Closing Bell - Closing Bell Overtime: Anduril Founder Palmer Luckey; Can Microsoft Keep Extend Recent Strength? 6/10/25

Episode Date: June 10, 2025

Vital Knowledge’s Adam Crisafulli and Nicole Webb of Wealth Enhancement Group weigh in on where the market goes from here. Jason Furman, Harvard professor and former CEA chair, joins to talk policy, China talks, and the latest from DC. As Microsoft hits multiple record highs in recent days, Joel Fishbein of Truist explains why he’s the Street’s biggest bull while KeyBanc’s Jackson Ader defends his neutral rating. Plus: Palmer Luckey, Anduril’s founder, sits down to discuss what’s ahead for the company after topping this year’s CNBC Disruptor 50 list.

That's the end of regulation. Jazz Foundation of America ringing the closing bell at the New York Stock Exchange. Amazon Web Services and Red Point Ventures doing the honors at the NASDAQ. Stocks closing higher after opening the day to the downside. The NASDAQ, the leader once again thanks to MegaCap Tech, Treasury's holding steady with yields slightly lower today. It was another bullish day for the semis. Intel on Semi, NXP and Microchip were the big winners. Intel surging nearly 8 and microchip with the big winners Intel surging nearly 8% crude oil hitting the highest level since April although it did turn negative in the last hour of trading energy the best performing sector on the day Tesla higher again today now up

10% in the past two days this ahead of its big robo taxi event on Thursday. And the home construction ETF posting its best day in nearly a month. Every stock in the ETF closing in the green. But a down day for the GEs, GE Aerospace and GE Vernova, both among the worst performers on the S&P. Well, that is the scorecard on Wall Street. But we're gonna stay late. Welcome to Closing Bell Overtime.

I'm John Ford alongside Morgan Brennan. Coming up on Overtime, the CEO of the number one company on CNBC's Disruptor 50 list, Palmer Luckey of Anderil is going to join us live a little later in the show. But first we begin with the markets. The S&P 500 is at its highest level since late February. It's just 2%, maybe a little less than 2% from its record high. And in the last half hour, Commerce Secretary Howard Lutnick saying that trade talks with China are going really well. So will that keep this rally going?

Well, joining us now, Vital Knowledge founder Adam Chrisafouli and Wealth Enhancement Group Senior Vice President Nicole Webb. Great to have you both here. And Adam, I will kick it off with you. How much hinges for this market as it starts to flirt with record highs regarding these trade talks? Yeah I mean I think they're obviously very significant but you know we're already back to where we were before the you know the trade war really kicked into high gear so you know I think not only

do we need to have a significant de-escalation between the US and China but you know remember there hasn't been a single trade agreement struck yet you know the UK had that. It was a memorandum of understanding. But we're coming up on that 90-day reciprocal tariff suspension deadline in really just over a month from now. And so we have to see more progress on the non-China side of the equation as well. There's a big G7 meeting coming up that starts this coming weekend.

I think there's a lot of anticipation that you're going to see at least another kind of memorandum of understanding announced with some other countries as well. But there's a lot of anticipation. Markets are, in my opinion, very complacent about the trade risks that are still out there. Keep in mind, we still have a significant tariff burden that the economy is absorbing right now. Nicole, we keep talking about the wall of worry that stocks have to climb here, but there's also this secular AI growth trade that has reignited in recent weeks and you can see that with a mega cap

tech names leading the rally since those April lows do you buy in here or do you sit on your hands and wait for a pullback you know I think there's two really important things I think first we have to remember that the market isn't just rallying off of the expectation of being past peak tariffs. It's rallied on real earnings, on the confirmation that capex spending is going to continue to happen, and then an economy that just continues to trudge along and refuses to roll over. On the other side of that, to your point, Morgan, we've shifted from a narrative of Morgan, we've shifted from a narrative of buying AI in bulk to who can actually deliver and where is the economy of scale on top of AI going to come from?

So this is where you're seeing this divergence in performance across the megs. They're not moving in lockstep anymore. And so you're seeing the benefactors like the Microsofts and the Metas and those like Alphabet that are getting left behind. I think that's where investors have to get really specific if they are deploying cash today. Adam, we're getting CPI tomorrow morning. Valuations are rich in the market overall.

How much of a difference is that going to make? I think the CPI is really crucial. The May data so far in the growth front has not been great. The Fed arguably, I think, has a stronger case to make for being a little bit more dovish in kind of their forward guidance. So if the CPI is tame and we've seen the weakness in some of the growth numbers last week, then I definitely think you could see kind of a little bit of a dovish tweak perhaps in the forward guidance from the Fed next week at their meeting.

