Closing Bell - Closing Bell Overtime 9/2/26

Episode Date: September 2, 2026

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, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing an end to the trading day at the NYSC Metafast, ringing the closing bell, and at the NASDAQ, SL Science, closing out the trading day. Welcome to closing bell overtime, live from Studio B at the NASDAQ market site. I'm Mike Santoli. Melissa Lee is off. Stocks moving higher after three straight days of losses, the Dow adding nearly 300 points, the S&P 500 up half a percent, the NASDAQ composite, and the 100, with gains as well. Stock's getting a bit of a reprie from oil and treasuries today, oil still was just slightly high.

higher. The 10-year yield down a bit, but early in the day got as high as 4.82%. That was its highest since November of 2023. Much more on the markets coming up. And another big hour of earnings as well, Broadcom, Snowflake and Hewlett-Packard Enterprise, all are due out in minutes. But let's begin with a look at the stocks and sectors making big moves. Did it? Christina Parchina. Let's hear with those. Christina. Well, NVIDIA led the way. The Chimaker climbed roughly 3 percent on report is closing in on hugging face, which is the hub for open source AI and a deal that could total around 14 billion with a billion dollar package to keep its people. Bloomberg says nothing sign yet. Reach out to

Nvidia. I haven't heard anything back about this, which means maybe something's up. That read-through lifted the broader chip trade helped also by Dell's beat and raised just yesterday. Another sign, the AI data center build just really isn't slowing. The next test will land in just the next few minutes, which HPE and Broadcom. Cybersecurity, though, went in the other direction. Palo Alto Networks was the worst stock in the SB 500 down roughly 9%. It beat and raised guidance, but gross margins slipped its cloud cost climb. And on a stock, this richly valued that was enough to drag it down. Crowdstrike Fortnet. Also down with it in sympathy. Uber switching gears completely said it is cutting roughly about 10% of its workforce, just over 3,000 jobs. Its biggest reduction

since the pandemic with management ranks trimmed roughly 20%. So that's what a lot of the job cuts car as it braces for a robotaxie. Future stock, though, you could see almost 2% higher, so still in the green. And the green also shut up where you might not necessarily expect it. Com services, communication services and materials both ended the day up more than 1% with almost all of their constituents higher on the day. Reddit, charter. You can see Reddit up over 9%.

Charter led comms while steel dynamics and new core lead in material, which overall is a welcome shift. Yesterday was the market's worst start to a month all year. September 1st had more lows than any sell-off since May. One day later, the green came back. It is interesting. There's been some wear and tear below the surface. And I think also, they have more months down than up, yet the market is up solidly for the year. So it's coming in spurts. You mentioned Nvidia leading the way, obviously a little bit headline-driven, going off of the earnings last week. It sometimes works against the rest of, semis, or at least it sort of acts as a maybe defensive quality play within semiconductors.

You saw a little bit of that today. Not every semiconductor stock participated. And you've seen that for the last several months, the divergence between Nvidia and then all of the other chips. Invita being used as a source of funding for whatever, you know, higher-rated stock there might be or whatever bonus that they might get through the earnings cycle. And so maybe today is that reversal. Will that hold on the technical stamp? but I was reading one note just saying that, yes, NVIDIA has really hit the special with that 70% growth revenue target is helping. But overall, I know you talked about it with Scott in the last hour yields, the 10-year yield really playing a big part in just the sell-off that we're seeing in tech. Momentum basket.

There was many notes about that this morning just speaking about how we've really seen a reversal, even down to the July lows near situational awareness when that blew up. And then, of course, you talked about oil, but 91. So it's all adding to the fuel of like, here are all these. rise in costs. Tech firms are just, you know, issuing more debt, ballooning when we don't even know what the ROI is going to be over the next few years. In a lot of ways, parts of the market are still kind of in payback mode from a very exuberant second quarter.

And I think we have to figure out what the right level is, even as we're into September. It's interesting, though, the software play. The fact that we are seeing just this reversal, you know, chips had their moment and now software. Some of these names are having their moment. Perhaps the by side estimates, whispers aren't as high as they were. but it's showing that, you know, AI is not eating everyone's lunch on that side.

Not yet, yeah, for sure, Christina. Thank you. All right, now to the bond market, as yields did take a breather, but not before the 10-year made new highs and yield. Rick Santelli is in Chicago for us. Hey, Rick. Santelli's good enough. Listen, if you look at a two-day chart of two years,

you can clearly see we had more of a high-yield scenario early, and then, of course, it started to dip on the two-year yesterday's close was the highest yield close going back to July of 24. We'll call it two years. And if we look at the two-day-at-tens, as you pointed out, Mike, a little bit more aggressive than the two-year. The 10 years did indeed stretch out a little bit before they reversed a bit. 478 is the last 477 now. That's down three basis points.

