Closing Bell - Closing Bell Overtime: AMD CEO Lisa Su On New AI Chip Aiming To Take On Nvidia 12/6/23

Episode Date: December 6, 2023

AMD unveiled a new chip aimed at taking market share from Nvidia in the AI arms race; CEO Lisa Su gave us her first comments after the company’s event. Plus, RBC’s Lori Calvasina on markers heading into year-end and her 2024 outlook, plus C3.AI CEO Tom Siebel on his company’s latest quarter and demand for AI. Tortoise’s Rob Thummel gives energy picks to buy that he says will do well regardless of the price of oil. AeroVironment CEO Wahib Nawabi on the strong quarter and growing demand worldwide. 

Well, a bit of a slump in the last hour brings you your scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ford with Morgan Brennan. Coming up this hour, a can't-miss interview with AMD CEO Lisa Su. As the company announces its answer to NVIDIA's AI chip, she will join us first on CNBC. Plus, another big hour of earnings is coming with results from Chewy, GameStop, and C3 AI. We will talk to C3.ai CEO Tom Siebel before he talks to analysts on Wall Street. We begin with the market, though, another tight range closing near the lows. The biggest move today is in oil with WTI

crude dipping below 70 bucks a barrel for the first time since July. Mike Santoli, the flip side of quality is, well, some people would call it garbage, trash, but one person's trash is another's treasure. It's been rallying somewhat, right? Yeah, it has. So along with this rotation into, you know, banks and small caps and transports and stuff that's going to benefit from a steady economy, you absolutely have seen a lot of either the heavily shorted or unprofitable or formerly, you know, speculative darlings of the market come back pretty heavily. And they've reached an interesting point because they have bad multi-year charts.

And the question is, is this a real revival or is it just, you know, this rush of risk appetites that are reawakening, finding its way there? It remains to be seen. I do think that there's still room for people to play around in those areas if we're going to have a decent macro backdrop. And we still do keep getting relatively friendly economic numbers. But once the prevailing view is already that a soft landing is likely, it's hard for new Goldilocks-type numbers to move the needle. And that's what we've been seeing as we've been kind of stuck here right in the mid-4,500s on the S&P for two and a half weeks or so. Yeah, we're range-bound and down today.

Mike, stay with us because we're also going to bring in Lori Calvisina of RBC Capital Markets, who joins us here on set. Lori, it's great to have you. You know, we've been talking about it for the better part of a week or so, this rotation out of the mega cap tech names and into other parts of the market. And yes, everything finished the day lower in terms of the major averages, but the Russell 2000 outperformed versus the S&P yet again. Is this compelling? It is. And you know what's funny, Morgan, is right around when 10-year treasury yields peaked a

little bit under 5 percent, started to come down. People were like, OK, interest rates have peaked. What do we buy? And there was really kind of a willingness once we started to get the softer CPI prints, kind of the hotter unemployment numbers, people were like, okay, what the Fed has wanted to happen is happening. So now we can count on the Fed to cut. And small caps have been an intrinsic part of that conversation. I would say over the past month, I'm having conversations with people about small caps, not just small cap PMs. They always want to talk about small caps, but people who are looking at the small caps as a sentiment barometer, as one of those possible destinations for the rotation out of the MAG-7. And what we're seeing is really a willingness, you know, even from tech investors, right, to explore alternatives for things like energy,

things like small caps. Obviously, energy is having kind of a rough time, but this is just a really refreshing, you know, kind of equity story over the last month where people really finally seem ready to do something different. And does that carry over to 2024? And perhaps just as importantly, when you look at the S&P 500, you know, 45, 49 is where we ended the day. You've got a price target for next year on the S&P, the broader market that represents about 9 percent upside from here, 5,000. Is that what's going to propel the broader market into 2024 as well? I think you're going to still see some choppiness in terms of leadership. I mean, I think one of the reasons why it's been so difficult for the growth trade to really kind of relinquish its leadership is that expectations for economic growth are still sluggish.

I think one of the potential triggers for small caps to really get going is for people to ratchet up their economic expectations. Right now, GDP is still expected to be about 1.2 percent next year. Talk to a lot of investors who are skeptical the number is going to be that low, that we could see things revised up. And if you see that, I think you'll get more of kind of a lift to come of these cyclical beaten up areas and kind of the safer, more defensive secular growth names. I don't think they're going to do horribly, but you just may not see incremental buyers for those stocks. Mike Santoli, next year is 24, is an election year. What does an election year do potentially to markets, especially one that's looking as action-packed as this one?