So the CPI is going to be important. Then we also have some critical bond auctions as well. And both of those two events are going to play into how yields perform going forward. Yeah. And Nicole, you like two retail names, TJX and Home Depot, both up better than 10% over the past 12 months. TJX doing better than the S&P up, I think more like 15 plus percent, S&P's up better than 12,

Home Depot trading trailing the S&P a little up about 10%. But what does that signify? You're liking retail names about what you expect from the consumer and what investors should expect over the next year. Yeah, I think when it comes to the consumer and the psyche of the consumer and how that parlay is into longer term trends, this is where names like Home Depot and TJ Maxx have

longer runways thematically for us, meaning we don't expect that a consumer is going to change their mindset in a short window of time and be ready to buy luxury in high volume demand. Instead, they're gonna continue to be more cost conscious as other areas of spending are effectively going to experience a consumption tax through tariffs. And so that offset will happen at places like TJ Maxx. And then the Home Depot trend is just this continuation of a long-term thesis of we are not headed back

to mortgage rates at 2.83 and a half or even four anywhere in the near term. And so the Fed can cut on the front end of the curve as much as they want, but we're just not seeing that movement on the longer end of the curve, and therefore rates on mortgages

likely to stay higher, and we're going to continue to see reinvestment into existing owned homes. Yeah, the other piece of this, Adam, is the fact that you've had a dollar that's been weaker. You've seen this rallying commodities. We talked about the fact that crude has continued to move

higher here, but also you've had this pretty blistering rally in precious metals and not just gold, but now silver playing catch up. Platinum now, I believe, outperforming gold for the year as well. And then, of course, copper, I think as investors start to realize that hey maybe there's going to be a shortage of copper in the coming years and this anticipation that tariffs on non-U.S. copper could be coming in the coming weeks as well. Do you invest into the commodity rally here or is it just too volatile? Yeah I mean I think you know you saw you saw gains in some certain sickle who groups, and I think that's just a reflection of the broader risk on bias. There's so many moving pieces right now with various components of the commodities market.

You have energy, where you have some big supply increases coming out of OPEC. Like you mentioned with certain metals, tariffs are a big headwind. It's unclear when we're going to see a sectoral tariff announcement on copper and potentially other metals as well. So, and then this will play into margins potentially also going forward, although like you mentioned, the dollar weakness has been a decent tailwind for corporate America as far as just

earnings translation back into reported EPS. That's been a tailwind and a positive for earnings over the last few weeks. All right, Adam, Nicole, thanks to you both. Well, as broader averages rally, chip stocks going particularly strong with top three stocks in the S&P so far in June are all chip names. Christina Parts-Nevelis joining us now for more on the semiconductor surge. Christina?

Yeah, chips are really staging a comeback. The SMH ETF, which we often use, is a good barometer up about 45% from its April low, also posting its best 43-day period for the fund since 2002. There are some catalysts. You talked about it. President Trump could ease some export restrictions to China in exchange for faster rare earth exports. Some are assuming semiconductors would be part of that conversation.

NVIDIA's dominance, though, got another boost also today when Huawei's CEO admitted their chips still lag US peers by a full generation behind. And this is according to Chinese state media. Nvidia's CFO reinforced this edge just last week in Paris, citing margin recovery and improving Blackwell supply. And so that's why you're really seeing shares up 23% in just the last month, a real change in course for the company. And the momentum is spreading.

Micron shares, they jumped about 3% today on new HBM high bandwidth memory sample shipments, while TSMC gained about 3% on a 40% year of year May sales spike, which is just a little bit ahead of trend. TSMC is now on its longest winning streak since December 2023, eight straight days of winning. And then you've got Intel shares. Let's talk about Intel for a second, because I was very confused on this. You can see shares are up 8%, really climbing higher after 12 PM. There's no news. I reached out to the company. They haven't

gotten back. But if you look at the options volume for this name, it was surging. So the assumption is that traders are betting this share price will continue to rise. I wonder if there's any rumor, perhaps about the supplier event tomorrow, maybe the trade talks. But overall, take a look at this key metric. SMH up about what, 16%, 17% just in the last month versus 6% for the software ETF, the IGV, which we also look at, and then 6.5% for the Spider ETF, represented by SPY. So there's a clear rotation into hardware as AI infrastructure builds and geopolitical risk potentially ease.