The two-year is also down about three basis points. And the 10-year closed yesterday was the highest yield close since October. of 23, the intraday highs today, as you pointed out, were an intraday high going back to November of 23. And the reason all this is important, of course, is because global rates continue to rise, and it's not like we had a big reprieve, but it's not quite as aggressive. Boond yields clicked off a close of 3.38 15 plus year new high yield close. UK, 523, 18-year fresh high-yield close. The French was 425, 18-year high-ield closed. Japanese, over 3%, fresh 30-year high yield closed.

So we see that the global rates keep going up. The U.S. isn't far behind, but not quite as aggressive. And even though we had the beige book for the next meeting, which is September, which is now gone from almost 70% yesterday to about 64% today. Of course, the beige book was pretty much moderate, mean middling. There wasn't any big adjectives there. So we may see that we start to join. drop those percentages, and the closer we get to the meeting, the more important it is to monitor what the market's expecting from the Federal Reserve.

Mike, back to you. Yeah, for sure. See how jobs fits into that and everything else. Rick, thank you very much. Well, Snowflake earnings are out. Seamimimodi has the number. Mike Snowflake, the Dita warehouse operator, delivering a sizable quarterly revenue beat, $1.55 billion versus the $1.48 billion estimate. Adjusted earnings beat by a wide margin, 17 cents. Two metrics came in slightly lighter than expected. Product gross margins at 74.7% versus the 75.1% while remaining performance obligations came in at 9 billion. The street was looking for around 9.5, but let's talk about guidance. Snowflake does see third quarter revenue and operating margins above analyst estimates. That is a sign that AI-native solutions are gaining traction, though it does see its full-year non-gap product margins coming down to 74% versus the previous outlook of 75.

But as the company says, they're balancing growth with discipline. That remains a top priority. CEO Shreidharvama Swami and the press release, citing the AI tailwind and mentioning operational discipline positioning snowflake to capture the opportunity ahead. We're looking at shares up now about 19 percent here. So a big mover, and it was already up about 40 percent, my going into today's print.

I would point out the company's also raising its full-year product revenue guidance to 36 percent year-over-year. That is better than expected. Yeah, comfortably at a new high. with this aftermarket move. Seema, thank you. Heelah Packer Enterprise earnings also out. Christina has those for us.

I'm back. HBE beating estimates and raising guidance across the board. So earnings came in, EPS at $1.11 versus 93 cents expected revenues of $12.21 billion ahead of the streetview. The company posting a record backlog with orders growing faster than revenue, driven primarily by networking. Their networking firm at heart, which actually came in at $2.9 billion, a hair below estimates, while cloud and AI hit $9 billion above the street. Gross margins, stronger thanks to networking, though CEO Antonio Neri told me that he expects another round of price hikes.

HPE did provide a strong Q4 guidance and is also raising its 2027 framework too. There are two headlines that have just hit the tape, which is why you're seeing the stock just bounce around. First, a new $3.5 billion deal with a hyper-scaler that will use HPE's traditional servers for its own inference, no name given. And then, secondly, an expanded partnership with Oracle. This is a three-year global rollout of HPE Juniper networking gear across Oracle's AI data centers, part of a, quote, multi-gigawatt buildout. I pushed, asked for some terms, what does multi-watt gigawatt?

They didn't tell me, but C.O. Antonio Neri tells me demand overall is still outpacing supply, something we've heard from Dell yesterday. That backlog keeps them constrained into 2028. networking after Juniper is now running a 3.5 times faster than revenue. And he says that's why they signed all of these multi-year agreements with key suppliers, especially in the memory space. I also push back on, you know, whether those long-term agreements could break because that seems to be the bare narrative for a lot of the hardware and chip names. He told me there are stringent commitments on both sides.

So right now you're seeing the stock just teetering in positive territory. Mike? All right, Christina. Thank you. The S&P 500 rebounding following a three-week losing streak, three-day losing streak, but it has not traveled far since hitting a then record above 7600 at the beginning of June. Despite the lack of conviction at the index level, there are some notable moves underneath the surface. As always, joining us now is Baird's strategist partner and chief market strategist Chris Veron. Chris, good to see you.

