Closing Bell - Closing Bell Overtime: 8/8/25

Episode Date: August 8, 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. Hong Kong Dragon Boat Festival, ringing the closing bell at the New York Stock Exchange. Dax ordering the honors at the NASDAQ moving higher today off their very best level. The S&P and NASDAQ posting their best weeks since June with gains more than 1%. The NASDAQ and NASDAQ 100 both hitting all-time highs in earlier trading. Tech and communication services were the S&P sector leaders, real estate and utilities lagged within the tech sector. Micron, Apple, Skyworks, and Palantir led those gains. Gold hitting an all-time high intraday.

It's 26th record closed this year, losing a big chunk of that gain after the settle when the White House said it would issue a clarification on its bullion tariffs. Oil ending the day modestly lower, hitting the lowest levels since June 6th that ended lower for the third week in the past four. Well, that's the scorecard on Wall Street. Welcome to Closing Bell overtime. I'm Morgan Brennan, along with John Fort. Well, let's get straight to the markets and the NASDAQ once again soaring two record highs being led by some familiar names. Christina Parts Nevelis is at the NASDAQ with more in what was not only

an up day, but an up week. Yes. So the NASDAQ, like you guys talked about. Let's start with that. Closing at a fresh record high today with Apple leading the charge through its best week in five years. Mega Cap Tech continues to just act as a safe haven for investors that have been spooked by tariffs, recent labor market volatility, including that shocking payroll miss and revision we saw recently. Money is really flowing into defensive tech names, Palantir, Tesla, alphabet. And that's what drove the NASDAQ hired this week because traders really digest the market's impressive almost 28% rally since the April lows. With August, traditionally the thin liquidity and the Fed September rate decision looming, investors just are parking their cash

and familiar tech names while they remain in this kind of like a wait-and-see mode. And I'll end on Nvidia because we constantly talk about they did hit an intraday high today. And that was driven by Open AI's breakthrough AI model release and signals that that Tesla may boost its tech spending. Those are two drivers helping fuel this name even higher. But it's still closed about 1% higher on the day and 5% on the week. John? All right.

Christina, thank you. And now let's head down to senior markets commentator Mike Santholi for a look at where we are in the markets overall as this week wraps up. Mike. Yeah, John, holding firm and those mega cap leaders enabling the S&P 500 to stay within 1% of its record high, which was a week and a day ago, essentially. And we've gone sort of sideways for a couple of weeks here in a sort of constructive way, I guess if you're just looking at the top-down view. I have the 50-day moving average in here, mostly because if you kind of look and say,

look, we're due for some kind of settling back action. Maybe that's a logical spot. People are thinking about it. It matches up, you know, roughly speaking with the old February high. I also feel like this is giving people some comfort because it's like, well, if it's only a three and a half percent move down to support, you know, why am I even going to play for that? maybe I don't have to take any defensive action. So obviously that kind of thinking if it becomes too popular can leave us vulnerable to a shock. But so far so good with a basically sideways week after Monday's little rebound rally.

Take a look here at the rest of the world relative to the United States markets. You know, year to date, rest of the world, that's the ACWX. That's well outperforming the S&P 500. But you can see real divergences here. That was when the U.S. was way outperforming after last year's election. It was the U.S. exceptionalism trade. We got the utter reverse of that. And still, global markets hanging in there.

In fact, multiple days this week, it felt like overnight strength in Asia and European markets actually gave the impetus for U.S. markets to work. Now take a look here at crude oil, relative to the energy sector of the S&P 500. So crude here in blue. Have a five-year look,

because that captures the burst higher around the invasion of Ukraine and really grinding low. really grinding lower here. That's probably good for headline, you know, disinflationary forces obviously can help the consumer, but kind of a gap opening up here with the stocks and how they're performing. So maybe they're starting to look a little rich relative to the commodity, even though they are focused on cash flow and not really being too aggressive in new drilling and such, guys. Mike, I think I saw a stat this week, and I don't remember exactly, but the top

stocks and the S&P 500 once again at these highs representing an unprecedented amount of concentration of market cap and I guess perhaps profitability as well. And I mean, maybe spending, too. When's the last time we were at these kinds of levels? Nvidia is, I guess, something like 8.5% of the S&P 500. And going back at least 40 or 45 years, that's about as high as the largest stock has been as a weight in the S&P 500. Now, we're We did get similar levels of concentration if you're looking at things like the top 10 stocks back in 1999 and 2000. I will say if you go farther back into the 50s and 60s, I don't think it was that unusual because you had the IBMs and GMs and AT&Ts that actually were massive relative to the rest of the market. I do think it sort of as you know what you own to me is like you have to recognize that every dollar you put in the S&P 500, 40 cents goes into 10 stocks.