But the question I have, or I guess the uncertainty is really the speed of this rally and whether the sustainability will stick with it, given how fast these names turned around. Yeah, Christina, Intel, as you mentioned, up more than seven, Qualcomm up better than two. It just sort of seems like an across the board, maybe even some catch up there with people perhaps getting less pessimistic about the outlook for this industry that sources quite a bit from Asia. I wonder how much the semiconductor industry, as you've seen it lately, is hinging on the

geopolitics and the policy moves. I think the assumption from most streets or sales side guys is that most of the China restrictions are already priced into the stock. What you're seeing from that momentum is just recent commentary from the earnings call or the Bank of America tech event just last week. They had a conference and you had AMD CFO speak. You had OnSemi CEO speak on Tuesday saying that things are really improving within the auto sector. So you're starting to see this cyclical nature of chips, which normally, you know, downturn for auto for quite a while, is starting to uptick a little bit. And so that that spread and that desire to hold chips is coming back into people's portfolio,

especially as the AI theme is still so relevant. So we're really seeing some positive commentary that could move beyond just the China risk. Yeah, the rare earths would be upside to loosening up overall supply chain. Christina, thanks. Thanks. Speaking of chips, don't miss my exclusive interview with AMD CEO Lisa Su. That's coming up Thursday, live from the chip makers advancing AI conference in San Jose, California.

Well, shares of Microsoft snapping an eight session winning streak today, but it's still the most valuable company with a market cap around three and a half trillion dollars and it's less than 1% from an all time high. Can its record run continue? We will debate. Plus a busy time for the Trump administration trade talks with China taking place in London, budget bill negotiations back in Washington. We're going to discuss those economic developments with Jason Furman, the former chair of the Council of Economic Advisors.

Over time is back to overtime. Big moves in biotech today. Shares of Vince Med soaring to their highest level in 25 years. You can see closing up more than 28 percent. It's drug to treat hypertension met its goal in a phase two trial. Now rivals working on competing drugs were down big, United Therapeutics and Liquidia, as you can see right there, double digits for both. Small losses for Moderna and Novavax as well,

after HHS Secretary Kennedy decided to get rid of all of the members of the CDC's vaccine panel. Well, turning over to Washington, two big issues in the spotlight. US-China trade talks are going well, the next week. We'll be back with more information on the Biden administration's vaccine panel. Well, turning over to Washington, two big issues in the spotlight. U.S.-China trade talks

are going well, but could continue tomorrow, according to Commerce Secretary Lutnick. Meanwhile, the budget bill continues to make its way through the Senate as the July 4th

deadline looms. Joining us now to discuss is Jason Furman, who's former chair of the White House's Council of Economic Advisers and currently a professor at Harvard's Kennedy School.

Jason, good to see you. So let's talk about inflation in the context of what's happening with this bill and the fact that spending isn't really something that's being tackled here. What's your sense of how well the economy's holding up at this point, the disconnect between soft and hard data and how this bill factors in.

Yeah, so I think largely the real economy is holding up surprisingly well. We are seeing some slowing in labor markets, but I think that's more about potential growth is slower because we have less inflow of immigrants. So it's more about the supply side than it is any sort of demand efficiency the Fed could do something about.

And frankly, I believe the hard data at this point more than I believe the soft data. Huh, okay, and these China trade talks, I know you think that the administration should have really taken on China with trade before throwing it to the rest of the world as well, but what would a win look like out of this stage of the negotiation?

Look, the problem is that the only people in the room right now are the United States and China. China has a lot of cards here because we need those rare earths for our industries. We don't have a lot of cards. And so yeah, the talks are going well, but it looks like they're going well because we're gonna give up potentially some of the Biden-era restrictions on exporting chips to China,

restrictions that made a lot of sense for our national security, and an exchange for what? Just to get back to the place we were a few months ago. So we might, as a result of this negotiation, end up in a worse place vis-a-vis China than where we started the Trump administration. Jason, I know we're getting CPI tomorrow, key inflation reading given everything we've seen with the implementation and also shifting of all of these tariffs here and what that's going to mean for the good side of the equation in particular in the inflation data. But how closely are you watching the labor market as well?

Here's why I ask. Because Oxford economics put out a report this week and he said, for the first time since 1980, unemployment among recent and new college grads is higher than the national average, close to 6% versus a national average of 4.2%. I wonder what you attribute that to and whether we should be paying closer attention

to something like AI adoption in the midst of everything else we're talking about regarding this economy? Yeah, so the labor market is a tricky thing to watch right now, because what the Fed can do something about is demand problems in the labor market. If businesses are worried, so they're not hiring, you cut interest rates, they hire more. they hire more. But if businesses aren't hiring because of productivity shifts, that's not something you can really solve with the Fed. If there aren't workers because of limits on immigration, that's not something you can really follow with the Fed. So the labor market right now, you need to look at the headline numbers, but then you need to unpack what the different causes. Is it demand? Is it supply, is it reallocation? And all three of those could be operating

in a big way right now. I think it's more supply. And then as that Oxford report pointed out, reallocation that's at work there. Now I know we have the Fed in a blackout period right now. We get a decision what, next week. They've been very clear on the fact that they're following the data.