Well, typically, the market is somewhat held in check in the first part of an election year. I know there's various ways to slice this. I always also say, you know, in terms of modern market history, if you want to talk about since World War Two, it's been like 20 elections. Right. It's not necessarily a statistically significant sample of here's what happens. But usually there tends to be a little bit of of a stalemate in the market as we try to figure out policy implications. And you get some rallies into the election and then some, again, choppiness right around it and then clarity thereafter and some relief. So if it all follows the script, that's what you would expect. But, I mean, I can go back to a year like 2012, which came after a really harsh correction year in 2011. And it was a pretty smooth ride to

the upside with a couple of modest pullbacks. And that was an election with an incumbent president, as opposed to, you know, one at the end of a second term. So all of it can get thrown into the mix. And I think it's always safe to keep your expectations relatively muted as you go into an election year and understand that it's not just going to be the pure observable fundamentals that are operating on the market. The fact that WTI flirted with 70 bucks, Mike, even dipped below it at one point. We saw energy, the worst performing sector in the S&P today. I mean, as we talk about this soft landing narrative that's at least for now,

intact based on the macro data we've been getting, what is the energy market signaling? And is it in contrast to that? I don't know that the price of crude is necessarily foremost sending a macro signal about the strength of the global economy. I mean, today you did actually have an inventory draw that was greater than expected in crude because refineries were running heavy. And, you know, so production is in play. And so I'm inclined to believe what the futures curve says, which is this is an oversupplied market in the short term. I don't think it's because economies are falling off a cliff. Maybe that changes if you really catch, you know, some acceleration to the downside in the price. But, you know, you're basically flat on a two-year basis.

And we were at this price when the economy was kind of reawakening a couple of years ago. So I'm not that concerned about that as a signal right now in terms of growth. Okay. Mike, stay close. We're going to see you again in a few minutes. In the meantime, Chewy earnings are out. Steve Kovac has the number. Steve. Yeah, and shares down about 9% now, Morgan, after missing on the top and bottom lines. A loss per share of 8 cents. Street was looking for a loss of 6 cents per share. Revenues, a slight miss here, $2.74 billion. Street was looking for $2.75 billion. It's been bouncing around all over the place, now down about 8%, Morgan. All right. I will take it, Steve. Thank you.

Lori, keep an eye on Chewy and others. I want to go back to your target for next year. So about 10% higher from here on the S&P, and small caps are intriguing. Does that mean you think the Russell could do better than 10% in 2024? We don't do a price target on the Russell 2000. I used to do that and people didn't pay too much attention to it, to be honest. But we do think that small caps have the potential to outperform in the year ahead without putting no kind of too fine of a number

on it. And going back to the election conversation you all just had, I had I had a funny experience last week at a couple of small cap portfolio managers kind of hound me for statistics on how small caps do in presidential election years, because I agree with Mike on the playbook for the S&P 500. But we actually found that in election years, presidential ones, small caps go up almost 10 percent. If you look at the stats since 1979 and the large caps, it's a little bit less than 6 percent. So it's interesting that even in a presidential election year in which you've got this massive uncertainty, small caps tend to shine. OK, and we've got more news coming out. News alert out of the pharma space.

Angelica Peebles has that. Angelica. Yeah, John. Reuters reporting that AbbVie is nearing a deal to acquire CeraVell Therapeutics. And that's a company that's developing neuroscience drugs for diseases like Parkinson's. And they're saying that they're in talks for about $45 a share, which would value Ceravel at about $8 billion. And that would be a big development. We saw AbbVie acquiring another company a few weeks ago. And Ceravel is a company that they are developing neuroscience

drugs that actually came from Pfizer. This stock has been up all week because of speculation around a possible takeout. And now we'll have to follow that and see what happens next. OK, Angelica Peebles, thanks for joining us. Health care, it was an underperformer, has been an underperformer this year. That is starting to change, at least in recent weeks in terms of the trading activity. Does that continue into 2024? And I guess perhaps just as importantly, how much is something like M&A, which I realize is picking up across industries right now,

but how much is that going to be something that spurs stock activity or stock gains next year? Well, you know, on the M&A question, it's interesting. We read through a lot of transcripts for earnings reporting season, just S&P companies. I don't have time for the small caps. But I've noticed that we haven't seen a lot of commentary on buybacks recently. There's not as much commentary on debt pay down as I was like, but we see that happening in the stats. But I have noticed a little bit more chatter on M&A than what we've seen in the past. And it's not like companies are coming out and telling us exactly what they're going to do, but it just feels like when the cash deployment story has kind of diminished overall, that's the one thing that stands out where there's a little bit more enthusiasm.

And as you mentioned, you're starting to see it across sectors. I would say on health care, you know, one of the fascinating things we've seen is that if you look at small cap sectors and you compare their performance to interest rates, small cap health care is really the sector that tends to get beaten up the most over different cycles when interest rates are rising. And so the fact that health care is starting to act a little bit better once we start finding people are ready again to make those kind of anti-interest rate bets and kind of bet on interest rates falling, I don't think that's a coincidence. I think that's been a big problem in the small cap space. And if you can breathe some life back into those small cap health care stocks, it should help the big caps as well. Okay. Lori Calvisina, we covered a lot there. Thanks for joining us. Thanks for having me.

