Closing Bell - Closing Bell Overtime: Exclusive Interviews With CEOs of Mastercard & Affirm; Vertiv CEO On Outperforming Nvidia 6/11/24

Episode Date: June 11, 2024

A rare and exclusive interview with Mastercard CEO Michael Miebach on the consumer, spending trends, global economic environment and more. Affirm CEO Max Levchin on new payments plans and a partnership with Apple. Vertiv CEO Giordano Albertazzi, a company that helps keep data centers cool, on the company’s explosive stock jump in the past 12 months, outpacing Nvidia’s gains. 

A late-day reversal with the S&P 500 and the Nasdaq closing at record highs as Apple hits a new high of its own, fueled by AI excitement. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. And we have got a big show coming your way in just moments. Rubrics, first earnings report since going public, plus numbers from Oracle. We're going to bring you those results as soon as they cross. And a pair of payment CEOs share their views on the state of the consumer and spending. MasterCard's chief executive, Michael Meebach, joins us in a rare interview from the company's Connections Conference.

And we're going to talk to Affirm CEO, Max Levchin, as his company announces new payment options, including a tie in with Apple Pay. And if that wasn't enough, we're also going to talk to the CEO of Red Hot AI Play, Vertiv, which has handily outperformed even NVIDIA over the last 12 months. But let's begin with today's market action and those records for the S&P and Nasdaq and Apple, all ahead of tomorrow's Fed decision, not to mention a CPI report. Joining us now is Nicole Webb of Wealth Enhancement Group and Adam Crisafulli of Vital Knowledge. Good afternoon to you both. Nicole, yes, we did tick higher to record closes for the S&P and the Nasdaq,

but arguably we've been grinding higher. So it raises the question, what's the next big catalyst for big market moves here? You know, Morgan, it's one of these things where you look at the Atlanta growth print, you look at GDP, and we'd say that it's going to translate well into earnings, but I think the proof needs to be there to get the breath back in the market. And so, while we've seen unit labor costs slightly down, productivity up, services, ISM, new records, you know, the market hasn't really caught up in the full breath or the belief that we're going to carry here and that we're going to get the earnings growth that we want sub mega technology. And so I think it's just waiting for some of these proof points.

And that first one might come as early as tomorrow in terms of, you know, laying the pathway for the Fed to give us a little bit of flexibility here in the back half of the year. Yeah, perhaps we get that tomorrow with the CPI report, Adam. But we also know that the Fed's going to want to see at least a couple of months worth of that type of data with signs that inflation is is again cooling the pace of inflation. It raises the question, if we have a Fed that's essentially taking the summer off, at least according to how markets are pricing and no cuts until at least the fall, can the market continue to move higher from here? Can earnings continue to grow enough to justify the multiples we see right now if rates stay higher

for longer? I think the market has done relatively well in an environment of healthy growth, modest disinflation, and a Fed that's on the sidelines. And so if that's the scenario going forward, I think the market can survive. We will have to see a little bit of a pickup in the pace of disinflation. So the CPI tomorrow, I think, is going to be a lot more important than the Fed. The Fed's been very consistent in its messaging. The bar for incremental highs is extremely high. We're not really even close to hitting that level. But like you said, they want to see a few more months of favorable inflation data. I think the September 18th meeting is reasonable for them to start the easing process. But it won't be the typical aggressive rate-cutting cycle like we've

seen over the last couple of easing processes. It's going to be a very gradual one, somewhere to kind of how the ECB is messaging, where they'll move for a meeting and then take a pause for one or two meetings, and then perhaps move again as they digest further data. So we've been in the environment you mentioned, you know, year to date pretty much with, again, very, very modest disinflation of Fed on hold and healthy growth. So if that's the scenario we're looking at, stocks can survive. But there kind of needs to be a pathway towards that that disinflationary process really resuming from the second half of last year and then the Fed, you know, commencing the easing process by the end of the summer. So by that September meeting. Nicole, one of the themes that you say investors should keep an eye on

is AI revolutionizing how businesses operate. And so I wonder how important Oracle might be. We expect to get those results pretty soon. I mean, whether it's more Salesforce in terms of disappointing or AWS, Microsoft Azure on the transformation side showing strength, given that Oracle's core business, that database business represents so much of what pretty much every organization needs to operate. Yeah, look, we really like Oracle and it's been a long-term hold for us. You know, we think there's room for a fourth and Oracle very much is in fourth place