Great to be here, Mike. You know, it's been fascinating how you've had this kind of orchestrated rotation. It's worked very well, keeping the indexes supported, some little bit of down. damage being done on the cyclical quadrants of the market? I wonder if that's sort of, we got another stealth correction and now we're done, or is there something that we watchful for? You know, I would say with conviction, it's probably been one of the most rotational markets I've seen in years. Really the only constant in this rotational tape has been how prevalent health care has been on both sides of it. It has just persisted and persisted.

Aside from that, I think you're right. There's a little chips in some of the cyclical trade that was so dominant for really not just the last year, really the last three years. I think industrials are probably exhibit A. Now, they are decently washed out here. And I think as we kind of get through the tougher seasonal into October, can industrials mount a charge here from an oversult condition? I think it's going to be a very important message as to whether this is, hey, your typical midterm seasonal sloppiness or is it the start of something more serious.

And on the consumer side, too, I mean, I just look at it on an equated basis. It hasn't really been, you know, doing much of anything. You know, I think when you look at particularly in the consumer space, discretionary versus Staples, legally weighted, which was such a potent signal back in late 22, early 23, that, hey, the game is changing. I mean, this has basically been sideways all year. So I think we've got to watch that carefully. And it kind of begs the broader question of what kind of bothers the market, at least in the interim here. Is it the idea that Warsh won't hike when he should, or is it the idea that Warsh is about to hike into a weakening? economic backdrop. That, I think, is the big question as we look at over the next number of weeks.

Yeah, that's been the fascinating setup with what's been going on in yields, the longer-term yields, where it's sort of like, well, the market's trying to reprice for something going on in the world, and for corporate demand, and is that the appropriate level for the rest of the economy? I think there's some exaggeration of what's happening in global bond markets right now. Number one, it's not a uniquely American story. Oh, sure. G7 rates across the board are up here. U.S. yields are actually among the more benign of those. If you look at the range, whether rolling 12 or 24 months, it's actually one of the narrowest ranges we've seen in decades.

I also think it's important that this move higher in yields the last couple weeks has not hit credit along with it. In fact, even where there's been big concern, hyperscalor debt, you've seen tech IG spreads actually contract here. So I'd listen, I'm certainly mindful. of rates. There's some level here that we seem to have hit that the equity market doesn't love. But is it a truly economic message? I think credit markets might disagree with that so far. Yeah. Well, maybe not truly economic, but just a matter of, I mean, people in the bond market will tell you there's just a lot of demand for new paper. And so it's just sort of digesting. Yeah. And listen, and that's where I think we've got to put some of this stuff in context. If we're going to talk about Microsoft CDS or something, well, the absolute level matters as well.

And, you know, you look at like IG, text. spreads, they actually peeped back in March. They've been in, you know, some contraction since then. We look at double B spreads, which are, you know, weaker to remove from fresh cycle tight. So there's not a lot that would scream, hey, wait a second, credits now starting to deteriorate. Now, you've seen banks come in here, let's say, over the last two or three weeks, but again, in the context of very good long-term uptrems. What seems timely then? I mean, you mentioned health care. I just also wonder if we're just going to be in this sort of hangover malaise mode when it comes to the previous leadership like in semis?

I mean, believe it or not, there's some Max 7 that looks pretty timely here. And I do wonder, we've called it the revenge of the funders. Are the funders, you know, about to step up and take the ton of leadership? I think Nvidia at 230 is really Exhibit A for that. If it can punch through here, I mean, that's a pretty meaningful breakout. We've seen what Microsoft has done here. Amazon looks pretty timely. Even meta, I think, holding the lows here. I wouldn't endorse it yet, but it's certainly something that I would see as part of this idea. So Ken Mag 7 kind of asserted self here, I think, is number one. And then number two, you know, these material bellwethers, you know, we've talked about the free porch and the BHPs, and they all look pretty timely here.

So, you know, it's a unique tape. I'm not sure I want to read too deeply into what the messages are here. I think we're in this kind of awkward seasonal period. We've seen some internal deterioration in the last couple weeks. I don't think bad enough to say, whoa, the trend's changing. Sure. Yeah, it doesn't. It's also telling you put Nvidia in that category with the hyperscalers and

Mac 7 and funders because that's how it trades. And that's how it's traded for the last 18 months. Exactly, exactly. Chris, great to see you. Great to see you, Mike. Well, shares of snowflakes soaring right now after posting a beat on EPS and revenue outlook for the revenue and operating margin coming in higher than expected looking forward. Joining me now is Brent Dill from Jeffries.

