger cars $9 to enter Manhattan south of 60th Street during peak periods. Today's order keeps the fee in place until at least June 9th. Back over to you. Julia, thanks. Well, check out shares of Opta down, let's see, about 12 percent, reporting at the top of the hour.

It is trading low on concerns about its full-year guidance. The numbers come as First Trust Cybersecurity ETF hits an all-time high today. CrowdStrike and CloudFlare were among the leaders. We're going to get deeper into the cyber trade ahead. Welcome back to Overtime. Wall Street rallies today after President Trump delays a 50% tariff on the EU. The NASDAQ leading up more than 2%. S&P up 2%, snapping a four-session losing streak.

Tesla up nearly 7%, despite Europe's sales that dropped by nearly half in April. Elon Musk's promises to mostly leave politics behind and refocus on Tesla, adding to the positive sentiment. And the other big chip earnings report this week, Marvell due out Thursday. Stock up 5% today. One of the best performers in the NASDAQ 100. Still down though more than 40% this year.

Let's also check bond yields, slightly lower today, gold down nearly 2%, and at the top of the hour we got results from Box. That stock jumping about 10.5% on results, and guidance for the full year looks better than analysts had expected. The other big report out this hour is APTA. That stock is moving lower, about 11% on concerns

about its full year guidance. The move comes as cybersecurity stocks soared today. The CIBR ETF hitting a record high on the back of strength of names like CrowdStrike and Fortinet. Let's get into the cyber trade with Peter Levine. He has Evercore ISI Cybersecurity Analyst. Peter, it strikes me that if you had sold Okta and CrowdStrike when they had trouble over the past two years,

it would have been a mistake, probably still even after this drop in Okta after hours here. What's the lesson about the importance of security in this era with data and AI? Thanks, Jacques. I'm beyond. I would say the secular trends powering security go unabated. The need for security transformations to stay ahead of the threat landscape AI more broadly,

I think it's just better understood by investors today. You can't just halt security transformations. I think security possesses unique industry-specific dynamics that no other subsector of software holds. For that, I think there's a conviction for investors to pay up for growth, especially within software security. What about the competitive pressures? Why didn't somebody else eat their lunch in these situations

where they got embarrassed so badly? And what can investors learn from that? Yeah, I think there's a lot to say. I think for one, for CrowdStrike, I think for them specific outside of Okta was its management. I think they did a pretty good job of navigating the choppy waters that they found themselves in. And I think they came out a bit stronger. They changed their go-to market. So there's a lot they did to the customer to kind of make them happy. And then you saw the results.

It's also an evolving platform. There's a lot more security products that CrowdStrike has to sell into their install base. There is a trend within CISOs, within organizations to consolidate security spend, the tools they have. And I think CrowdStrike sits front and center. I think for Okta, that one has obviously traded at a discount to the group for obvious reasons with the mis-execution, some of the go-to-market issues, but it sounds like most of that was

behind us. I think the results we're seeing now, again, I think a lot of that has to do with the guide. I will have to make one correction. They did keep the full year guide flat from last quarter. It just seems like they didn't carry forward the beat, which we saw in the quarter. For Occi, specifically, it was, you know, they've had their issues,

but it seems like they've overcome. Yeah, it seems like expectations were for that guide to be higher for the full year, based on the expectations for the quarter. So what are the questions that you would have about that then? Is this just garden variety, caution based on the macro environment? It seems like some other companies are indeed

upping their guides in tech at least. Does this cast a pall of any sort over the cybersecurity trade or no? Yeah, I don't think so. I think we've heard from other security companies where the month of April was a bit not challenging, but they saw a couple of days where sales cycles were elongated. There was some hesitation,

but it seems like most of that went away. For Okta, we want to hear is they just de-risking the guide or are they just kind of using the market as an opportunity just to kind of keep guide flat and then hopefully create a beat and race scenario throughout the next three quarters. For them, it's just kind of understanding the upsell motion of their platform. They're the only vendor that has the three core products of identity. If you think about AI, that becomes a huge upsell opportunity around the number of non-human

identities, the AI workflows, the bots, the co-pilots, those all need to be provisioned with security and access controls, which is identity is top of mind for most CISOs. So there's definitely the demand is here. I'd just love to hear what they saw in Macro, if it was any different from what we've heard from Palo, Alto, Checkpoint, or even Fortinet. Right. We've got CrowdStrike and Rubrik coming up soon.

Do you see at all the geopolitical shifts changing the competitive landscape for these companies? I know there's a congressional hearing tomorrow. I don't think so. I don't think threats don't slow down in a recession. Hackers, especially state-sponsored groups, they operate regardless of any economic cycle. I think CISOs, even boards, are taking security a lot more serious. You saw what happened with Coinbase and the cyber issue they went into and obviously the impact. Threat

landscape is not going to change because we're in a recession. You have regulatory mandates, which are actually forcing companies to spend more. So there's a lot of secular trends here that I think should power the demand for security, specifically I think identity stands to benefit the most with the rise of AI. All right, Peter Levine, thank you. Now still ahead, find out why AI is proving to be a risky business for one major industry

that's been perhaps too slow to adopt the technology. But first, our Eunice Yoon takes a look at why it's anything but business as usual for factories in China right now. Now that the U.S. and China have called a 90-day tariff truce, factories like this one in the port city of Ningbo are shipping out as many products as they can.