Well, GameStop earnings are out. Steve Kovac has those numbers. Steve. Hey, Morgan. Yeah, it's a loss of one cent per share for GameStop here. And revenue is coming in at $1.08 billion, which I'll note is down slightly from the year-ago quarter. There's not enough analyst coverage on this company to make any good comparisons here, so we won't be doing that. Also, no earnings call or any other data we're going to get from the company. So this is really the meme-iest of the meme stocks, I guess, down about 2% here. John. All right, Steve Kovac, thank you. Now let's bring back Mike Santoli. He's got a look at the disinflation dynamics that are driving the recent market action. Mike?

Yes. After labor market wages indicator today, a higher productivity growth in the third quarter feeds into this disinflation narrative. Of course, the yields are responding. Look at the 10-year Treasury yield right down toward its 200-day moving average. We're down under 4.12, around 4.12 percent at the close. Not sure we can get that but essentially. It's challenging that longer term trend line

that two hundred day. Moving average. There you go and you can see it has found some support there over time now if you flip it over and talk about the price. Of the treasuries it's just going. Up to the two hundred day average from

below so if it breaks out maybe that's decisive. But from here maybe logical to expect. little bit of traction in 410 down toward 390 in the yield. And then take a look at oil, crude oil relative to consumer discretionary on an equal weighted basis. This is a one year relationship. And you see this last little move, right? You have crude really falling apart and then a little more of a bid in consumer discretionary. They continue to outperform Staples as well. So you take some pressure off the consumer from that front as well.

I don't think it's the main thing that's going to be a make or break for the economy into next year, but it certainly helps on the margin. I see that little last move down. There you go, John. Your favorite guy. Yes. Now, is that a consistent relationship or maybe just because of this inflationary environment that we're in, when the price of gas moves down, hey, boy, that's an extra dollar that the consumer has got to spend.

Who's shown a propensity to spend this year? Yeah, I would say it's at a time when there's a mature economic cycle and you're kind of worried which way it's going to break. Because when you're coming out of a downturn in the economy, both the consumer stuff and energy can do quite well as demand picks up. So it is kind of the moment in the cycle matters in terms of how this relationship plays out. Okay. Mike Santoli, we'll see you later in the hour. Thank you. We're just moments away from our first on CNBC interview with AMD CEO Lisa Su as her company launches its new AI chip. This is the big news of the day. We're going to hear about her plan to take on NVIDIA and much more. And after the break, we will ask an energy portfolio manager why he still thinks the sector is a good bet for 2024,

even as oil prices slide. Overtime's back in two. Welcome back to Overtime. Oil falling hard today, trading below 70 bucks a barrel for the first time since July. But our next guest has some names to buy, even if prices stay lower for longer. Let's bring in Robert Thummel, senior portfolio manager at Tortoise Advisors. Robert, it's great to have you on the show. And I'm going to start right there. If we have a situation where oil stays lower for longer, what's compelling in the energy sector in terms of stocks right now? Yeah, Morgan, thanks for having me. So if oil is lower for longer, that means demand is probably going up. You're going to transport more energy. And so energy infrastructure is a great place to be in the energy infrastructure or in the energy

asset class if you're looking for an energy play. Also, with a lot of these energy infrastructure stocks, you get really high dividend yields. So as we look at 2024, interest rates are probably coming down. The 10-year is probably coming down. So if investors are looking, where can they get exposure to the equity market, but also significant cash income? Energy infrastructure is a great place to be. I want to get your thoughts on Exxon because they did unveil a pretty large plan. Multi-year strategy involves $20 billion in stock buyback, capital project spending to come in at $23 billion to $25 billion. Oil and gas production to average 3.8 million barrels, and put out,

as I mentioned, their multi-year targets. Did you feel good about what Exxon had to say? Do we see that as a harbinger of where the industry more broadly is going? And to your point, where output is headed? Yeah, so Exxon's doing exactly what we think it toward us the energy sector should do, which is continue to generate significant amounts of free cash flow. It's really hard to find free cash flow in this market. Energy is the one place where you can get a free cash flow yield of 10% or higher. That compares to 5% for the rest of the market. So Exxon is generating a high amount of free cash flow. It's returning that free cash flow, as you highlight, back to the shareholders in the form of buybacks, but also a really solid dividend yield, 4%, 4.5%.