up against more of the household names here. And they're growing in the low double digits and they traded a 20 times 2025 EPS. So it's really attractive from an overall software space perspective. So we don't expect to see the type of volatility in response where many don't look at Oracle and say it's priced to perfect. And so there's as much volatility around each of its earning reports. We also know that they've made an acquisition that didn't necessarily go perfectly and perhaps been a little bit of a longer lag. But at the same time, it opens up the door for them in the health care space, which is a big market for them. So there's a lot of parts of Oracle that we actually really like from a business perspective. Oracle's results, by the way, are out.

We are going through them. Rubric's results are out as well. I guess the team will let me know when we can talk Rubric. Yes. Wait a minute. Here it is. Rubric's earnings are out and it's a beat on the top and bottom lines. And the Q2 and full year guides are stronger than consensus as well. Give you the numbers here. Q1 revenue is 187.3 million versus 171.6 expected. Non-gap loss per share of $1.58 versus a loss of $1.87 expected. For the Q2 guide, revenue of $196 million at the midpoint of a range of $195 to $197. So that's better than expectations of $194.9 million. The Q2 loss projected at $0.49 at the midpoint, plus or minus a penny. That's a little better than the loss of 50 cents expected. For the full year, guiding to 817 million in revenue at the midpoint versus 806.7 million expected.

Loss of $2.30 at the midpoint, better than a loss of $2.41 expected. Subscription annualized recurring revenue is 856.1 million for this quarter. That's up 46% year over year. And 1,859 customers had 100,000 or more in subscription ARR. That's up 41% year over year. Now, Rubrics Chairman and CEO Bipol Sena is going to break down the results for us tomorrow here on Overtime in an exclusive interview, their first earnings report as a public company. So, Morgan, strong results, solid. It looks like, let's see, I see Oracle is up 5% on results and Rubrik is up 7, just as almost 8 as we're talking through those. So, yeah, encouraging perhaps on the top line. Absolutely. And speaking of those Oracle results, Kate Rogers has the

numbers for us. Kate. Hey, Morgan, yeah, I'll take you through Q4 results here for Oracle. A miss on the top and bottom lines, a dollar sixty three adjusted a bit lower than the dollar sixty five that analysts were looking for. Revenue is fourteen point two nine billion, also lower than the fourteen point five five billion that analysts were looking for. Revenue is $14.29 billion, also lower than the $14.55 billion that analysts were looking for. But as you can see, the stock has been up nearly 5%. It's up more than 3.5% right now. And that's because the company also announced after about two new partnerships. Oracle, Microsoft, and OpenAI are going to be partnering to extend the Microsoft Azure AI platform to Oracle Cloud Infrastructure to provide additional capacity for OpenAI.

So yet another partnership for that company, this time with Oracle. And then a separate announcement, Oracle and Google Cloud announcing a partnership that gives customers the choice to combine Oracle Cloud Infrastructure and Google Cloud technologies to help accelerate their application migrations and modernization, the company says. So that's likely why you're seeing the stock get a nice pop here after hours. Back over to you guys. All right, Kay Rogers, thank you. Nicole, I'm going to go to you on this one because we talk about Oracle arguably as number four among the cloud providers in terms of this market that's shaking out. And then you see these types of partnerships announced, sending the stock higher. How does this speak to this dynamic and evolving environment in this new era of AI? Yeah, I mean, this is exactly what we would hope to hear from

Oracle, that you want to see that their cloud services are not just gaining traction, but that these partnerships are working to help them run generative AI workloads. And so when we think about their enterprise level customers, you know, it used to be that Oracle was known as providing mission critical software to enterprises. Now, when you think about being able to run the workloads or the future of infrastructure, this is really meaningful for them. And so, you know, the results speak for themselves as you watch this tick higher, but that is the vision one would hope for. Also really interesting to see Oracle providing extra capacity both to Microsoft and to Google, you know, kind of as the fourth player.