And right now they feel like they can be patient and don't have to do anything. But say the time came for the Fed to begin cutting rates again, how much would it actually affect what we're seeing in the long end of the yield curve right now and what we're seeing more broadly in the bond market? I don't think it would affect it that much. I mean, a lot of what we're seeing in the long end is issues with the term premium, concerns about risk associated with the United States, where we're going to be with inflation in the future, and the like. I don't think it's incredibly dependent on that path of short rates right now.

But the Fed is right to be patient. The data, neither the price data nor the jobs data are screaming out. And I don't think they should cut rates unless we see a real market deterioration in the job market, not just little hints of slowing. That we've seen. Jason Furman. Great to have you on. Thank you.

Thank you. Well, the S&P 500 is getting to within less than 2% of an all-time high. Coming up, we're going to take a look at investor sentiment during this big rally off those April lows. And we'll talk to the founder of the company building the military of the future, at least helping to. Anderil was number one on our Disruptor 50 list. Paul Mulucky joins us coming up. Welcome back to overtime. Shares of JM Smucker today, well they were toast. Having their worst day ever, the company missed on sales

for the fourth quarter, lowered its full year earnings forecast to well below the current estimate. Several issues facing the company, tariffs, higher coffee prices, changing demand in the snacks segment of its business. Well, let's turn now to senior markets commentator Mike Santoli for a look at the revival of small investors. Mike. Yes, Morgan, so they bought the dip and they continue to buy the rip in the market.

One way of measuring this, this is the buzz. This is the VanEck social sentiment ETF- it's back basically to all time highs I remember it started in the first quarter of twenty twenty one that was actually the moment when all the mean stocks had their blow off peak

and then had massive- declines from there while we see we've rebuilt I wouldn't call them all mean stocks in this ETF is a lot of big cap names but they're the ones that are most actively discussed on social channels.

They're subject to these retail investor stampeds. Take a look at another measure here from Barclay's equity derivatives desk. This is retail options trading based measure of how many stocks, what percentage of stocks are euphoric based on the options activity. You see it's not super high on the list, but it's coming up fast, and we haven't spent a lot of time above these levels when we have spiked there,

and we're in a higher range than we ever were in the prior decade. So it shows you there's an entrenched muscle memory here of how retail traders are operating. So you gotta keep an eye on that as to whether it becomes a little bit disorderly in these rotations we're seeing toward riskier stocks.

Yeah, let's take us back to the conversation with Vlad Tenet from Robinhood on this show yesterday, where he basically said, net deposits overall activity are near all time highs and that they are seeing those investors on that platform jump into things like tech and innovation. Yes, and look, people who run brokerage firms always say that their customers are smart and they're pulling

in money from elsewhere. It's it's also true that retail investors are very slow to realize losses when their stocks go down. They don't like to sell them, but I do think in general it is true that that cohort of investors is more aggressive and they're looking for opportunities to add risk when the markets pull back rather than to run away. All right, Mike, see you in a bit. Well, coming up, Microsoft shares on a tear lately, completing a key bullish

technical pattern today. We're going to debate if the stock has more room to run with two analysts, one who says his recent downgrade looks pretty foolish. That's coming up next on Overtime. Music Welcome back. Stocks closing higher on the day with gains late in the session. The S&P 500 now within 2% of its all-time high. Chips continuing their strong recent run. Today Intel taking the lead with an 8% gain. Well, checking in on the earnings we got in overtime,

all lower right now. Dave and Buster's missed on earnings and same store sales fell 8%. The interim CEO saying the first quarter performance was quote, nowhere close to where we want and expect to be. He did add that it's back to basic strategy is starting to work though. GitLab meantime, slightly better than expected

on earnings and revenue, but guidance was roughly in line. That stock is down about 12.5%, 13% right now. And GameStop, posting a profit compared to a loss in Q1 of last year. Revenue falling year over year. We don't compare those numbers to estimates because of a limited number of analysts that cover the stock. And of course, you don't get a lot of detail in that report or on a conference call either.