It's going to grow that dividend yield next year. And in addition, while it's doing that, it's growing energy production, which needs to happen, but also helping really the world participate in decarbonization, which is just as important as well for investors. Robert, do you feel differently about the energy sector if WTI goes below 65? Not 65, John. I don't think so. No, actually, I think that's great for us as consumers. That's great for lowering inflation. As far as energy infrastructure is concerned, the price of the lower oil price,

the lower natural gas price actually will boost demand. For the producers, where they have a little more commodity price sensitivity, they've lowered their costs significantly. They've lowered their debt significantly. They can still pay pretty strong dividends. They can still generate a lot of free cash flow. And so, yeah, $65 doesn't scare us as an energy sector investor. Okay, so to clarify, you're not saying that you think that those prices are bottoming,

just that if they do go lower, it's not necessarily a big deal. Yeah, that's right. You know, oil prices work at the bottom. That's always a good question. I will say this from a fundamentals perspective. You will likely see, if the OPEC Plus agreement carries out, you'll see lower oil inventories in the first quarter of next year, which is a surprise.

Usually that doesn't happen. If we see lower oil inventories next year first quarter of next year, which is a surprise. Usually that doesn't happen. If we see lower oil inventories next year, which you probably won't find out until March or April just because of the lag effect in the reporting, but that will result in higher oil prices because typically you see inventory increases in the first quarter of every year due to the seasonal weak demand in oil demand globally. Your outlook for natural gas, and I ask that knowing that that is a market that tends to be very volatile in terms of price fluctuations, but on the global stage, there is a huge amount of demand for LNG right now, and that's not going anywhere.

That's right. That's right, Morgan. Actually, natural gas is our favorite commodity. We'd love to see everybody talk more about natural gas than oil because longer term, natural gas is decarbonizing, but it's also really efficient from an energy perspective. And the world needs a lot more U.S. natural gas. The Marcellus shale and really shale in general has really helped the U.S. possess a lot more natural gas than anywhere else in the world. We're the largest producer of natural gas in the world. We're the largest exporter of LNG in the world, and we don't expect that to change anytime soon. So companies like Chenier Energy are a classic example

of the way investors can get exposure to the growing demand for U.S. natural gas, not only domestically, but also globally. All right. Thanks, Robert. Robert Thummel from Tortoise Advisors. And now in just a moment, AMD's CEO, Lisa Su, is going to join us on the company's plan to take on NVIDIA with its just announced AI chip for data centers. Speaking of AI,

we're going to talk to the CEO of C3AI, ticker AI. That's Tom Siebel. After his company's earnings come out in just a few minutes and before he joins the call with analysts. And up next, big bank CEOs testifying on Capitol Hill today about their criticism of the regulatory landscape. We're going to bring you the highlights after a fiery day in D.C. Stay with us. Bank executives in the spotlight today during testimony to the Senate Banking Committee about government regulation. Our Leslie Picker joins us. Leslie, you were at the Capitol for the hearings. What were the highlights? Hey, John. Yeah. By recent historical standards, a relatively calm and civil hearing

today, the executives largely used the time to explain their distaste for the so-called Basel Three rules that hike their required capital levels. By and large, they received little pushback from the lawmakers, with several asking the CEOs to expand upon their view that the rules would have trickled down effects to average Americans. J.P. Morgan's CEO spoke about how these rules would push activity outside the regulated banking sector. And Goldman Sachs' CEO David Solomon said it would push activity outside the U.S.

The U.S. capital markets are the strongest capital markets in the world. I think it's one of our big competitive advantages that everyone comes from all over the world into our capital markets. If you think about IPO activity and debt capital raising, it's done to a great proportion for international capital in our capital markets on a relative basis. And this would just shift that balance. It would push more activity into other jurisdictions. It would make banks and other jurisdictions more competitive. And I don't think that strengthens the U.S. position over time. Senator Sherrod Brown, a Democrat and chair of the committee, was the only lawmaker who came out in defense of the capital proposal, saying we need a strong capital requirement to ensure that investors, not taxpayers, are, quote, on the hook when risks at the bank don't pay off.

Guys? Leslie, I wonder. I mean, you got a bunch of bank CEOs up there, a bunch of Congress people who like the cameras. Why not beat up on them? I'm not suggesting that they should have, but normally, normally it is. Could it be that an election is coming up in about a year and so therefore it's not the time. I mean, how do these things go? Yeah. I mean, I've been asking sources too, who were, you know, on the executive side of things. And I said, you know, this seemed very amicable today. What do you think is going on? They said

behind the scenes, it was very amicable as well. I think part of it had to do with the fact, yes, it is an election year and that's very important. But also in the testimony, a lot of these banks pointed out that they were the ones when there was all this market turmoil in March with all the regional banks, with the three to four regional banks that ultimately went under. They were the ones that were able to provide liquidity. They were doing weekend deals to buy these things out of receivership. They were the ones to help come in and pump support capital into some of the ones that were more faltering. And so basically, they come into this hearing. I think it was James Gorman of Morgan Stanley who said, it's nice to not be the problem

like we were back in 08, 09 and instead be the solution. So I think that was well taken by lawmakers. And therefore, in this environment, they were just much more calm and civil. All right. Well, Leslie Picker, it was an incredible couple of days of bank coverage by you. So thanks for bringing us the latest. Up next, AMD's CEO Lisa Su joins us fresh off her presentation at the company's Advancing AI event, where the company AMD just unveiled its AI chip. It is an interview you do not want to miss, so stay tuned. Welcome back to Overtime. It is time now for a CNBC News update with Bertha Coombs.