you know, $0.33 goes into six stocks, whatever it is. And, you know, you have to hope that the profitability is going to be maintained at those levels. They are more expensive than the rest of the market, though. So even though they're contributing an outsized amount of the profit growth, they still have richer multiples on those earnings. So, you know, that's leading a lot of people to say, hey, maybe you want to emphasize the $4.93 as opposed to the seven. Okay. Mike Santoli. Thank you. We're going to see a little later this hour. Let's stay on the market. Let's bring in Ariel Investments Vice Chairman Charlie Babrynskoy and HSBC Chief Investment Officer Jose Rasko. Great to have you both here. Charlie, I'm going to kick this off with

you. I'm going to pick up on something that was just touched on by Mike and John. And that is what we've seen so far in this earning season because we've seen this upside surprise to earnings. But there's also been this debate with a number of Wall Street strategists writing about it this week on the concentration of those surprises being so heavy in tech and to perhaps a lesser extent financials. How do you see stocks? coming out of this season? Yeah, this is very important. The concentration in market cap is unprecedented, but those stocks are not contributing

a record amount of S&P earnings. They are trading at huge multiples and are not contributing the earnings that their market weights would justify. So there is a lot of evidence, if you look back at times, in which there's been this kind of concentration, owning the rest of the market has been the right place to go. I always like to point to people in 1999, Microsoft was a wonderful company, trading at 35 times earnings. Over the next 10 years, earnings tripled, and the stock went down by 50%. Valuation eventually matters.

I know I've said this for a long time, but we're starting to see some cracks. We had a much better month. The quarter to date was much better for small cap value. My fund, I haven't been talking much about performance because it hasn't been great relative to the market, but it outperformed the S&P by a lot this last quarter to date. So we're seeing some signs of change. Okay. Jose, how do you see this market, especially as I know,

your overweight U.S. equities? I mean, are we seeing a broadening out and are earnings what's driving it? Well, unfortunately, we've seen the opposite, right? Since the trough in April, Morgan, we've seen that the market has become more concentrated. The MAG 7 has driven a large part of the returns here. But what we see going forward is we see almost the quadrupling of earnings for the forgotten 493. And so to Charlie's point, I think you have to diversify.

And more importantly, not just diversify because growth value is now 4x in terms of that multiple, that's unsustainable. And the Mag 7 versus the forgotten 493 in the last three months has been a 4x multiple as well. But more importantly is what we call diffusion, which is a lot of those technologies that have been driving the market are now going to filter through the market and begin to affect earnings in financials. in education in hospitals all across the board, that's going to drive earnings for the rest of the

market. And we think that's what keeps the market rally going. Charlie, I know we're still waiting for value here. You were just mentioning it. What's going to be the catalyst, you think, that shifts the market's mentality and attention back in the direction that you favor? You know, it's always hard to predict, John, because, you know, that if it was easy what the catalyst was going to be, then the stocks wouldn't be as cheap as they are. I think one thing we can point to is some takeovers of smaller companies. There's so much private equity money sitting on the sidelines. So many big companies that have been waiting to do M&A to get more clarity from the Trump

administration, and we're now getting that. So we had a name Zimvi, which is a dental implant company that got taken over and was up 100% in two days. We're starting to see that kind of activity happening. The leverage finance market is in very good shape. I think that could be a catalyst, some smaller value companies getting bought. And Jose, part of your optimistic thesis is that productivity from tech is going to offset any inflationary pressures from tariffs. What kinds of productivity do you expect? How much is AI at this point factoring into that, or is it something else?

Well, AI plays a big role, definitely, John. And I think the key is it's not just productivity. It's the broadening out of that productivity. And you also have two other factors that we haven't mentioned. Number one is the tariffs we don't think are going to be as bad as what was announced on Liberation Day. That's an upside surprise to the markets from our perspective because what was priced in on Liberation Day probably is not happening. And the second factor, which we think is accretive to earnings in the near term here, is the Fed. And when the Fed begins to move, we think it's going to happen in September, December and March. When the Fed begins to move, that's also accretive to earnings. So we think there's upside surprise to earnings potentially here in the short term.

term. But we have to get through this recalibration of growth value. And to Charlie's point, I think that that's coming. But we're optimistic after that. Okay. We'll keep our seatbelts buckled, Jose, Charlie. Thank you. Well, the NASDAX up nearly 4% this week, closing out a record high, coming up, a closer look at some of the stocks helping to drive that record rally. Including Apple, which had its best week in five years. Still in the red for the year, though. Is this the turnaround moment? Or is it still lagging? when it comes to AI. We'll be back in two minutes. Welcome back to overtime, the hottest stock in the market, raising its temperature further.