Those shares are down 5%. Well, let's get a check on Microsoft. Shares closing slightly lower today after hitting an all-time high yesterday. Now up more than 20% over the last two months. Stock forming a golden cross. It's a bullish technical term for the 50-day moving average crossing above the 200-day. First time that's happened here since February. Microsoft has accounted for 38% of the S&P 500's gain

for the year, 10% of the indexes, 80% gain in the last five, according to Jeffries, can the run continue? Joining us now is Truist analyst Joel Fishbine, he's got a buy rating and the highest price target on the street, and KeyBank analyst Jackson Ader, one of a few analysts with a neutral rating, that's as close as you get to a sell these days. Jackson, is too much near-term AI success

priced into Microsoft stock, and what area of Microsoft has the most concerning exposure for you? Is it the premium add to Office or somewhere else? Yeah, thanks for having us on. John, it's good to be here. I think if we think about the near-term risks, it's really just a mismatch in just how much money

they're spending on AI CapEx versus how much money they're actually able to monetize on the application side. I totally understand that CapEx is more related to Azure revenue in the near term, but at some point we've got to see some revenue showing up in Copilot or in Agents in some ways on the application side in order to fund all the CapEx that's going on on the AI front. I think that's probably where the biggest risk is and it's mostly just the timing mismatch. Joel, how long does Microsoft have to show

that its customers, businesses, are getting the needed AI productivity out of the cloud infrastructure they're offering? Excellent, although I respect his research. We think that the CapEx is a huge barrier to entry. They are capacity constrained and they need to build for the demand environment that's out there and you're seeing them doing it

and they're seeing the fruits of the labor now and we're going to see Azure growth accelerate right now in terms of customers. They, you know, Accenture is on record of saying that they're rolling out 200,000 seats. They're going to go to 300,000 seats and it's out there that they may sign their first million seat customer for Microsoft Co-Pilot.

They've got 70% of the Fortune 500 or 75% of the Fortune 500 using their AI products. And we think now is where the rubber meets the road where you're gonna see not only acceleration but margin expansion as well. Jackson, what would make you more bullish on Microsoft right now? Let's see. but margin expansion as well. Jackson, what would make you more bullish on Microsoft right now?

Let's see. I mean, honestly, if what Joel says actually plays out or comes to fruition maybe in the shorter term rather than the longer term, yeah, that would definitely make me bullish. Certainly, this most recent quarter made me feel a little bit more bullish. We downgraded prior to the company's best quarter in like three to five years.

So when you mentioned, you know, we look pretty foolish on that downgrade. Certainly this most recent quarter makes us look that way. So I think that if we start to see non Azure AI revenue really pick up and if some of these copilot and agentic trials and tests go into implementation and turning into revenue, yeah, that would definitely make me feel more bullish. The other thing that I think might be,

I don't know about misunderstood, but maybe underappreciated is that we continue to look at Microsoft mostly on a price-to-earnings basis and I think that we're to look at Microsoft mostly on a price to earnings basis. I think that we're going to start to see some of these CapEx numbers catch up to the EPS growth that's factored into sell side in the next couple of years. Okay. Something to watch in earnings reports

that we always get here in overtime. Joel, OpenAI, it seems to be growing evermore octopus tentacles and stretching out into partnerships with other companies and moving beyond Microsoft. How much is Microsoft's success attached to that company? It's clearly a very key partnership, and as it's been well reported, that Microsoft has a pretty big stake in OpenAI,

and so they'll continue to get revenue from them. But I think what Microsoft has done is done a good job in diversifying. They've got partnerships with SAP and others that in terms of trying to diversify where they're getting their revenue from and being less dependent on open AI and they're also building their own models.

But again, I think one of the reasons why the CAPEX number, as I consider it a barrier to entry, is so high is because they need to be able to supply to OpenEye, who, as you have said, is growing exponentially at this point. The key differentiator from an AI perspective, and this is why they are a leader, Microsoft is a leader in the AI,

is not only growth but profitability. Remember, they're able to show 68% gross margins at scale in AI workloads, and they've got 37% operating margin. So it's growth and profitability. A lot of these other companies that you're mentioning, where they're growing very fast, we have yet to see what kind of profits

they can actually deliver at the end of the day, and Microsoft is delivering both of those at scale. Okay, Joel Fishbine from Truist, Jackson Ater from Keyback, thank you. Now time for a CNBC News Update with Courtney Reagan, Courtney. Hi John, well California Governor Gavin Newsom asked a federal judge today to block

the Trump administration from expanding the deployment of National Guard members and Marines to LA amid immigration protests. The state's asking for a temporary restraining order, claiming the mission orders soldiers to engage in unlawful civilian law enforcement. GOP Senator Josh Haley introduced a bill today with Democratic co-sponsor Pete Welch of Vermont to raise the federal minimum wage to $15 an hour. It currently sits at $7.25 an hour and hasn't been raised since 2009. Republican

lawmakers have long been opposed to minimum wage hikes, so it's unclear whether the legislation will make it to the Senate floor or get the 60 votes needed to pass the chamber. And voters in New Jersey are heading to the polls today to pick nominees for the governor's race. New Jersey and Virginia are the only states with a gubernatorial race this year, and both contests will be closely watched as early indicators of how voters are responding to President Trump's second term. Morgan, back over to you. Courtney, Reagan, thank you.