You know, Brent, I mean, obviously, pretty vociferous endorsement from the market of these numbers. What are we keying on? Product growth accelerating. There's really only two vendors in the market, data breaks and snowflake, that are going to enable this AI foundational wave. I think you look at the increase in the guide for the year. Again, it was the highest growth in 13 quarters on product,

which tells you corporations are getting ready for AI. They don't know what they're doing yet, but they have to centralize and get their data in the right spot. So there's literally it's a duopoly in the industry right now with DataRex and Snowflake. And if you look at Snowflake's growth, they're way below their peer. Their main competitors growing a lot faster. So the advantage for Snowflake is they can go further and faster in the future. And I think that they've got more in the tank.

If you look at the margin guide, low teens to mid-teens on margin, this should be a 30% margin business at, you know, in a couple of years, right? So you have big upside on margin. You have upside on revenue growth. The multiple is a little stretch now when you look at the after hours. We still believe the stock with the $385 price target has upside even in the after hours. But this is a big move. The stock had moved hard and sold off into the print.

So, again, I think a pretty good testament that, AI is working in the enterprise. And I think it's going to get better in the next couple of quarters when you look at the growth rates that we think they can do. The way you set it up with Snowflake and Databricks, it seems like, I mean, is this now the new bottleneck or another bottleneck that everyone's going to decide is the key one to play? I think they're both doing really well. You look at the category, it's, you know, a duopoly. They're good for each other. They're competitive.

It's a very different stylistic difference between the CEOs. We think there's room. You know, our firm, we use both technologies, and we're not the biggest firm. We're an important firm, but we're not the largest in terms of footprint. So you look at like our size of the company using both technologies, we think, again, there's a clear case study that companies can use both. They can coexist. Not one is going to take off.

They're both doing very well. Again, Databricks has higher growth, and if you look at the growth rate, obviously Snowflake aspires to have that growth. Databricks is in the private market, and Snowflake, obviously, being public, is said, we need to show the margins. We need to show more balance. So, again, I think you saw good growth, good margin improvement, continued focus on great customer wins, and then you look at the acceleration on the product growth. That's the key thing we've said. We think this is a 40, 50% growth market. They've been saying it's 30 plus percent.

We're now seeing signs that that growth rate is starting to pick up. So execution's improved. And Shriar, the CEO who's been there for a couple years, was that Google prior has done any fantastic job of closing the product gap. They were kind of wandering in the woods on the product side. They've really gotten their product act together. They always had a strong sales force. You put the two together, and that's where the magic's happening.

You mentioned, obviously, it's an aggressive valuation, has been forever. You say this margin upside, so maybe it can grow into it. Is there maybe a less fundamental thing to keep in mind, which is I observe software. You live and die with it as people feel like it's okay and have felt for a while to play things like Snowflake, Database Software. They get AI and then cybersecurity. And then kind of everything else is at risk. you know, if people decide that service now and CRM and everything else can be owned again, does it net detract from flows from these other winners?

Yeah, I mean, I think there's a boxout effect that we're seeing, and we've said this, and this is part of our playbook all years, invests where we're AI certain. It's certain in infrastructure and security. It's a little more uncertain in applications, although we're seeing that AI is not eroding the software industry. the pace that Wall Street thought and the terminal value of software is going to zero. That's nonsense. And so I think what we're seeing is a gravity towards the highest quality vendors. Snowflake lives in that. They're going to pay up for the multiples. Even if you look at snowflakes multiple relative to cross-strike, Palo Alto, you know, Palantir. I mean, Snowflake is still relatively cheap. It's expensive,

but it's cheaper than the other peers when you look at other top vendors. So, again, more room to go as it relates to others. But, again, I think a little bit stretch. And I think, again, investors are going to stick with the highest quality names. And Snowflake is still one of those. Yeah, I mean, remarkable that the stock traded about 400 not long after its IPO back then at a more nascent phase. Brent, really appreciate you jumping in to weigh in on this one. Thank you.

Snowflake CEO will break down those results in a first on CNBC interview tomorrow at 10 a.m. Eastern on Squawk on the street. Broadcom earnings are out. Christina, if Partsenevolous has the number. Yeah, so it's a beat on the top and bottom line. $3.32 EPS earnings per share on $29.6 billion. For the actual quarter, semiconductor revenue did come in a touch higher than what the street anticipated. The infrastructure revenue, which encompasses VM, where that was a little light at $8.75 billion. And then the big number, a lot of people were looking for was AI semis revenue, so AI chip revenue.

That came in at $16.7 billion, up 54% sequentially quarter over quarter. They're guiding that AI revenue to hit $21.7 billion, which also clears the street estimates. But overall, the revenue guide for the fourth quarter coming in a touchlight, $34.8 billion. So you have the fact that they maybe came in light on the revenue guide, the fact that they didn't provide the fifth fiscal 2027, total AI revenue, which needs to be well north of $100 billion in this report, may be released on the call, could be contributing to the 5% sell-off in the stock. And then lastly, Q4 non-gap operating margins came in at 66%. Street was looking for 66.5%.