This on the heels of blowout earnings that I brought you right here on overtime to start the week. Palantir has been up every day. It's its best week since February. The stock is up 160% since President Trump took office 200 days ago. By far the best stock in the S&P 500 over that time as well. It's now the 18th biggest U.S. company. by market cap, and it's trading at a record high. Near a half a trillion dollar market cap, getting close. Well, let's stick with tech and two well-known names that made headlines this week. Apple rallying 13 percent's best week since July 2020

after agreeing to invest in additional $100 billion in U.S. companies and suppliers. And Intel still managed to post gains for the week as President Trump called for CEO Lit Bhutan to step down, claiming he is, quote, conflicted by past business ties to China, current as well, I guess, Intel responding to the claim, saying the company, the board, and the CEO are deeply committed to advancing U.S. national and economic security interests. Joining us now to discuss both these stories is Ben Baharan. He's CEO and principal analysts at Creative Strategies. Ben, good to see you. You think Intel's answer here is going to be enough? How much of a threat is a potentially uncooperative President Trump to Intel's turnaround?

I mean, I think it doesn't help things, obviously. I think, you know, this is, administration has obviously been less engaged with Intel, and especially with this new CEO in Lipputan, even though he just started than prior administrations. I think obviously, you know, with Biden and even prior Trump, you know, Pat Gelsinger was, was very, very active. So we do think that there's an element of this, which is, you know, trying to get a conversation going, trying to get some joint win-win announcements with Intel in their increased manufacturing in the United States. And we think an outcome for this will be some form of a meeting of the minds, you know, handshake, win-win, that just talks about more what Intel's doing to invest

in America and keep us at the bleeding edge of manufacturing semis. To your point, maybe this is how President Trump asked for a meeting. I seem to recall not too many weeks ago, he was being very critical of Tim Cook, and Tim Cook visited the White House. And then, you know, we saw from Tim Cook this week the announcement of this investment. Sale on this investment is enormous. And given what Apple's been doing over the years, trying to invest in certain suppliers in order to get the best pricing and prioritization for its own devices, how much in character or out of character of what Tim Cook would have already done, did this announcement look to

you? Yeah, it's really hard to see what's net new. I think there was more of a correlation between the companies that's being invested in. Obviously, a whole host of companies have been involved in this, many of them already current suppliers. I think Apple is just doubling down their commitment on what they will keep doing and using in American suppliers, which, again, I think is an interesting point because they have at times used some component providers who are not, you know, U.S.-based either in China or in some other

markets. And so I think it just doubles down their commitment to the component ecosystem as much as possible. And I also think there's some elements of this where, you know, even on earnings call, Tim Cook mentioned that they do expect their capex to go up. And so there's a question of what they'll be investing in. I think there's been some speculation about maybe they might start investing in some land or buildings for data centers and a small capacity, not a large capacity, but for their hybrid approach to AI and running some of those in-servers. So I think we'll see more of that. But it's like I said, it's very hard to see what's net new because most of these companies

Apple already works with. I think it's just the reassuring of the commitment to those U.S. companies and the ecosystem that they're investing in. Well, I mean, I'm just, I'm looking at this press release, Ben, for Apple and Corning, a $2.5 billion commitment that's new to produce all the cover glass for iPhone and Apple watches, not just that for ones that are sold in the U.S., but worldwide. And Corning's saying that they're going to increase their manufacturing and engineering workforce in Kentucky by 50%. Something that wasn't part of this week's announcement, but also was an investment by Apple, was this half billion dollar partnership with MP materials.

I mean, it's my understanding, speaking of folks involved in that, that that was years in the making. So I think this idea of reshoring your supply chain and expanding your supply chain, you have to get to a place of scale to even start to think about bringing prices down to make stuff in the U.S. to make a competitive with, for example, manufacturing in China. Is that what this is? Is this really a first step to something that's longer term in terms of supply chain for Apple? I do think it's part of that. I mean, I think you've seen some of the speculation, too, around, like, let's just say they start using, and I do believe they will, more manufacturing from TSMC, not for leading edge, because obviously we don't have leading edge foundries here from TSMC, but they have other products, right? They can use for Mac.