It seems like they're a safe, almost neutral party. Hard to imagine Google doing that for Microsoft or Microsoft for AWS. Nicole, Adam, thanks to both of you. Well, the S&P 500 closing at a record, but the financial sector missed out on this upside, falling more than a percent. Mike Santoli is with us for a closer look. What's going on with the banks, Mike? Yeah, John, it doesn't take much to sour investors on the bank stocks. They've been a really kind of a fickle hold for a while. A lot of things have to go right now. A couple of things in the last couple of days, which was a couple of Midwestern regionals had pretty muted

guidance about deposit costs and net interest income, fifth third today, and Huntington Bank shares yesterday. You do still have this idea of maybe the Fed's not going to cut soon. That might keep the pressure on in terms of deposit rates. And then who knows about the consumer credit cycle. So it seems if we're in another moment here when bank stocks in particular are lagging. However, I wanted to point out that the financial sector as a whole has been vastly outperforming the banks. Why is that? Well, one of the reasons is banks per se are only about 25, 26 percent of overall financials. You have Berkshire Hathaway, Visa and MasterCard together, 27 percent of the XLF.

You have insurance companies. You have all the exchange providers. You have S&P Global index companies. My point is the financial sector, which seems to be more of a bellwether of the overall market, is a whole lot more than banks. They're not really lenders. And therefore, banks themselves are a little bit less important in terms of market direction. That's the way I would read it, even though for the broad economy, you want banks actually to stay above those lows and start to actually turn higher. Ideally, take a look at how regional banks in particular are now valued on a price to book basis, because, again, we're down below one times book value. So a discount to stated book value for the group in general. This was the aftermath of the Silicon Valley bank failure. So you did get down to about 80 percent of book. And of course, that's the covid crash when you were down to 70 percent coming out of the financial crisis. Also, 70 percent of book value. So it would seem as if on a valuation basis, this group has been de-risked, so to speak, even though that's not really in itself any kind of a catalyst or a guarantee that the book values are going to hold up and grow. Yeah, it really does look like, Mike, the regional banks represented by the KRE underperforming the KBE both year to date and

over the past, I mean, whatever frame you look at, one year, two years, to my eye, is that all having to do with Silicon Valley Bank in the aftermath, lingering concerns about the impact? It's largely that, John. I would also say that the big cap banks are so dominated by J.P. Morgan, which doesn't really trade along with the other large banks or financials as a whole. It really is just considered to be a category killer and has a big premium valuation. And it's that much. It just dwarfs the rest of it. So I think that's the other thing you're hearing is that a lot of the money is just hiding in J.P. Morgan, to a lesser degree, some of the kind of wealth management banks out there. Yeah. So really a bifurcated sector at

this point. Like the NVIDIA of banks. That's it. Yeah. Mike Santoli, thanks. After the break, we're going to talk some more about Rubrik's first report as a public company as that stock pops after results. And later, MasterCard CEO joins us for a rare and exclusive interview with an inside read on consumer spending. Overtime. Shares of Rubrik popping right now, up 6.5% on the back of a revenue beat and a strong guide in its first report as a public company. Rubrik also raising its full year outlook, and joining us now is Joel Fischbein from Truist on that. Joel, how does this look versus, say, Commvault, which is, you know, profitable, for example?

And is this reassuring for a recent IPO when smaller tech stocks haven't been performing that well? It's a great question. And thanks for having. Rubrics is a standout here. You got a company that's growing 40 percent. They beat by 17 million. You haven't seen that in software in a long time. They raised the guidance. They're frankly in the sweet spot right now of data security and compliance. And everybody needs it. There is over 2,000 companies that lost data last year. And this company has helped them deal with breaches and ransomware, and they're in a favorable position. So what is it that you want to hear from management on the call? We still don't have a sense of how cautious their guides might be, for example, though they did seem to be careful to guide to

beats over consensus at the midpoint. Yeah, it looks to us that they just passed the beat through, that they didn't guide up further than that. They kind of up 2Q by about $2 million, which is what we like to see, which gives us some conservatism. Just the metrics were, you know, really strong, particularly the $100,000 customers they've added. That was up 47%. What we want to hear is that they're continuing to get strong traction across the board in every vertical market. We want to hear about the competitive landscape. Obviously, there's other competitors. You brought up Commvault. There's Cohisti and Veritas. But again, this is a very big market. We think it's a market that several companies can compete in.