So it's just tiny misses, but enough for this stock to drop about 5%. Also one of the, I guess, dare I say, worst-performing chip names this year, up, what is it, 6-7% versus the stocks up. 66%. So this is a name that is still not benefiting from that, Mike. Yeah, this aftermarket decline takes it not far from the flatline for the year. We'll see where it goes during the call. Christina, thank you. Coming up, we'll get analyst's reaction to those Broadcom numbers. And we want to show you the closing bell at Cebo in Chicago, ending the regular trading day for options.

You're watching Closing Bell overtime. We're live from the NASDAQ markets. Broadcom moving lower after posting third quarter results, Revenue Guide coming in a bit light, but semiconductor revenue and infrastructure revenue were both higher than estimates in the latest quarter. Join me now is Stacey Raskon from Bernstein. Stacey, good to see you. Good to be here. Thanks for coming by. So, I mean, it's sort of a beat on some of the relevant numbers, modestly, maybe a disappointed reaction.

What's your read on? Yeah, so the quarter was actually very, very good. So it was good. It was a beat overall. Semis beat a little bit. The infrastructure software was a slight miss, but, I mean, it bounces around. It's fine. Gross margins look pretty solid.

They were about 75 percent. that was a point higher than the street. And the AI number in the quarter was quite strong. The guidance is kind of in-line-ish. The operating margin guidance, just to hair like to have 50-bips, it's probably memory pricing. We've seen that. We'll see what they say on the call.

The AI guide looks okay into Q4. It's a little higher than the street. But they had already sort of given a 26 number for that anyways. Most of what we want to hear and we're interested in is not in the press release. It's going to be on the call. Okay. We're going to want to know what do they say about 2027. They'd already given $100 billion.

plus number. People are widely expecting them to take that up, and hopefully they will, and where does it go? And I'm also hoping that they can help us maybe frame out some of what 2028 looks like. They had talked a little bit before. They have something called, they basically have some financing work that they're doing with Apollo and Blackstone that can deploy potentially a tremendous amount of data center capacity into 28. And if you think about that, it actually points to material upside. But last quarter, they just sort of let it hang there. They didn't really help us frame it. Yeah. So anything. they can give us on that, I think, would be helpful as well.

You mentioned $100 billion. That's sort of their previous guide. That's for AI semis. For AI, I'm sorry, for AI semis. That's correct. Okay. So we'll listen for that. In terms of how the stock has kind of struggled on a relative basis, I mean,

there was at least a perception that maybe they didn't any longer have the inside track on some of the custom chip business. And where does that all stand? I mean, yeah, so there are other players in custom chips. And like Google is working with guys like Media Tech and others. And so there's always a narrative. around share losses, and this is semiconductors, you always worry about that. My view has been a little more blazes the wrong word.

I understand how it moves the stocks, but my general view has been, you know, is it bigger, is it not? If it's big, I think there's actually room for everybody. If it's not, we're all in big trouble anyways. I mean, given the numbers that Broadcom has already put out there, I'm not even convinced it like the percentage market shares are necessarily even changing very much. Everybody's like growing like crazy Broadcom and Media Tech and Invidia and A&B. And even guys like Qualcomm are all seeing upside.

Yeah, in a world when everybody needs more and you have to build the capacity and diversify if you can. So that's what we've been seeing. So I haven't been terribly worried. But I understand how the narratives can move the stocks. And it's been a narrative headwind, if not necessarily like a fundamental headwind at this point. So how does it boil into a case for the stock? I mean, it's pretty modest valuation at this point after this run. Yeah, I mean, it's gotten cheaper.

So have a lot of the other names in the space. But it's gotten cheaper. Again, I think the answer of that question, we'll know in a little bit. bit when they talk on the call. That's actually going to give us a lot of visibility in terms of where this can go and whether or not people want to buy into the story or not. And how was Broadcom the expectations shaped by Invidia or even in general people thinking about where it fits? Yeah, you know, before the Invidia print, I feel like expectations for Broadcom had been coming down. I think post-invideo, you know, the pressure is on, right? I mean, yeah, and, you know,

Jensen sort of went a little bit shock and awe. And, you know, we'll see how Hawk responds. Yeah. No, it'd be fun to listen to. Stacy, thanks very much. Oh, you bet, you bet. Get on that call. All right, as the battle over data centers rages across the country, one of the key issues is how to power them. Our Pippa Stevens is at a facility owned by Fervo, which just announced a deal with Google. Pippa. Hey, Michael, customers are lining up to buy Fervo's emissions free baseload power. Now the company has to deliver. It's a maker break moment, and we got a closer look inside Cape Station. The details coming up next. EOS Energy jumping today after a deal to provide energy to Google data centers started with a plan project in West Virginia.