Well, the defense tech sector, we're calling it a sector now, has been booming, sending Anderl to the top of this year's CNBC Disruptor 50 list. Founder Palmer Luckey joins us next to discuss what it takes to build the military of the future, and when and if they could take the company public. ["The Daily Show Theme"] Welcome back to overtime.

Boeing shares falling despite reporting the most monthly plane orders since December 2023 and deliveries nearly doubling from a year ago. That new snapping the aerospace and defense ETF 11 day wind streak. Boeing is the third largest holding in there. The stock, however, still up 21% this year. Well, let's stay with defense. The money and interest has been pouring into defense tech, and Anderil has been a top beneficiary.

The company is number one on this year's CNBC Disruptor 50 list, with its most recent funding valuing the company at more than $30 billion. Anderil is helping to build the military of the future, a future powered by AI and robots that include drones and autonomous submarines and unmanned fighter jets. Joining us now is Andrew founder Palmer Lucky along with our own queen of the disruptor list, Julia Borson. Palmer, it's great to see you.

It's great to be here. So let's start right there because not only are you, not only is there a focus on rebuilding the military and rethinking how we do that, but there is this focus on reindustrialization here in the U.S. So the fact that you just raised another $2.5 billion, how are you going to put that money to work? Well, we're putting it to work in a lot of different ways, but one of the biggest individual spends is putting $900 million of our money into a new factory in Ohio called Arsenal One.

We're going to be hiring thousands of people there. It's about five million square feet of cutting edge manufacturing space that we're going to be hiring thousands of people there. It's about five million square feet of cutting edge manufacturing space that we're going to be using to build autonomous fighter jets, missiles, torpedoes, a whole bunch of other really cool weapon systems. In terms of reindustrialization writ large, even beyond Andral, I think that America is coming to the realization that if we can't make the things that are critical for our national security, if we are dependent on foreign adversaries for critical minerals or critical electronics, then we're not actually

independent of them at all. And I've been kind of riding this wave for a while. I was part of the problem for a while. My previous job at Oculus VR, later acquired by Facebook, was building millions of virtual reality headsets in China, out of Chinese parts, for billions of dollars. And I'm glad that I get to be on the American side of the equation this time around.

Yeah, and that's a key piece that I think is sometimes overlooked in the Andrel story is the fact that you are also helping to stand up directly or indirectly this, I think as you call it, Super Friends supply chain, as you build out your different product lines, looking at the technology that you are investing in and developing, looking at some of that you are investing in and developing, looking at some of these different weapon systems as well.

Where do you see the most growth? What are you most excited about? There's gonna be growth across the board, but I'd say two categories, they're very different. One of them is just answering the question, how could this be done if AI is good? And that's something that Androl's been doing since the beginning of our company eight years ago.

We started an AI company, you know, Androl Industries, acronym is AI, back when AI was crazy. Nobody took it seriously. They saw it kind of like virtual reality as this always 20 years in the future, never in the present type of thing, but we ask ourselves, how would you do this differently if you had AI? How would you do ships differently?

How would you do submarines differently? What would a missile look like? What would a fighter jet look like? It's just applying that to everything. And people are finally realizing that it is the right way to think about it. How do you apply those cutting edge tools to these problems? The other big area of expansion

is I think gonna be on the foreign side. Androl has sold the vast and overwhelming majority of our capability to the United States government, to the United States military. But we do a bit of work here and there with U.S. allies around the world. Those allies are really doing a lot more, and I think that they want to take on a larger share of the problem for themselves, with Japan moving to double its defense budget, with Germany pledging to massively increase their spending as a fraction of GDP.

I think there's going to be a lot of expansion in the global state of investment in next gen technology that can win the next war rather than the last one. So Palmer, you just mentioned Meta earlier. Yes, you sold Oculus to Meta, but now you're partnering with Meta. Meta did push you out after selling your company to them. Now you seem to have reconciled, partnering with them to build next generation headsets.

What is the potential you see in this technology and why does it make sense to partner with Meta? Boy, what a roller coaster ride. You start a company, you sell it, you stay there for a few years, they fire you, you hate each other for a while, and then you partner up on a $22 billion program for the United States Army.