Bertha. Hey, Morgan. Police in Las Vegas reporting several victims after an active shooter on the University of Nevada Las Vegas campus. Police say the suspect in the shooting has been located and is dead. They're continuing to investigate and are evacuating buildings on campus. Two senior law enforcement officials tell NBC News that multiple people were killed. Canada is set to unveil a new system to limit emissions from its oil and gas sector, the country's highest polluting industry.

According to multiple reports, details of the cap and trade system are expected to be announced Thursday at the COP28 climate summit in Dubai. The plan follows Prime Minister Justin Trudeau's commitment to slash emissions 40 to 45 percent below 20 or 2006 levels by 2030. And the Buffalo Bills general manager said Von Miller can keep playing despite being charged with third-degree felony assault. The star linebacker is expected to participate in practice and will play on Sunday against the Kansas City Chiefs. Miller allegedly assaulted the mother of his children, who is pregnant. Back over to you, Morgan. Bertha, thank you. Campbell Soup closing the day at the top of the S&P 500 after posting superb, superb earnings this morning.

But packaged foods companies have lagged behind restaurants this year. Could this be a reversal that is coming soon? Let's bring back Mike Santoli. Mike? Yeah, Morgan. Coming off of a pretty tough stretch, a lot of the packaged food stocks. Take a look at this push pull between dining out and eating at home. You see the restaurant group has been outperforming recently compared to the packaged food sector of the S&P.

Look at here. That also mirrors what happened coming out of lockdown, as you might imagine. Right. That was the reopening trade. And it's continued here. It's also a kind of a branch of the services over goods type preference that consumers have right now, although you see maybe signs of that gap trying to close. Now, take a look at Campbell's because it is also coming off of one of the lowest valuations based on projected earnings that it has had over the last 15 years or so. In fact, pretty much the bottom end of this range. It's just curling up from there as the stock has recovered. They did reaffirm guidance along with their numbers today. So perhaps this is a little bit more of a solid forward PE.

And this compared to the S&P 500 and UC2 on a relative basis, it looks pretty cheap. There's not a lot else to say that's so cheery about the packaged food stocks. Disinflation isn't really a help to them, but maybe they've grown pretty washed out, guys. All right. Mike Santoli, thank you. Now, AMD unveiling a new AI chip today aiming to compete with NVIDIA's H100. It powers a lot of large language models out there. Joining us now, fresh off the stage, is AMD CEO Lisa Su with our Christina Parts and Eveless. Christina. Thank you, John, and thank you, Lisa, for joining us today. When you went on stage, you reiterated a common theme that this market is growing much faster than you anticipated, and you more than doubled your total addressable market. What about your 2024 estimates? You said

previously it was $2 billion in sales. Is that going to change anytime soon, given this demand? Well, I have to say, first of all, Christina, thanks for being here. Great to be on the show today with you guys. It's been a big day for AMD. I would say it was so exciting to talk about our new products, MI300X, MI300A, and then have all of our customers and partners with us. So it was a fantastic day. To your question, yeah.

I mean, look, the AI market over the last year has just exploded, right? I mean, ChatGPT has really kind of changed our perspective for what Gen AI can do. So we originally thought the total market for data center AI accelerators would be about 150 billion as we got into 2027, and now we think it's going to be over $400 billion. So yeah, much, much larger market. The reason for that is, frankly, everybody wants to use AI. We need more training. We need more inference. We did, in our last conference

call, also talk about sort of the AMD opportunity for AI. We view next year will be about $2 billion in revenue. That's what we have a very, very clear line of sight to. But I have to say, customers want more. There's very high customer demand. And we have supply for a lot more than $2 billion as well. So we're excited to see how the next year will play out. So just to reiterate for our audience, too, because the issue with NVIDIA is that there's been so many comments with supply, especially when it comes to advanced packaging,

TSMC. So you're not facing that. Well, look, I think we all probably underestimated the demand for AI. If you just took a look at the market a year ago, I mean, there's been just a significant demand overall. So yes, it's tight in the semiconductor market, but this is what we do for a living. I mean, we spend a lot of time with our partners. We've been planning for this launch. We plan for success. So yeah, we have a significant supply for next year. Before I just pass it on to John, one quick question about pricing, though. It seems like there's a concern about shifting from NVIDIA to AMD because of the switching costs given their ecosystem. What would you say to all of those people, especially when you're competing on price? Well, I think what we showed today is we have an incredibly competitive product and roadmap, very competitive on training, actually best in class, industry leading on inference, which is when you're asking these models questions.