Welcome back to Overtime. Shares of Chinese e-commerce company PDD Holdings, which owns Temu, are tumbling after reporting a 47% plunge in net profit because of increasing competition, weak consumer sentiment at home, and ongoing trade uncertainty. And speaking of China and uncertainty, in the latest China Lens, our Eunice Yoon takes a look at how factories in China are dealing with the fallout from the trade war with the US. I'm at a factory in the port city of Ningbo.

A hundred percent of its products have been selling in the U.S. on Amazon and other retailers. The company says that it's feeling relieved about the U.S.-China tariff truce, but it's hardly business as usual. Like many other Chinese factories, this maker of outdoor gear and other items has been holding inventory for its us customers who stop shipments when President Trump hit China with 145% tariffs in April. Boxes are piled up next to production lines which the company says is not normal practice. These boxes have been

here since January there's a post a ship out in April. For now most of this factory's clients are trying to rush backlogged orders to the United States during this 90 day pause in the trade war. But some may face delays because of a lack of space and container ships since so many suppliers here are doing the same thing. The factory says that it's responsible for all the costs

until its products reach that port. Everything else beyond that, it says, is paid for by U.S. importers, as well as other American companies, including the tariffs. Without having some kind of visibility into what's gonna happen next, basically everyone's sort of lost, frozen frozen not really knowing what to do next which makes it you know very hard for businesses to invest for the

future. For its future this factory is looking for new customers outside of the United States since April it started shipping to Europe and Latin America. This area used to be packed with boat awnings that would go to the United States, but almost headed to Europe. Unlike the American versions, these European ones, which will be used on lakes rather than the ocean,

don't have a protective coating for saltwater redesigned by a Chinese factory. Unsure of what comes next. Redesigned by a Chinese factory, unsure of what comes next. These tariff issues have become so sensitive in China that the company that we visited didn't want to be named in our report and the factory managers didn't want to be interviewed on camera, John. Eunice, it's interesting how the tastes are different between the U.S. and other areas of the world where some of these manufacturers might want to send their goods instead.

How much of a challenge is that for them? It's a really big challenge. In fact, I spoke to one manufacturer who specialized in coffee mugs, and he was telling me that for the U.S., they have special machines to make extra large coffee mugs because Americans tend to like to have these huge coffee mugs that are 12 to 18 ounces. But he said that in Europe, you have small mugs and here in China, you have average mugs.

So you don't actually see these kind of large mugs that people like, actually personally I do as well. But the, actually can't find them here. But the machines that they have in the factories are catered toward the US. And then they have a lot of people who speak English. So you have these kinds of situations where factories have spent their entire existence

really focused on the US market. Some of them have 100% reliance on the US market. And now they're in this situation where they have to change that entirely. It's a really, really big challenge for them. And if they change it over, I guess that's a long haul bet. Yeah, absolutely.

All right. Eunice Yoon, thank you with another great China lens. Well, consumer confidence is staging a big comeback in May, but up next Mike Santoli digs under the report's surface to reveal what could be a concerning trend. And shares of Hullogic spiking midday on an FT report that private equity groups Blackstone and TPG made an offer to buy the medical technology company for more than $16 billion. Hullogic rejected the deal, although the FT cites sources that said talks could continue. Be right back. Welcome back to Overtime.

As stocks rallied today, consumer discretionary was the best performing sector. Consumer confidence was much stronger in May, higher for the first time in six months, and had the biggest jump in four years. Tesla among the stocks leading the way, but travel names also did well. In particular, there were big gains in restaurant stocks. Darden, Brinker, Shake Shack, Dave and Buster's all up nicely today. So while that consumer confidence report was strong on the surface, one key part of the report still looks soft.

Let's bring back Mike Santoli for more on that. Mike? Yeah, I would say more of a mixed report. Definitely some relief attached to the headline numbers because basically consumer confidence was so deep in the depths coming into this and it was better than expected. But here's what's called the labor market differential within the conference board's consumer confidence survey. And what it does is it asks

people every month, do you think that jobs right now are plentiful or jobs hard to get? And the ratio of the people saying plentiful versus hard to get, that's what this line shows you. So obviously it's very cyclical around, you know, business cycle expansions and contractions and you see it continues with this downward trend now it's not as if people are saying that that jobs are more scarce than not in other words plentiful is still out numbering people saying that they're hard to get we are above the zero line but it does show you that there is a softening tone to the labor market at least in the perception out there and even some things

Like help want it's all the job openings data So we have a labor market that's a little bit maybe close to stall speed even though we're clicking toward a hundred thousand plus Monthly non-farm payroll gains on a base of employment that we have right now. That's actually not that heavy So it's something to keep an eye on and it's a reminder that things like the labor market were decelerating even going into the end of last year, John. Mike, I know there's probably no exact data on this, but anecdotally, I'm hearing that for new college graduates, those entering the workforce, it might be below zero, right?