These guys are clearly the standout right now, growing above 40%. You know, a lot of times we talk about regulations as a headwind to companies. How much of a tailwind are the SEC cybersecurity disclosure regulations to a company like Rubrik? It's huge. It's a tremendous tailwind for them, not a headwind, sorry, tailwind for them, because companies have to disclose when they're breached before they didn't really have to disclose it. And now companies have to disclose their breach. They also, there's penalties if you lose customer data or you use PII data. And Rubrik's in a position with their architecture that they can actually go back and recover that data, even if it's stolen, and get companies back up and running very, very quickly.

And that's kind of a unique value proposition. And these government regulations are just going to get stricter, particularly around AI and AI sovereignty and AI privacy. All that data needs to be protected. And Rubrik is in a very unique position to be able to do that. Okay. Joel, thanks for joining us. We share the Rubrik of 7% right now on the heels of its first earnings report as a public company. After the break, we're going to talk to MasterCard's CEO, Michael Meebach, on the sidelines of the company's Connections Conference,

where he just spoke to hundreds of corporate customers. We will get his take on the state of the consumer and so much more. And later, we're going to be joined by the CEO of Vertiv, the AI data center infrastructure company that has skyrocketed up more than 4x in the past year. Be right back. Welcome back. We've got a news alert on activist investor Nelson Peltz. Leslie Picker has details. Leslie. Hi, John. Yes, I want to draw your attention to shares of a company called Rent-A-Kill.

They are the parent company for Terminex. You may have heard of them, the termite specialist. Those shares up more than 7.5% right now, 7.7% right now on headlines that Tryon has taken a stake in this company. I just received a statement from the Tryon spokesperson who said, quote, Tryon confirms it has a significant position in Rent-A-Kill and is currently a top 10 shareholder. Tryon also confirms it has reached out to Rent-A-Kill to

discuss ideas and improve our initiatives to improve shareholder value. Tryon looks forward to working with Rent-A-Kill's leadership team. So it appears a new-ish stake from Nelson Peltz's Tryon. You can see their shares of Rent-A-Kill up more than 8% in after hours trading, guys. All right. First, Nelson goes after the mouse house and then the bugs in the house. The pest house. I was just going to say there's an exterminator joke somewhere in there. But you just, I mean, you went straight for it.

Okay. Leslie Picker, thank you. I don't know if a bug's life is Disney or not. It is. That's definitely something to look into. All right. Well, meantime, a mixed picture for the consumer emerging from the latest earnings season, including companies from retail to fast casual restaurants, warning about changes in consumer behavior,

possible cracks forming, especially on the lower end. At the same time, executives saying they are still seeing, quote, deliberate spending or, quote, spending with a purpose. Our next guest has an inside look at real time spending across not just the U.S., but the global economy. Joining us now in a rare and exclusive interview is MasterCard's CEO, Michael Meebach. It's great to have you back on the show. Welcome. Thank you, Morgan. Happy to be on the show. So it is a big week for macro data. That is exactly where I need to start with you. And that is at a time where everybody is wondering, including the Fed, as it continues with this policy meeting here over the next couple of days, how would you assess the health of the consumer right now? So we take a

broader look around the world. The picture isn't any different than here in the United States. Overall, consumer spending has remained healthy in aggregate. As you just said, there's difference across different parts of the consumer segments, lower income, higher income, middle class. But overall, spending has remained solid. We're about to release our spending pulse for the month of May. When I look at online spend, we're seeing a year over year increase of 7.8 percent. And for in-store, it's 3.5%. So consumers make it work in aggregate.

And why is that? Because we continue to see a strong labor market. We continue to see healthy consumer balance sheets. There's access to credit. There's willingness to access credit. So overall, it remains a fairly benign picture. Given the billions of transactions that you oversee at MasterCard through your infrastructure, what are you seeing in terms of the inflation picture in real time?

There's been a real debate about just how sticky it is here at these levels. Right. So, you know, it's important to consider where the data that we see. We see the carded side of the data. You look at everyday groceries for example that is a segment that you know where cards are used debit cards most most often you we see a lot of inflation in non-carded segments for example rent or insurance particular parts of the insurance industry so the picture is a little bit diverse we see higher end innovation inflation and some of those um when it comes at the carded side of things overall.