Look, I'm working with Meta because we've buried the hatchet and because there's a lot of incredible technology that they have that paired with Andrew can make a huge difference for the American war fighter. I'm talking about all the technology that I invented before I sold my company to Metta. All the technology that I developed while I was there. All the technology that they've spent tens of billions on

since they fired me. I want to bring all of that technology to bear on the problem of turning soldiers into technomancers with seamless control of large numbers of autonomous systems and superhuman augmentation of their perception. I want to augment their vision, augment their hearing, augment their sense of touch. I want them to be safe from the bad guys

and well aware of where the good guys are. You also have a big partnership with OpenAI and it seems like these dual use products, whether it's the Oculus headsets that you originally invented for Meta or this generative AI conversational engine seem like they have a lot of potential for your world, what are other potential partnerships that you're looking at for the future? Other potential partnerships, I mean that's probably the area I'm supposed to keep close to the chest, but I think you'll notice that anyone who wants to work with the United States military who's not already worked with the United States military tends to come to Anderil

first, right? Whether you're open AI, whether you're meta, Anderil is a really good partner to work with the United States military tends to come to Andrel first. Whether you're open AI, whether you're meta, Andrel is a really good partner to work with if you're trying to bring cutting edge technology, whether it's commercial or industrial or consumer oriented and getting it into problems that matter. And so I can't tell you who's next on the list. I can tell you that we've got no allergic reaction to working with pretty much anyone and everybody who agrees with our mission and who wants to make the United States a more powerful fighting force.

It is such a 180 degree reversal in terms of that relationship between tech and military from what we saw just seven years ago. So I am curious what you think this President Trump Elon Musk feud does to that growing intersection that we have seen between Silicon Valley and the tech community and Washington. Well, so you know, we're working from the beginning there. You're right, things have changed a lot over the last seven or eight years. And I think it's because the world has changed in a way where nobody can deny that a strong military is part of strong deterrence, that having a strong military capability is the

only way you can credibly backstop diplomatic measures and make diplomatic measures remotely effective in the first place. Before the war in Ukraine, a lot of people would say that what Androl was doing was meaningless, irrelevant, that we lived at the end of history and that there would never be another large-scale war again. And sometimes I felt like maybe I was the crazy one, looking at what was happening with Iran, looking at what was happening with Russia, looking at what was happening with China. And I think everyone, even the people who thought I was crazy have come around to my way of thinking.

You've got to remember, seven years ago, Androl was winning awards for the most controversial company in tech. We were near the top of Slate Magazine's most evil companies list. I won the Wired Magazine award, worst man in Silicon Valley. How times change? In terms of this feud between Elon and Trump, look, I think that it is a tiny part of the big picture.

I'm friends with Elon, I'm friends with Trump. I don't think it's actually going to have a particularly large impact on the future of U.S. national security. And I'll remind somebody of something. Do you remember when someone asked Donald Trump, hey, Mr. Trump, how do you think that Elon felt you standing up on stage with Sam Altman, the head of OpenAI? Don't you think that he feels really insulted by that? And Trump said, I don't think so. How do you think that Elon felt you standing up on stage with Sam Altman, the head of Open AI?

Don't you think that he feels really insulted by that? And Trump said, oh no, well, you know, I totally understand it, you know? I, you know, I get it. Look, they hate, he hates the guy and certain people, I have a hatred of myself and that's just the way that it is. And I think that there's an understanding that a feud between two people does not need to extend to every interrelationship with both of those people. I don't think Trump nor Elon are gonna hate me because of their feud. Yeah, quickly, quickly Palmer.

IPO, is it in the cards? Yes, I mean, we've talked about it a number of times, but to get a little more detail today, we are definitely going to be a publicly traded company. We are running this company to be the shape of a publicly traded company. I don't think that there's really a path to a company like Anderil winning things in the shape of, let's say, a trillion dollar F-35 Joint Strike Fighter contract as a private

company. It just doesn't seem to be the thing that can be done. And there's a lot of reasons for that. We could have a whole show just about why that is, why private companies are probably not going to scale to the scale that Andral wants to scale to, but it is definitely on our road map. It sounds like you've already fleshed out our future interview together, Palmer. I'm going to hold you to that one. Palmer Lucky of Andral, thank you, and our own Julia Borstein. Thank you.

Still ahead, Mike Santoli looks at why falling earnings forecasts on Wall Street might not be a cause of concern for investors. And check out Shares of Alphabet. CNBC confirming reports the company is offering buyouts to employees across the company. That includes its knowledge and information unit of which search and ads are a part. It's part of a broader effort to reduce headcount, which the company's That includes its Knowledge and Information Unit, of which search and ads are a part. It's part of a broader effort to reduce headcount, which the company's been doing since cutting 12,000 workers in 2023.