They can use for, as you said, phone. They could use for AirPods, any number of things, right, that doesn't need to run on the most cutting-edge semiconductor process. So those are areas where you already can see that scale come in. And I think, again, you know, TI was a part of this, you know, other, even global founders, right? They're not manufacturing at the leading edge. So I think it's, again, Apple showing, you know, we're bringing components, we're bringing this ecosystem to all of our products. Not all of our products need to be made at leading edge TSMC, and that benefits a wide ecosystem. And I think that's just, again, their commitment.

And like you said with Corning, they've worked with Corning forever, right? It just might be more products that they're bringing Glass to, which is, again, a doubling down, I think, of that relationship. which is, again, great for everybody. Okay. Ben Baharan. Thank you. Thank you. Well, coming up, gold hitting a record high, but losing some steam late in the day. As the White House says, it will clarify reports on tariffs on gold bars. We're going to get our traders take on whether gold can continue to shine.

And the software slump continuing today, a new culprit, Twilio. We'll hear from the CEO on the issue weighing on the quarter's results and why he says it's overdone. Over time, we brought back. Welcome back. Twilio falling hard down 19% after Q2 earnings yesterday that beat on the top and bottom lines, but gross margins and bottom line Q3 guidance missed. I spoke with CEO Cozama Ship Chandler about the higher carrier fees that hit margins. It's a fee that we ultimately pass through. It has some optical effects in terms of RP&L. But the bottom line is, is that it doesn't affect our ability to generate ongoing operating profitability and free cash flow. It doesn't particularly affect business dynamics. I mean, I think you kind of articulated the gist of

what happened there. We bill in U.S. dollars. A lot of our costs are denominated in other currencies. It's not more complicated than that. I think investors understand that there will be FX impacts from time to time. That's where we broke out the impact. I think as it relates to gross margins and growth more broadly, you know, we find ourselves in a position in which we're taking share in the overall market. I think, again, that's really the story here. If it means, that our messaging business in particular is growing a little bit faster. We'll certainly take that. That gives us a great opportunity to be able to grow into some of our other products and

services. The strength of that messaging business, squeezed Tullio's overall margin profile. But Chip Chandler telling me voice-driven AI applications for tasks like customer service are driving durable growth, Morgan. Well, it's time now for CNBC News Update. And for that, we turn to Angelica Peebles. Hi, Angelica. Yeah.

Hey Morgan. The Trump administration wants UCLA to pay a $1 billion settlement to restore its federal funding. University said today that the fee would devastate the school. Last week, UCLA's chancellor said the administration froze $584 million in funding for the school, which the Justice Department said was because the school was, quote, hostile towards its Jewish students. A highly anticipated report on improving children's health is expected to miss its deadline. Bloomberg reporting that the Make America Healthy Again, or Maha report, was set to release next week per President Trump's executive order. It's unclear why it's being delayed, and the White House has yet to comment.

And Jim Lovell, the commander of Apollo 13 has died. In a statement, acting NASA administrator Sean Duffy said that Lovell died Thursday in Illinois. Lovell flew four missions for NASA, including as commander of the failed Apollo 13 mission to the moon, made famous by the 1995 Move Me, in which actor Tom Hanks portrayed him. Jim Lovell was 97 years old. Back over to you, Morgan. Angelica Peebles, thank you. May you rest in peace.

A true American hero, 715 hours in space that's the most of any astronaut in the pioneering Mercury, Gemini, and Apollo programs. And he was also one of the first three astronauts to actually orbit the moon in the Apollo 8 mission as well. So a big loss with an American treasure. As the NASDAQ hits another record high today, many have wondered whether all the focus on big tech and AI is bad for stocks. Up next, we'll examine

whether it could also have negative effects on the economy. Well, we'll see how powerful the impact is, but the reality is that AI is here. So up next, we're going to hear from the head of Amazon Web Services about the impact as having on business and our families. So be right back. Welcome back. Well, stocks higher on the day and on the week. The S&P 500 closing less than half a point from a record. The NASDAQ up 1% today and actually closing at a record high. For the week, the NASDAG gain nearly 4%. It's the best week since the end of June. Apple, a big driver for tech's gains. Palantir and Tesla also joining in on the momentum. But we've talked about stocks getting hit hard on earnings disappointments. And today's example is Trade Desk, losing nearly 40% of its value. Take a look at this chart.

Trade Desk does advertising for large global companies. It says tariff concerns are hurting those customers. All right. Well, in Seattle this week, I got a lengthy sit down with AWS CEO Matt Garman. We talked growth in video, Open AI and Anthropic, China, even what he's telling his own teenage kids about career preparation in the AI era. We started with the financial results that sent the stock reeling last week. Look, we added, like, $1.6 billion of revenue quarter over quarter, and so the growth is really great. And when we talk to customers, the potential out there is just mass. We have, you know, maybe some by some estimates, 10 to 15% of workloads have moved to the cloud. And so there's an enormous potential out there.