And so I think our performance capability is really high. And yes, you know, we're always about partnership. So we want to ensure that our customers get good total cost of ownership benefit. You know, right now, things are so tight in the data center, you know, people want to be able to deploy products that can, you know, train and inference, you know, more. So absolutely, you know, we think this is a great opportunity for customers who are looking for AI solutions to consider AMD. Lisa, great to see you and great to have you on launch day here. What gives you confidence in the linearity of demand for AI chips and infrastructure when you look at the way that software is starting to roll out now? Well, I think, first of all, John, thank you

very much. It's great to be here with you guys. I have to say that what we're hearing from customers is really fantastic. I mean, you heard from a lot of customers on our show this morning. We had Microsoft, Meta, Oracle, Lenovo, Dell, Supermicro, a number of AI innovators. I think that tells you a little bit about just how much demand there is and the close partnerships that we have across the ecosystem. And the key is right now we're still at the very, very early innings of AI. And from my standpoint, the more compute we have, the more capable AI will be, the more it can increase our productivity. And so it's just one of those areas where it's like nothing that I've seen before. It's nothing

the industry has seen before. But we are absolutely focused on ensuring that we ramp as fast as possible. Think about the accelerator chips that the hyperscalers themselves, Microsoft, Amazon, Google, et cetera, are designing and having built. I was trying to figure out if these are going to operate sort of like the graphics chips, integrated graphics chips, versus the really powerful, you know, purpose-built gaming chips that are out there. They're going to handle some basic functions. What's your expectation on how much of this tan the hyperscalers are going to successfully take themselves

and how much you're going to be competing for? You know, I think, John, if you were to ask anyone in the industry ecosystem today, what they'll tell you is that AI is so big and it's changing so fast that you're going to need multiple different types of solutions. I don't believe it's going to be a one-size-fits-all. It turns out with large language models and, you know, sort of the largest models are the smartest models, so they can be the most capable and most productive. You know, they really favor GPUs just given where the algorithms are today.

So I do think that, you know, when we talk about a $400 billion TAM in 2027, the vast majority of that is going to be GPUs. But yes, there will be other solutions, and we fully expect that. Lisa, it's Morgan. It's good to see you. Do you plan on selling these chips or perhaps a modified version of these chips to China? And I ask because I spoke with Commerce Secretary Gina Raimondo over the weekend about export controls. And she said, quote, as the technology changes, as China changes, that commerce is going to have to consider adjusting the rules to, quote, keep up. So how are you navigating what seems to be a fluid dynamic?

Yeah, absolutely, Morgan. Look, you know, we spend a lot of time with the administration, you know, with Secretary Raimondo and her team. We understand the importance of, you know, protecting our most advanced technologies from a national security standpoint. That being the case, you know, China is an important market and we continue to look for, you know, opportunities where, you know, there will be an opportunity to offer some capabilities in China going forward. NVIDIA CEO Jensen Huang said Huawei is among a group of, quote, very formidable competitors in the AI chip market. How do you see it? How do you see the competitive landscape evolving? Well, I think the competitive landscape is such that, you know, with AI exploding, there are lots and lots of solutions that are out there, but for the most advanced and most capable products, it is these large-scale GPUs. That's where there are very, very few that have the technology. We've been working on this technology for many generations.

It continues to get better with time, so I do think that this is an area where AMD has a very unique position. You know, we look at AI very holistically, you know, cloud. We look at enterprise and what individual companies want to do. We also look at it as to what we all would like to see in the personal computer and, you know, sort of the AI PC. So, you know, lots and lots of opportunity in AI, and I think we have a very unique position. Lisa, what I've been taking from a lot of this is that it's not one or the other. The market is big enough now for a lot of players in the near term. You compared the chip to NVIDIA quite often on stage with the specs and everything like that, but NVIDIA is going to be launching the H200 next year.

And with the speed of every 12 months, how do you maintain that lead time, specifically with inferencing? Because I know that's the strength for AMD in this new chip. Look, Christina, you're absolutely right. This market is moving faster than anything that we've seen before. And we've accelerated our roadmap, too, because we're spending a lot of time with our largest customers. And they're saying, hey, MI300 is great. We love it. Now, we're also talking about the next generation and

the next next generation. So, you know, definitely there's a lot of stuff that we have in the pipeline. We're excited about where things are. We're also pulling in our timelines because we believe that, you know, this market is going to favor speed. So is that like 12 months or? Well, we'll talk a little bit more about our roadmap as we go forward, but I think the key is as great as MI300 is, you can imagine that we're working on the next great thing as well. All right. We'll end on that positive note. Lisa, thank you so much for joining us today. Thank you so much. All right. Christina, thank you as well. And now we're still awaiting earnings from C3 AI. As soon as they cross, we're going to be looking at CEO Tom Siebel