We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back.

We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We US-China trade talks taking place in London. Treasury Secretary Scott Besson saying there have been two days of productive talks and

talks will continue. Besson is coming back to Washington to testify on Capitol Hill tomorrow. Commerce Secretary Lutnick and Trade Rep Greer are going to stay to continue negotiations. Well earnings forecasts seem to be sliding for this quarter and next Mike Santoli is back with us to discuss if these. Forecasts matter for the markets Mike. Yeah normally they would John

you don't like to see downward earnings revisions and it's been a pretty steep slope in a familiar one so here's the current quarter. You see they've started to give way in the last couple of months this is next quarter. That's the the forward

estimates. Maybe the market though is not overreacting to these things because look quarter that's the the forward estimates maybe the market though is not overreacting to these things because look at what's happened the last two quarters very similar level of erosion of earnings forecast and then they got reported

there's the fourth quarter of last year there's the first quarter of this year and they more or less got back to where they were several months earlier before that steep part of the downward earnings revision took place so obviously companies

continue to beat by large margins. Now will it continue? Obviously we don't know for sure. The economy definitely has slowed in certain areas this first part of the year. The other thing is MAG-7 type companies really account for a lot of that outperformance in the reports that's projected to slow down toward 10 percent growth. We'll see if the market can rely on them rescuing the earnings forecast, John.

All right, I'll take it. Mike Santoli, thank you. Up next, why a key inflation report tomorrow could go a long way in determining the Fed's next move on interest rates. Stay with us. Welcome back to overtime. Investors are awaiting the latest read on inflation when the May consumer price index is released tomorrow.

Our Steve Leesman looks at how those numbers could impact the fed's decision on interest rates next week. Steve. Yeah, John, the inflation numbers are going to be hotly debated and dissected economically and politically. Muted inflation and the administration could declare

its tariffs have had little effect on broad prices. Most economists are likely to claim, hey, still too early to declare victory. But any hint of upward movement in inflation is going to raise concern at the Fed and enforce

its wait and see approach to rate cuts. The most, the least likely cutting scenario is this, if inflation marches higher and the unemployment rate doesn't rise. The most likely scenario for a cut, higher unemployment and stable to lower inflation will clear the Fed's path for adjusting the employment side of the mandate. The worst dilemma, higher inflation and higher unemployment. Chicago Fed President

Austin Gulsby told us recently that's the central bank's worst situation stagflation where both sides of the legal mandate get worse at the same time so I think we'll have to see how big the impacts on prices are. The market is built in a tentative 50 basis points it cuts this year with a less than 60% probability of one coming in September and another in December. It's above 50%, but that's not a lot of strong conviction ahead of tomorrow's data. If tariffs don't show up in the data, it'll be an important step to clearing the way for cuts,

but it'll need probably at least a couple more months for the Fed to have confidence, inflation's on a downward path in order to cut, guys. And Steve, if tariffs don't show up in the data, is that because enough importers have sort of gotten around the tariffs by pulling goods in ahead of time or that the impact of tariffs is just coming later in the year? It could be the latter, it could be the former, it could be a number of other issues, which is that the sellers have held the line on prices because if they think this is temporary, John, you might want to just wait it out and

suck it up and profit margins in order to not scare customers away. It's possible that some of the exporters have absorbed some of the price, all sorts of places along the chain where it may not show up. But the idea that the administration so far looks this year to have collected $60 billion in tariffs, well, John, it's got to come from somewhere. Okay, Steve Leesman, thank you. Earnings will be another big focus for investors tomorrow.

Oracle is the big name on the earnings calendar. It's reporting right here during overtime. Before the bell though, we will get numbers from Chewy and Victoria's Secrets and of course, CPI, John. And we also get the 10-year treasury auction, which is gonna be one to watch in a very busy week of auctions, knowing how all of the fiscal policy dynamics and Fed discussion and everything else

are playing out in the bond market. We get Oracle tomorrow, we get Adobe the day after. Those are two pretty big software names reporting off cycle of most of the big technology names. Oracle has gotten some kind of fail over in a way benefit. The overage of AI capacity that the likes of Microsoft can't handle, Oracle has tended to get. So we had an analyst earlier talking about that. We'll see if that's the case there. Adobe stock has really been in a bit of a doldrums as investors wait for the benefit of Firefly

and other AI efforts to pan out. So we'll see if that started to happen for them. We also, sticking with Defense Tech, we get the Voyager Technologies IPO tomorrow too. I'll be covering that with the CEO. But that's gonna do it for us here at Overtime.