And customers are super excited about AI. And so when we think about our strategy, we're laying this groundwork for where we think the real value is for enterprises. From an AI perspective, from a modernization perspective, from a cloud perspective, for the next two, three, five years out there. When we talk to customers about AI, which everyone's excited about AI, they should be, it's such a transformative technology that is really going to change. everything that customers do and every business and every workflow and every job out there. And when you think about that, a lot of the benefits that customers are going to get from a bunch of these in the future, when they really start to measure the ROI and when they really start to see how this is materially changing the business, is going to be from these agentic workflows.

Andy talked about being supply constraint in the cloud. Demand is outstripping what you, what happens when you are supply constraint? Does that customer wait? Do they go with a competitor? How does that fit into the context that people should understand about what's happening? Yeah, it's a really good question, and frankly, it's a place that we don't love being. And so, you know, I think that's something that we work really hard to make sure that we don't get supply constrained on. Sometimes there's a couple of workloads that we're unable to support from very large customers, particularly building very large training clusters or other things like that, where there's just massive, massive amounts of compute.

And we have kind of longer-term relationships with some of those customers where we kind of plan for future years out. But a lot of what we do is try to make sure that we don't impact mission-critical kind of enterprise or startup workloads that are kind of core to what they're doing. And so we think about there's some of these opportunistic workloads where they're really large swaths of capacity that sometimes where our view is we want to make sure that customers can run their businesses on us and that they can take advantage of the innovation and the technology that we have and that they can trust us for the long term. And so those are the workloads that we really prioritize for our customers as we think about what we can support and what we can't support. And we're working really hard to be able to say yes to everybody. And I feel very good about kind of where we are in the medium to long term. And in the short term, whether it's, and you know, it's like the whole industry is growing incredibly fast. And so no one can say yes to everyone.

And part of that is how do you continue to knock down the various constraints that there are in the world? And sometimes it's chips, sometimes it's power, sometimes it's other components, other times it's demand. And there's always constraints in business when you're trying to figure out which thing is perfect and growing. But also from a strategic perspective, right? And I wonder how that influences it because, for example, Nvidia DGX cloud, where Nvidia is saying, hey, not only will we give you the chips, we'll give you the rack and the networking and tell you how to connect it all. My sense is that Amazon has said, actually, we do that pretty well. We want to design our data centers top to bottom, be a great place for Nvidia.

but we're going to do that. Does that in a way take you longer then to build out your data center infrastructure in a way that you think is going to be long-term efficient? Is that part of what has you ending up supply constraint? I don't think so. No, no, no, I don't think so. So just on DGX Cloud, look, we're great partners with NVIDIA.

DGX Cloud runs in AWS. In fact, we're one of their biggest DGX cloud partners. Jensen and I talk all of the time. We're very close partners with NVIDIA. We do add value to that, though, right? And so there's the DGX cloud where NVIDIA actually adds some really great value to their cloud. They have some software on top to help customers train and get efficiencies out of their hardware, which is great. And they sell that on AWS today, and we have many customers taking advantage of that in AWS today.

We also sell NVIDIA servers, GPUs, as EC2 instances. And in those, we do add capabilities there. And so you're right, it's not just the same thing that you go get from everybody else. It actually has what we call Nitro. And so that gives customers much better enterprise security. It gives you better isolation, it gives you much better security, it gives you much better encryption. And so from a security perspective, we feel pretty convicted that that's an important part of running in a customer environment. And so we do add that, but that's unrelated to being supply constrained.

We've been building the nitro system for a decade now. We know how to add that in. And we work very closely with the NVIDIA engineering team to make sure that that seamlessly integrates. Garmin this week announced that some open source, open AI models are now on AWS for the first time. Given Amazon's investments in close ties to OpenAI rival Anthropic, I asked why having chat GPT on AWS is important to customers. Well, they're definitely the first ones out there, right? And so for sure they had early adoption, right? And they had first mover advantage.