Jobs really are a lot harder to get than they were, say, two, three years ago. I don't know if that bears out anywhere in the data and how much nuance there is within that data when you're talking about stage of career and certainly industry. I actually think there is data on that. I mean, you can basically, there is an unemployment rate for new college graduates. You can actually kind of slice it, and that's true. It actually has really contracted in terms of availability of jobs or at least people catching on with new jobs. So I think

there has been, you know, and this is born out in the aggregate data too, where there's not a lot of layoffs happening but the hiring rate is also quite low. So companies seem like they're kind of stuck or they're just in wait and see mode. Who knows to what degree, you know, AI is displacing certain types of job functions that maybe new college graduates might be attuned to. So trust me, I'm pretty alert to these trends. I got a kid going to be there within a year or so. Yeah, we're about that age. And the magazine editor in me, I used to do that once upon a time, makes me think that

this is perhaps a new kind of youth recession when you take that difficulty finding jobs on top of the high cost of getting a first time home and some of the other costs, cars out there, it's very different from what the job market used to be when maybe they'd lay off mid-career people to hire cheap young labor. It is true.

Now this maybe arguably happens every 15 years or so. I mean you can talk to the millennials and say hey we graduated college after the global financial crisis. We were stuck for a long period of time. That was the whole you know college graduate living in the basement story. I was you know I came out of college in the early 90s. That was actually considered at the time a pretty rough job market coming out of a recession too. So it's not unique, but I do think that right now the affordability crisis as well as, just kind of the low metabolism hiring rate for white collar is something that we might have to deal with

for a little while here. Indeed, Mike Santoli, thank you. Well, shares of cruise line operator Viking Holdings moving lower in the after hours, that company announcing the launch of a secondary Offering of about 30.5 million ordinary shares by certain selling shareholders JP Morgan and B of a securities are the underwriters for that offering the stock down 1% this year Now a new report finds most banks have a lot of catching up to do when it comes to integrating

AI into their businesses. Up next, we'll break down the risks that banks are facing if they should fall behind. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We'll be right back. Welcome back to overtime. A new report finds perhaps surprisingly low percentage of banks are using AI to gain a competitive advantage over their peers. Leslie Picker has the details.

Leslie? Hey, John. Yeah, a new report out saying that banks are, quote, falling behind when it comes to AI. While the industry is doing plenty of experimenting, only about a quarter of firms are using the technology strategically, according to Boston Consulting Group. The research found that most banks are, quote, playing it safe using AI for individual productivity improvements rather than broad-based transformation. Now, there are several reasons for this.

Number one, the bank's data is notoriously fragmented and general purpose large language models aren't applicable here. Additionally, 61 percent of firms told BCG that running a foul of regulation is a tough concern and fully embracing the technology. But the report serves as a reckoning for an industry that spent more than $30 billion on AI last year, more than any other industry except software. And the stakes are high with BCG saying the window is quickly closing for banks to fully embrace AI or risk losing their competitive position. The report says Gen.AI and agentic AI will dismantle current modes that banks currently enjoy, things like complexity and sticky customers and opaque pricing.

However, the double-edged sword in all of this is if or when banks fully lean into AI, there could be a drastic reshaping of the workforce. One unnamed large bank in the report is said to be targeting a 35 to 50% reduction in headcount by 2030 with full potential deployment of AI. John. Leslie, an interesting wrinkle here that you alluded to is data management. And this in a way ties back into Salesforce's plan

to acquisition of Informatica. I was speaking a few months ago with the CEO and founder of Sierra. It's a company that tags, organizes, uses AI on critical data so that organizations like banks can tell what is personally identifiable information, perhaps regulatorially sensitive information versus not. And they really have to go through,

especially the big banks that have been around a long time, a whole lot of data and be absolutely sure that they have it organized and managed correctly before they can apply AI to it, right? Isn't that part of the challenge that the challenger banks can move faster because their customers are all new, their data's new, but the banks that have stuff on paper or on tape,

they've got to really sanitize that and organize it. Yeah, I mean, 60% of banks' tech spend is going to kind of run the bank technology management. So that doesn't leave as much for AI and upgrades and so forth. And to your point about the data fragmentation, it's one aspect of it is that the data is essentially all over the place for a lot of these large firms. The other aspect is that you have to essentially ring fence the data so that you're

not allowing the data that's from inside the bank to go externally to train models elsewhere. That's a huge component of it as well to make sure that the data is secure and safe and not being used for training outside of the organization. So all of those things take time, they take a lot of money, and they're not always able to use the same vendors that other industries are able to use. Alright, Leslie Picker. Thank you. What a day it was for the market. The Dow closing up about 740 points, the S&P up 2%, the NASDAQ faring the best of all.

Is that a good runway for Nvidia? Maybe that does it for overtime. Fast Money starts now.