EOS makes zinc-based long-duration energy storage systems, I think, otherwise known as batteries. The stock up almost 19%. Shares of Fervo pulling back today after a big jump yesterday when it announced an energy deal with Google as well. Today, our Piper Stevens is at Fervos's geothermal plant in Utah. Pippa. Hey, Mike, so that agreement with Google brings Furbo's total contracted power to about one gigawatt. And CEO Tim Latimer told me they're in advanced commercial negotiations with multiple other off-takers. And it's not just hyperscalers. Their other customers include Shell, Southern California, Edison, and many more.

But first up is getting here at Cape Station up and running. So the first phase is set to deliver power next month, becoming the first enhanced geothermal system in the world to reach commercial operation. Phase two under construction right here, it's set to send power to the grid in 2028. Now, part of Furbos pitch is its modular design and small footprint. You have the rig right there, and then you have the power plant right there. Earlier this year, there was nothing there. And now you see the construction is rapidly advancing on that power plant. The geothermal brine comes out of the ground.

It's 400 degrees. It goes through an organic rank and cycle turbine over there, a heat exchanger, and then all those big fans on the top, cool it down before it's reinjected into the ground in a closed loop system. Now, the efficiencies and is one to phase two are on display. For phase one's power plant, each part was delivered individually. Phase two, it's all standardized, meaning the construction timeline is down to 18 months for that for reduction of 30%. And Mike, the speed is what's so important here, because then that is really what the hypers need. So that is Furbos' big pitch.

We can get you power and we can get it for you now. Remarkable, Pippa, it seems like I think those windmills are probably providing some power there as well at this point. How unique is the geography or the circumstances under which they can do this in a place like Utah? Is this scalable in many other places? Or might that location become more of a destination for even more of these facilities? So Fervo's pitches that they can make conditions for enhanced geothermal and systems work anywhere across the U.S. Now, where Fervo has an advantage is they were the clear first mover here. This company was founded back in 2017 by Tim Flathamor, who comes from the shale industry,

and so he was well aware of what it takes to acquire land rights. He amassed about 600,000 acres out here in the west, including across Utah and Nevada. Average cost of $4 per acre. Some of those acres are now going for more than 400. The company also has a bunch of patents for their drilling. But basically what they're doing is they're leaning on all of the trillions of dollars spent in the shale industry and using the exact same machines. This is a hemlock and pain drilling rig.

They have partnerships with Halliborton. Devon is one of their key shareholders. And so they are saying we can harness what has already been done and use it to create these ideal conditions for enhanced geothermal systems across the U.S. Geosermal 1.0 required specific conditions, and so it really was not applicable in many places. Geothermal 2.0, which are doing here, can be used anywhere. Fascinating. Forta house an acre sounds like a pretty good deal, and you can even go that far down on that land. Pippa, great stuff. Thanks very much.

We have a news alert on Microsoft. Kate Rooney has the details. Kate. Hey there, Mike. So Microsoft is overhauling its financial reporting structure. going to be starting in fiscal year 2027, the tech giant, is changing what has been three segments. They're turning that into two. And it's also going to be disclosing quarterly revenue for its Azure cloud business for the first time. That's going to give investors a better picture of the overall business or the cloud business in particular. One segment is going to be called agents and infra. So that's the enterprise engine. It brings together apps. You have agents as part of that, hence the name, and then chips as well. Azure, as I mentioned, Microsoft 360.

GitHub are all going to be under this umbrella. And then you have this other segment that's going to be called devices and consumer. So in that you have search, you have ads, LinkedIn, Xbox, and Windows. There's also a quote in here from CEO Satinadella. He says in the statement here that AI is blurring the line between products and this all changes and reflects how the company now runs. So says it's better aligned with that. There is also an adjustment to the Q1 guide for Microsoft.

Important to know that these are mechanical. So there's no change here to business expectations. They also updated two years of backwards financials so that Wall Street can do a bit more of a comparison going forward, Mike. Got it. So, Kay, Microsoft's on a June fiscal year. So the 2027 fiscal year, meaning the one that is already underway or the one that starts next June?

Good. I think, I believe this starts in 2027, but it's a good point. They're on an odd reporting structure. So whatever the fiscal year is, 2027 is. Depending on when that starts. I got to go check. All right. Thank you. Yeah, they start in June. But you're right. No, that's important to know that it is the fiscal year. It's not calendar year. Perfect. All right. Thank you, Kate.