And so I think folks love the open AI models just because they started getting going with them first. and they probably had a year-head start on many of the other models, and customers are familiar with them. So number one, I think they wrote a lot of prompts for them, they're familiar with them, and they're quite good models. And I think for different use cases, what we've always said is, we don't think there's going to be one model that's the best model for every single use case. Sometimes people want to use Open AI,

sometimes people want to use Clod's Anthropic Cloud models. Sometimes people want to use open source like Metas, Lama models. And sometimes people will custom-make their models for their very own use case that's very specific to a use case. And we actually think, and what we see is that many customers are actually use a variety of those models, and they combine them all together to build interesting applications. At the same time, Anthropic has become a hugely important strategic partner for AWS. One reason, Project Rainier. It's the AI supercomputer AWS is building based on its custom-designed Traneum chips. Anthropic has embraced Traneum

and is now the poster child for AWS' AI chip prowess versus Nvidia for better or worse. Well, they're a great partner of ours and the team has built some incredible technology. So kudos to that Anthropic team. They have a really great team there. And we share a lot of the ethos around really wanting to support customers and being missionary about what we're going after. I think one of the things they love about that team is they've really leaned in to AWS and Traneum. And they recognized early on the path that we were on and how that technology was going to allow them to scale and grow at a lower price and a lower cost and better performance for their customers. What does it mean to lean into Trinium?

Well, so they basically saw early on. We worked with that team. And before Trinium 2 was even launched on the market, they looked at it, realized that's going to be a great technology for us to build on, and kind of made a bet together with us, before it was even built into a server and launched. So now they're quite happy with it and we're scaling and worked out as a good bet for both of us. But it was, you know, they made that bet before kind of Trinium 2 was made as a chip. Now, zooming out to AI in broader society, I've got. two teenagers at home, one applying to colleges right now. I had questions. What are you telling or not telling your kids about what to study in order to not have to live off of you in the future?

Yeah, and I have a rising senior as well. And what I say is, I think part of going to college is building that ability to build critical thinking. And so I think it's less about the development of skills and the and it really is the how do you become a critical thinker and actually in some ways i actually think that's going to be the most important skill going forward is not do you know how to use the tool because if you learn to use a tool today five years from now it's going to be a very different tool and a different thing that you're going to want to do but that aGI isn't going to think critically for us it might but you're going to want to be creative you're going to want to be critical thinking and you want to be flexible and i think the ability to learn new

things and adapt is going to be just as important as any particular skill that you learn. And so, for better or worse, at least my wife and I are trying not to direct as to what they go think about, but other encouraging them to think about those, try to find ways to develop those skills. Finally, China, with tariff turmoil in China's ongoing trade negotiations with the Trump administration, I asked how AWS will navigate it. Look, we support all the countries that we operate in, and we operate in China, and we have through partners and we do have regions in China and we support customers there and they trust

our infrastructure there. And actually, global customers like to run an AWS in China because they can trust us to kind of run that infrastructure. So that's an important component of what we do. But from a supply chain perspective, for many other things, we look at diversifying for sure and trying to insulate ourselves from that. So that definitely is something that we focus on. There's a lot more to the interview for the full conversation. You can follow me and over time on LinkedIn. Morgan? Yeah, covered a lot there. Look forward to that. Well, up next, why the AI boom could be feeling a hidden risk to the economy and to your investments, sticking with AI, and later, Fast Money's Tim Seymour, on whether Gold's record rally will continue amid new

tariff uncertainty surrounding gold bars. Welcome back. AI-dominated earnings. AI-dominated earnings this quarter as companies race to lead the narrative. But taking the lead cost a lot of money. Amazon, Meta, Microsoft, and Alphabet are expected to spend around $340 billion this year alone in building out data centers and developing products. Our next guest is concerned about that spending, writing in a recent op-ed that the massive amount of money being spent poses a hidden risk to the economy. The Wall Street Journal, Chief Economics commentator Greg Ipp, joins us now. Greg, it's great to have you here on overtime, and let's start right there.

Why is this a hidden risk? well those sheer dollars being spent are just like a huge prop to the economy right now for example in the first half of the year the economy grew about 1.2% annual rate half of that came from information processing equipment investment and that was by and large data processing and all that's AI related so if something were to happen to this AI boom then I think that would be a very negative sign for the economy but secondly I mean for the stocks themselves right I mean there's a lot of open assumption going into the valuation as being assigned to stocks and anybody with exposure to AI. And the kind of spending they're doing can only be justified if they start to put up profits that are commensured with that investment. And it could happen. Smart people say it will happen, but it's not happening right now. And you're seeing that basically in the big drag on cash flow that this is capex has created. And when you see it kind of like a divergence between free cash flow and net income like we're seeing now, I think that people need to be a little

careful. We have also talked about, though, Greg, this AI investment halo and some of these other names that aren't the mega cap tech players that have been benefiting from this huge spend that we've been seeing over the last couple of years. And it has shown up in those companies' earnings and free cash flow numbers in some cases as well. And it comes at a time where you are talking about reindustrialization and more infrastructure spending and more manufacturing here in the U.S. Right. So I think that I I mean, for those of us old enough to remember the dot-com boom of about 25 years ago, there are certain sort of like echoes, right?