In some countries, it remains above expectations. Here in the U.S., we've seen the latest data. But nevertheless, the consumer has adjusted to that. We're going into summer. It's clearly a summer of experiences. People want to continue to travel. They want to go out and see friends and do things. And these are trade-offs that the consumer is making. Another aspect is with inflation not rising any longer in many countries around the world, the consumer starts

to feel more empowered. And they're making decisions. They're now looking for promotions. And they're making a call on what they want to spend on in this what I would call the experience summer. Interesting. We've talked about cross-border transactions before, how strong they've continued to be, especially in travel. It sounds like with what you just said, that's continuing. This is how it looks like. Yes. OK. In terms of how consumers are making their payments on goods and services, has there been any change in that or are they still turning to their credit cards

and their debit cards? Let's just go back a few years. So we're all locked up at home and behavior's changed dramatically because they had to. So people turn more to digital forms of purchasing, more online purchasing versus in-store purchasing. Here we are two, three years further down the line. And some of those habits got really ingrained

and people are not going back. We saw in-store spending rise, but online is there. We also see a proliferation of alternative payments coming around. There's your debit card, there's your credit card. Tremendous value brought, but there's buy now, pay later. There's a whole range of options. The payment industry has never been more competitive.

And for MasterCard, it's always been our strategy to say we don't provide choice in payments. We love cards, needless to say. At the same time, there are alternative options and we do provide them to our customers. 500 of which are actually here with us in Nashville right now at the Connection Conference. Yeah, and I think that's a key point, the fact that so many of these neobanks and fintech upstarts that we talk about are not necessarily competitors of yours, but customers of yours. So it raises the question, and I could ask this about the U.S. specifically, the payments environment, what this growth opportunity in electronic payments looks like, especially when there is already such penetration in terms of, I guess, that more traditional bread

and butter consumer. Right. The industry together across fintechs, retailers, banks has been tremendously successful in digitizing the economy. So the U.S. is one of the most digitized countries in the world. At the same time, in terms of absolute dollar volume, we're still talking trillions in cash out there. So, where is the potential for further digitization beyond consumer payments

is a question that we ask ourselves, that our customers here in Nashville ask themselves. Small business payments, business to business payments. There's a tremendous opportunity here. The consumer is used to an excellent digital user experience. Why isn't that the same in B2B payments? There's a question of how do you get data across?

That's a very different thing than in consumer payments, but people still want the same ease and the smarts of a digital payment experience they live every day. So there's a tremendous opportunity in payments growth and the digital economy growth in the US as it is around the world. Value added services, it's been a huge growth area for you.

What's propelling that, especially when you do talk about business to business, or you talk about fraud protection or security or some of these other areas that you are continuing to invest in? So, Morgan, we try to anchor on important and fundamental secular trends. Digitization is one of them, obviously. But, you know, with more digitization, there's more data that comes about that is thrown off by these digital transactions, and it's a clear need to keep that data safe. Businesses are worried about cybersecurity risk. Consumers are worried about identity theft and so forth.

So our value-added services, a big chunk of which is in the cybersecurity space, in the fraud management space, we're seeing tremendous growth, closely tied to digitization. On the other hand, all of this data is a wealth of information and it allows our customers to make better decisions. So how do we take the data and provide insights to our customers, to a retail bank? What is a small

business that is ready to underwrite and provide a better credit to? Those are all insights that can derive from the data. So data insights products is the other piece. Now, all of this comes together in a world where the consumer makes decisions. And what kind of decisions is a consumer making? If I get an offer that feels very, very personal to me, I might decide I want to avail that service,

I want to buy that good. Personalization, coming down to the economy of me is where a big trend in payments is going. And yet that's a whole different set of services that we provide in terms of allowing our customers in a retail space to really provide that offer to Morgan at the right channel, at the right time that feels like it's your offer.