Time for a CBC News update with Brandon Gomez. Brandon. Hey there, Mike. The jury in the Lindsay Clancy murder trial told the judge for a second time that they were deadlocked and couldn't reach a verdict. He instructed them to keep trying, but said if they return again without reaching a verdict, we will have to declare a mistrial. Clancy is charged with strangling her three young children, which she instructed. she admits, but says she was experiencing postpartum psychosis. Prosecutors allege she knew what she was doing. President Trump today formally nominated Hung Cow to be the permanent secretary of the U.S. Navy. Cow has been serving in acting capacity since April when former Secretary John Fallon was ousted over what the president said were conflicts he had inside the Pentagon over shipbuilding. Secretary of the Navy is the service's top civilian official.

And Papp's Blue Ribbon is offering a reward up to 20,000. after more than 1,600 cases were stolen last month in California. Police say the suds were stolen from a warehouse and two separate incidents on the same day and were valued at $700,000. PAP's CEO posted on TikTok that while he's sure the thieves look cool with a garage full of PBR, they want it back. So we'll see if they end up cashing it on that, Mike. In L.A., I'm sure a screenplay pitch is already underway for that caper.

Brandon, thank you very much. Up next, the top Wall Street strategist on the three big lessons investors learn this summer and how you can use them to your advantage as we wind down the year. Clos your bell overtime. We'll be right back. Stock's breaking a three-session losing streak. InVIDIA and Dell led tech higher today while software is on pace for its worst week in nearly three months. So has the AI leadership shifted once again? What does that mean for your portfolio?

Joining me now is Gabriella Santos, J.P. Morgan Asset Management Chief Strategist for the Americas. It's good to see you. Good to see you. Yeah, the market has started to trade almost like maybe not zero sum, but it's just not quite sure how much credit to give parts of technology for what we still see is this kind of unending string of spending that's going out. Nothing that's happened in the last few months has changed the trajectory of the macro in tech, and yet the market is unsure where we sit with that. How does that play into an investor's proposition here? Yeah, I think over the summer we learned two really important lessons around this huge secular AI theme. The first one is you can be really, really bullish AI and still need to think really, really carefully about portfolio construction. And that was the whole story around the momentum unwind that was particularly painful in July and then still continued a bit in August. So thinking really carefully about position sizing, about leverage, about having some diversification in other areas. of portfolios. I think that's still a really, really important takeaway, even if we think AI is still this huge driver for the earning super cycle. The second big thing that we learned is we're

still in this AI CAPX buildout phase, this accelerating phase, yet it's going to continue shifting shape, meaning the market will continue reassessing the winners and losers, expectations, reality. And I think one of the big things from the summer is that it's really hard to have these discrete buckets anymore. The Mag 7, that's long gone, but even a bucket of hyperscalers and semiconductors and software, there's just going to be a lot more dispersion within them. And actually, you can have an environment where companies within the three buckets can and should do well together. It doesn't have to be one or the other. Yeah, I mean, that's, I can see somebody in June saying, I own the S&P 500. It's 18% semiconductors. It's another 16% hypercales. I feel like,

I have almost too much exposure to AI, even though it's the most exciting thing going on. Right now, what is the solution or the ways to think about, you know, offsetting some of that or finding, you know, the riper opportunities? That's actually the number one question we thought about and talked to clients about, is how to think about holistically, do you have enough diversification from the AI buildout? And it's not as simple as saying, well, let's just look by sector or by style or by country or even by asset class. And it's actually going to get harder and harder because the tentacles of this AI build out is just reaching every single asset class. It's including fixed income,

including private markets. So how do we think about it? Well, we've constructed a AI factor thematic basket, and then we can analyze different assets and portfolios against that and see how tied or not the return streams are. And what we find is certainly a lot of things are moving together now. And so true diversification is hard to find. And it's in things like treasuries, in gold, in core real estate, in European equities. And that's kind of it. Otherwise, it's all about the buildout. Yeah, I see some people talk about how, you know, energy has been a little bit of an offset. You said treasuries, so it still has diversification value. And if so, you know, how to access it. It's just not a one-stop shop, right? For 20 years post-financial crisis, all we had to worry about was really