to break them down with us before he talks to analysts. We'll be right back. Welcome back to Overtime. AeroVironment under pressure today, finishing down 10 percent, despite strong fiscal second quarter results, as investors perhaps do some profit taking, with the stock up more than 60 percent heading into yesterday's print. The defense contractor that makes autonomous weapons systems and drones like the kamikaze switchblade currently being used in Ukraine, posting a sales surge with revenue up 62 percent year over year and raising fiscal 2024 guidance. Again, I spoke with CEO and chairman Waheed Nawabi after the conference call, and I asked him if that accelerated rate of revenue growth

is sustainable. We expect this year, we raised our guidance for this year on top line, and we feel really, really good about the future. I've said it before, and I will repeat, we are at an inflection point in our business. The mindsets of the strategists in the U.S. military and DoD, as well as our allies in the world, for that matter, has essentially completely changed in terms of what small unmanned systems and loitering munitions can do on a peer-to-peer fight, on a coin conflict, or any of those types of conflicts. It is becoming a major part of the U.S. DoD strategy and our allies. We are the leader in that. We are the only company who has delivered these things reliably and effectively in very large volumes over the last decade plus. And we've got an enormous amount of new capabilities and solutions in the pipeline

to help our customers even further. So I think that all of that, given the dynamics of how low the inventory levels are in USDOD, how low the inventory levels are in the U.S. DOD, how low the inventory levels are in stockpiles are in our European allies in the Asia-Pacific region, it really sets us up for a great, great set of opportunities in the years to come. And not only are we going to have a great performance this year, we expect this performance to continue beyond fiscal year 24 and even further than that. I also asked him about demand from Israel as the war with Hamas continues.

We have not received any order specifically for Switchblade, but there is a request on that and there is actually funding in the supplemental $100-plus billion budget proposal that's in front of Congress. And that budget proposal is for both Ukraine, Israel, and potentially Taiwan. All three of them would like a lot more switchblades, a lot more Pumas, a lot more JOM-20s. And so there are specific dollars allocated for those things specific to our systems in that supplemental budget. Drone warfare has played a big role in the war in Ukraine, in Azerbaijan, in Armenia, now in the Middle East. It's the case for small unmanned systems in large volumes coupled with loitering munitions in large volumes,

coupled with AI and autonomy, all at a lower cost than traditional weapons systems. It's a new era of warfare that Air Environment is positioned for, at least according to Nawabi. You can watch the entire interview with Air Environment's CEO at CNBC.com. Now, new developments on the health care deal that we told you about earlier this hour. Let's get back to Angelica Peebles for that. Angelica. Hey, John. Yeah, that was fast.

AbbVie confirming that it will acquire Cerevel. And that's a company that's developing drugs for neuroscience. And AbbVie specifically calling out an asset that CeraVell is developing for schizophrenia. And AbbVie saying that it will acquire CeraVell for about $45 in cash, and that values CeraVell at $8.7 billion. They're expecting that deal to close next year, in the middle of next year, of course, depending on the regulatory approval there and shareholder approval. But this is really interesting because just last week, AbbVie acquiring cancer company Immunogen. And at the time, they said that they still had the capacity to do additional deals if they saw something that made sense.

And now here we are only a week later and they're announcing yet another deal. Yeah. Closed up more than 13 percent. Angelica, thank you. Now, C3 AI making it really interesting for us. We're still awaiting those results. The stock is already up 150 percent this year. We can talk to Tom Siebel before the analyst call, but we can't talk to him before the numbers cross. When they do, we're going to try to get him on before the call. Overtime, we'll be right back. Welcome back.

As we await earnings from C3 AI, here's a look at some other after-hours movers. It's right across the board. GameStop reporting revenue of $1.08 billion, a loss of one cent per share. We're not comparing that to estimates. Chewy missing on both lines with Q4 net sales guidance light as well. And ChargePoint missing on revenues at $110 million. That company reporting a loss of 43 cents per share. Again, not comparable with estimates. They're all down, but Chewy down a little more than 9%. Well, up next, we are going to run through all of the earnings and economic data that could move the market tomorrow. And a programming note in the meantime, do not miss tonight's premiere of Cities of Success Nashville. Find out how that city has

transformed itself into a health care and research hub tonight at 10 p.m. Eastern. Welcome back to Overtime. C3 AI earnings are still not out. We're still waiting. But tomorrow, another big earnings day is coming. In the morning, we will get results from Dollar General. And after the bell on Overtime, we'll get Lululemon and Broadcom. Also tomorrow, Microsoft will be hosting a shareholder meeting where investors will be listening for the latest on the company's relationship with OpenAI and CEO Sam Altman. In the meantime, though, Mike Santoli is back with us. And Mike, it is really a countdown to that jobs report, at least from a macro perspective on Friday as well.