And at the time, anybody who literally put dot-com in their name got a halo effect. And I think it's important to remember that the dot-com boom or the Internet revolution, it was real. All that broadband cable that got laid really did advance the Internet and made us more productive and it was good for economic growth. It was, but in that competition to provide services, it kind of competed away all the margin. And I think that's what I would worry about right now. there's so much money going into AI and there's so much competition, it feels like somebody comes

out with a new model every week or two. It just strikes me that these are difficult conditions for anybody to be able to claim with confidence that they're going to be able to have a kind of a moat around the business, the sort of moat that generates consistent, strong profits the way, for example, Windows does for Microsoft or the iPhone does for Apple. Greg, doubling down on your comparison to the dot-com boom, if you look at, say, a 30-year chart of the S&P, it's a really long chart. It's not. non-standard. But the S&P didn't regain those 2,000 heights until right before, shortly before the financial crisis, when the iPhone came out. Even as Google was growing and mobile had become

a story in Facebook, social media, all these things driving the economy today had emerged, but the S&P was still coming back from those post-bust lows. What kind of impact? Are you saying that we're there again where you think things have gotten aheady enough that even if AI succeeds, the market's going to take a long time to grow into it. That's exactly right, John. I think it's a very important point. It's a nuance that's sometimes hard to convey. You can have a technological revolution, which is really good for the economy, but is not

great for investors. And I think the dot-com boom is exactly like that. I mean, we all benefited from the enormous spend that was put into like digital rollout, HTML and all that. And I'm so thankful to those broadband companies that went bustling all that broadband. for us. I am glad I wasn't one of the investors, you know, in those companies. It was good for all of us. And this is kind of what I worry about with AI. I don't, I definitely don't question the revolutionary character of what we're seeing with large language models and generative AI.

And I'm not disputing those who say that this could be a very big productivity boost for the economy. The question is, who gets the fruits of that productivity boost? Is it the users of the technology or the producers of the technology? And history tell us that it's often the users of the technology. Now, I am not at all saying that we're in a bubble and you need to get out that this is a dot-com. I just am not smart enough to say that. And then a lot of people who, John, were way smarter than me who says this thing is way bigger than the dot-com boom. All I'm saying is there are things out there that do remind me of, you know, excesses of the past that we need to be careful about. Well, we've been duly warned and Google bought a lot of that dark fiber

on the cheap. We'll see if anybody buys dark data centers. Greg Ip, thank you. Thank you. Up next, Fast Money's Tim Seymour on how to trade the names he'll be watching closely on next week's earnings calendar. And check out shares of Under Armour. Getting absolutely crushed today. It was a huge move. Finishing down 18 percent, having its fifth worst day ever after missing estimates on both the top and bottom lines. Warning expects to incur $100 million in additional tariff-related cost. Gross margins will be hit by supply chain headwinds and North America in particular coming in under expectations. Stay with us. Welcome back to overtime.

Gold got its 26th record close of the year and its best week since June. Still, the commodity gave up a chunk of today's gains after the White House said it would soon clarify reports of tariffs on gold bars. Well, let's bring in Tim Seymour. He's founder and CIO at Seymour Asset Management. Also a fast money trader. Happy Friday, Tim. So at these near highs with these politics, can gold still play a traditional role in your portfolio? My guess is people have asked this question at various points.

over the last 20 years and gold's 20-year chart is one of the best ones out there. I think the same dynamics which have us setting those record highs almost on a weekly basis are alive and well. And they are trends that are not just about the end of U.S. exceptionalism or suddenly the end of the dollar is a reserve currency. I think dollar remains that way. The interesting part of the trade, though, really has been that the gold miners are now starting to outperform and they typically, historically, had a nice beta to gold. But if you look at the GDX, massive move. So outperform the underlying metal. by about 15% in the last three months, and 50, 0% year to date.

I think gold miners, which have operational leverage, which for the first, I'd say, year of this big gold move, people are focused on the cost inflation they have, but they are generating massive free cash flow. Analyst have to upgrade their base price and their gold models, and it leads to major upgrades, and I think there's a lot more to go. Yeah, and of course, if interest rates come down, carry costs come down, and that's another tailwind for gold here, too. Now let's turn into our earnings next week.