a recession. And there really wasn't much competition for capital. Yields were low. And so bonds did the trick when you needed it too. And now, really, if you think about portfolio construction, is bonds still are needed for a certain diversification. But you also need other things more for supply-side shocks, inflation shocks, rate shocks. That was also a big feature this summer, right? It's the return to the old normal. And so for that, I think you need other more inflation-proof facets. Yeah. Gabriela, great to catch up. Thank you. Good to catch up. Thank you. All right. The NBA, just through the book at the LA Clippers, owner Steve Balmer and star player Kauai Leonard. The league is penalizing them for circumventing salary cap rules. The Clippers

will forfeit five first round draft picks beginning in 2029. The team has fined $30 million. Leonard will have to pay the league $700,000 in connection with his violations. and owner Steve Balmer is suspended from all league and team activities for one year. Balmer has yet to comment. In a statement, Leonard wrote that he accepts full responsibility for lapses and judgment from people within his inner circle. So is the so-called SaaSpocalypse all it's really cracked up to be? Up next, we'll ask a private software company,

which is in the process of going public about how much AI is really disrupting his company and the industry. Closing ball over time. We'll be right now. Let's get one more check on the big after-hours earnings movers. Broadcom falling slightly after its numbers. Earnings and revenue were better than expectations, but that fourth quarter revenue number, a bit short of the current consensus. Shares down almost 3%. Snowflake popping after beating on earnings.

62 cents a share. That was 17 cents better than consensus forecast shares up 20%. Net scope also higher, posting a narrower than expected loss and beating on revenue as well. also saying its annual recurring revenue is up 27% to nearly a billion dollars. The shares ahead by 12.7%. More closing bell overtime right after this. Genesis is making its case for the public market, saying its fiscal second quarter cloud annual recurring revenue reached nearly $3 billion,

with AI, ARR, above $400 million, while also unveiling new AI products and partnerships across the ecosystem today with the company in registration for an IPO. What does the CEO, Tony Bates, see ahead? Well, with me now in an exclusive CNBC interview from the company's experience conference in Vegas is Genesis chairman and CEO Tony Bates. Tony, it's great to see you. Appreciate you spending some time here to kind of walk through where you sit in this emerging industry, the interaction of, you know, customer service software, enterprise, what they're trying to figure out with AI,

what these kind of new deals allow you to do in that context. Yeah, well, first, it's great to be here, Mike. First for us, Genesis on CNBC. Just to set the stage, I'm here at our user conference. We call it Experience, where we have the largest companies pretty much on the planet that work with us, understanding our roadmap where we're going. So just to set the stage, what we focus on is really customer experience, all of the major touchpoints for the largest companies on the planet. We have over 7,500 customers on our Genesis Cloud platform. As you said, we're really growing quite rapidly.

Our cloud platform now is at $2.9 billion of annual recurring revenue, growing greater than 30%. And AI, as part of everything that we look at and do in the platform, is $400 million of ARR revenue, growing twice as fast. So what we focus on isn't just simple customer interactions. We really focus on what's the intent of our customer's customer and what they're trying to do and then create great outcomes, drive personalized experience. for our customers. We think about the world as an orchestration platform, right, not just a simple contact center anymore. And then what we do with that is really use AI, use the right

model to write the right use case, to really solve customers' problems. It's clearly resonating because you can see in our momentum that we're seeing in the market. Yeah, I mean, I understand, and from a company's perspective, of course, you want to know as much information about customer intent and maybe ways to model how they'd behave. From a customer's perspective, are they kind of okay with new ways of interacting with businesses? Yeah. In fact, what I would tell you is the enterprises that we work with, the CEO, they're looking for platforms that understand their needs and their requirements, right? What we do is make sure that we provide the right trust models, the right guardrails. We give them the capabilities to manage their data and then use

our technology to map that to the problems they're trying to solve. I mean, I actually think this is really what we hear from large enterprises. Their data is very important to them. You know, our largest customers are financial services companies, healthcare insurance. They're highly regulated businesses. So they look to Genesis to really not just provide technology, but provide the ability to orchestrate for them with the safety, the resilience, the compliance, the reliance, and the guardrails that they need.

Coming to the end of the hour here, Tony, but real quick, you've got some numbers out there about your performance. What about plans for an IPO? Yeah, we are under registration. Obviously, there's strict guidelines, so I can't share any more information than that. What I can tell you, and I'll bring it back

to what we're hearing, is that the strategy that we have, and it's really one around agentic orchestration for customer experience, it's really resonating with our customers. That's what we focus on each and every day. if we can solve their problems and help them not only automate and get productivity, which you hear a lot about, but also help them with revenue generation,

then the things should be ahead for us. I'm sure they would love the combination. Tony, fortunately, we've got to leave it there. Really appreciate it. Tony Bates from Genesis. That's going to do it for overtime. Fast money starts after the spring.