For sure, Morgan. And to that point tomorrow, we will get the weekly jobless claims, which have taken on a little more importance, especially the continuing claims number. They've tilted higher. And the question, as is the case with so many economic indicators right now, is is it just normalizing back to pre-pandemic levels or do we have more to worry about? So watch that for a little bit of a cue to how people are going to prepare to absorb the jobs number on Friday. Mike, these names like Dollar General, I think, are interesting. Look at TJX and how strong it's been during this period. I mean, do they get some of that Walmart effect of consumers who are stretched in their credit

trading down? And what do they say about the economy? Are you listening for that? Yes. In general, I am. Although, you know, the dollar stores in particular have just had a very, very rough road just for a variety of reasons. I mean, for a while they were blaming it on theft and things like that. But Walmart has been, I think, you know, kind of dominating the space a fair bit. Everybody wants to do more in consumables. So, yeah, there's no doubt you want to listen for macro tells there when it comes to Dollar General. But just be aware that there's some operational stuff in that sector as well. I mean, it sort of like encapsulates what have been the two kind of key themes of the market and the moves we've seen in stocks this year,

and that is consumer health and resiliency of the, and this secular growth story that is AI. I mean, we see it with Broadcom and Lulu tomorrow, but does this carry over to 2024 as well? Yeah, I mean, look, the theme is going to carry over. And of course, Microsoft and Broadcom tomorrow maybe give us something to work with in terms of what this next phase is going to look like in terms of monetization and all the other stuff we're willing to hear. Microsoft, I feel like, has been given a whole lot of credit up front for what it's able to do and how it's able to charge for this stuff. And then the rest of it, you know, we'll see when it comes to Brogdon, how much the market wants to pay for that component

of its business. Hey, Mike, got to interrupt you because C3 AI results are out. Let me run through them real quick. Revenues amiss, 73 million versus 74.3 expected. Loss per share better than expected. A loss of 13 cents versus 18 cents expected. Guidance is a bit light. Tom Siebel, CEO, joins us now right before the call. Tom, I did not get a chance to see remaining performance obligations in here, which would, I guess, get a sense of remaining demand.

Normally, you got that at the top of the release. How does that look and what do you have to say about the state of demand? Well, demand is up, John. It was a solid quarter. Year-over-year revenue growth in the federal unit was 100 percent. In the U.S., it was 28 percent. Bookings growth year-over-year was 100 percent. New contract grew up 140 percent, 48 percent year-over-year. RPO will go down, and it will continue to go down as we transition from subscription-based pricing to consumption-based pricing. So, our PO ultimately

approached zero as we moved to consumption-based pricing. But what we have here, so it was a pretty solid quarter. Demand is good. So, on federal in particular, is that what you expected? And given that revenues were a bit below the midpoint of your guide. Where does the federal strength fit in with what you saw from the rest of the business? Federal unit was exceptional. U.S. unit was solid. Our European sales unit organization did not perform well, and we have implemented a reorganization there to get that back on track. Tom, just to dig into federal a little bit more, I mean, the last time you joined us, you talked about how defense specifically was the most rapidly rising industry. Is that still the case? And do you think investors fully appreciate what that opportunity looks like

for the company? It is a, the defense business is a big business, whether it's predictive maintenance for aircraft, contested logistics for transcom, predictive maintenance, stochastic optimization of supply chain. Defense is a big business for us. I think it's probably roughly 15% of our business overall, but it is our most rapidly growing business. So when we look at the outlook, we were just talking to Lisa Su over at AMD, who's raising her estimate of the total addressable market. Your outlook is a bit light of what analysts were expecting. So can you break down what your expectations are and the areas from which you feel like that demand is really going to come? John, our revenue outlook for the year remains unchanged. It is the same as it was last quarter, so we didn't change it. That being said, there's no question with the advent of

generative AI, I think our addressable market has more than doubled. So the addressable market is huge. There is nobody that doesn't want to talk about generative AI, both standalone and with our application. So I would estimate our market is more than doubled this year. Can you say more about the go-to-market? And I know you mentioned specifically that you're making some changes in Europe based on what happened in the quarter. But overall, are there shifts happening in how you're going to market and even in how you're dealing with partnerships? Yes. For example, with AWS, we've made a number of announcements that are strengthening partnership with AWS. And now, last week, we announced the availability of C3 generative AI on the AWS marketplace. So,

you can sign on right now and order it. So this is this idea as we go from six customers to 60 customers to 6,000 to 60,000. So this is an opportunity for exponential growth. And this is a market, this generative AI is a market that you can expect us to be investing in substantially in human capital, in engineers, in data science, and in market development in the short term. All right. Down to the wire. Glad we got you. We took an extra couple minutes

with you. Tom Siebel, I know you got to get to that earnings call. Thanks for being with us on Overtime. Thank you, John. Stock's down about 6.5% right now. That's going to do it for us here at Overtime. Fast money begins right now.