Yeah, 100%. Yeah. Cisco, it's one of the names that's reporting next week. It hit a 52-week high today, and it was the second best stock in the Dow right behind Apple. What are your thoughts on Cisco? it's it's back to the future for certainly felt like it feels like that for the market with apple but for Cisco the story is a more predictable earning stream so this rotation into security and software and and then the networking dynamics that at least i i think we've heard pretty good news here i think the street's expecting pretty good numbers it it leads to a place where Cisco is the cheapest mega cap tech stock out there it doesn't have the growth of others but in a mid to maybe growing high single-digit EPS profile at 17 times.

A small re-rating means I think the stock's going to continue to go higher. They have cyclicality, but they have somewhat de-risk the business, and I think I hire a margin business means a higher multiple. Okay, one last one for you. We've got Circle and CoreWeave reporting next week. Circles up more than 5X since it's IPO. CoreWeave, more than 3X since it's rent public. Nice if you've got them.

Can you still buy them? Yeah. I think you're waiting for a pullback. I think it hasn't made sense. Neither stock have made sense in terms of multiple from the get-go. Having said that, they are in a sweet spot. And if you have a problem with multiples, look at Palantir, and you've been wrong if you thought it couldn't go higher. I think there's a lot of fluff here. I would be careful. Any disappointment. I think they get hurt. All right. Tim Seymour. Thank you. We're going to see at the top of the hour for fast money. Looking forward to that. Yeah. Up next, Mike Santoli looks at the historic underperformance of consumer staples and if a reversal could be on the horizon. Welcome back. Let's bring back Mike Santoli one last time to look at the underperformance of value and defensive stocks and whether it's time to place your bets on a comeback. Mike, what do you think? Yeah, Morgan, in fact, continuing this theme, kind of a happenstance theme, of looking at today's market situation and comparing it to prior decades when you had similar levels. of extremes. So here's the consumer staples waiting within the S&P 500. It's five percentish right now. Hasn't been that low except for this brief moment back in 1999 when, again, that was a

period when big growth and tech stocks were kind of dominating pretty much everything about the market. You see it tends to go up when you're entering recession. You probably need genuine recession scares or outright weakness, as well as maybe some more confidence in some of the underpinnings of some of the consumer staples business models in order for them to work, but you have the makings anyway for a very long-term reversion to the mean trend that may work in favor of this group

or at least stop working against it so much. So somewhat similarly, Russell 1000 value index relative to the Russell 1,000 growth index, not quite at the same extremes we got to at the peak of the bubble in 99 and 2000, but kind of well on its way and it's a similar angle and persistence of underperformance.

And again, there's a lot of people questioning literally the fundamental underpinnings of what we categorize as value stocks. Did we need a boom-bust manufacturing cycle like we had in the 70s and into the 80s for that group to get cheap enough to get to outperform from there? Who knows? But the point is, you do have, again, the makings of a very unbalanced market that maybe can come back into line. I always point out, too, this surge in value relative to growth we saw after,

2,000. A lot of that was just that growth collapsed, not as much that value really started to soar. Okay. So I'm seeing there's been a theme in some of our conversations in this hour today, and it has been some of these comparisons that are getting made to the late 1990s and that tech bubble bursting, the dot-com bubble bursting. So I am going to ask you the broader question of other comparisons, other things that you're watching that make this similar or different. I would point to a few things that are different or not quite. quite nearly at the levels we saw back then. One of them would be just the supply and demand for equities, meaning IPOs back then,

something like 500 IPOs in the year 1999, most of them doubled on day one. We have nothing like that. In fact, you have very little net issuance of equity right now. A lot of companies staying private longer. So you don't really have that. And while retail investors absolutely are very active and arguably are kind of setting risks aside and looking for kind of these big, long-shot payout type bets, it's not clear to me that it's really built upon itself

and used a lot of the leverage. And the final point, speaking of leverage, is the build-out of the AI infrastructure is mostly happening with cash on hand by these big companies. Yes, you're seeing signs of some borrowed money getting in there, meta doing it, maybe X-A-I doing it, but it's not the prevailing mode. So that suggests to me not as much systemic risk

is being built up right now. All right, Mike. Thank you. Yep. Well, let's talk next week's trade real quick. On the economic calendar, a key inflation reading when we get July CPI Tuesday. Thursday, weekly job was claims in July PPI and retail sales and import prices close out the week Friday. On the earnings front, core weave, circle, Kaba, Cisco, applied materials, and deer are among the highlights. And we'll also get an IPO, crypto exchange bullish. That's slated to begin trading on Wednesday, Morgan. Yeah, it's not just bullish. It's also Miami International. Also a crypto IPO we're expecting next week. And then, of course, we've got this possible sit down between President Trump and Russia's Putin as well to watch. And oil has been under pressure ahead of that. The president will stay in the news for sure. Yeah, that's going to do it for us here at overtime.