Okay. And of course all that data enables quite a lot of AI application as well. So you have to come back and join us to talk about that and your efforts in generative artificial intelligence too. Michael Meeback of MasterCard, thanks for being here. Thank you, Malorie. Well, let's get a CNBC News update with Contessa Brewer. Contessa. John, National Security Spokesman John Kirby said the U.S. is currently evaluating the reply from Hamas on the U.S.-backed ceasefire deal. Hamas said earlier it had given its reply to mediators with some, quote, remarks on the deal. Secretary of State Blinken said

Israeli Prime Minister Benjamin Netanyahu reaffirmed his commitment to the proposal when they met late yesterday. Medical debt will be banned from credit reports. The White House announced earlier today the Consumer Financial Protection Bureau will implement the rule as early as next year. The three biggest credit agencies, Equifax, Experian and TransUnion, voluntarily removed some medical debt on credit reports as of last year. And Pope Francis will convene a meeting with a global roster of top comedic talent Friday. 105 comedians from 15 countries were invited, including NBC's Jimmy Fallon,

Stephen Colbert, Whoopi Goldberg, Chris Rock and Tig Notaro. The Vatican said the purpose of the event is to celebrate human diversity and promote peace, love and solidarity. And in this case, guys, the headliner is the pontiff himself. I'm sure he'll kill it. I'm sure he'll stay away from the edgier jokes as well. Contessa, thank you. Up next, Apple roars back. The stock hitting a record high today, just a day after it laid out its long awaited AI strategy. We are going to lay out the key benchmarks that could show whether the AI rollout is working or not.

And we will talk to Max Levchin, the CEO of Affirm, which just today announced a new partnership with Apple Pay, sending that stock higher. Plus, much more on Oracle. Jumping, despite missing on both lines of the company, did announce partnerships with Google Cloud, Microsoft and OpenAI. You can see it's up 8% right now. Overtime will be right back.

Welcome back to Overtime. Apple touched all-time highs today after an AI unveil at its Worldwide Developer Conference yesterday that was supposedly underwhelming. Well, today investors giving it another look. So the question, how will we know if Apple intelligence will pay off for Apple's financials? And when will we know? Well, Apple has built new AI features into computers that start at $600 for a Mac Mini or really $1,000 for the MacBook Air. In phones, the entry price for the moment is $1,000 for the iPhone 15 Pro. But we'll see if the new base model iPhone 16 can handle Apple Intelligence 2. It might be cheaper than $1,000. So the test of the AI strategy will be, does it drive a new hardware upgrade cycle, driving revenue and margins

with premium device sales? So when will we know? Well, next month, both macOS Sequoia and iOS 18 should arrive in better form. And I expect we'll start to see the first reviews from early adopters of the betas on how well the AI software works. If those reviews start driving demand for Sequoia downloads and new Mac sales, that'll be a good sign. In the fall, sometime between late September and early November, we should expect to get the first sales of Apple's newest iPhones, which for now I'll continue to call the iPhone 16 that we don't know, and the broader launch of the AI enabled operating systems. Is the install base adopting features like Genmoji's? Do shipping times suggest premium iPhones are in short supply? Those are important

questions. And then in February 2025, we expect Apple's holiday quarter earnings report, which should include demand details. If margins are strong, new Macs are selling, and Apple's not sure when it'll have enough inventory, that's a good sign. If not, maybe no super cycle after all. Well, speaking of Apple, shares of Affirm were up 11% today after that company announced that Affirm's payment products are going to be available to Apple Pay users in the U.S. later this year. And this comes days after Affirm announced two new payment options, Pay in 2 and Pay in 30, to provide greater payment flexibility to their customers. And joining us now exclusively to discuss is the founder and CEO of Affirm, Max Levchin. Max, it's good to see you. So I want to ask you first about this Apple Pay partnership, which rolls out sometime later this year. What's

the longer term impact of arrangements like this? And why are you projecting no revenue impact really for fiscal 25 when we should see this rollout at least within the next six, seven months? So things that are worth doing really take time. And we think in years and we hope decades, not, you know, next three, six, 12 months. It's just always a good idea to aim really high and take your time to build something worth building. It is a super exciting partnership. It is you know the most beautifully designed, easiest to use, greatest wallet, digital wallets probably out there with our products that are designed to give people total control over their payments, transparency, no gimmicks, no late fees. And so it's very exciting. We're just getting started.

Today is just the announcement, not even the launch. Okay. So I want to ask you about pay in two and pay in 30 in the context of the broader economy and consumer behavior. Because buy now, pay later is a bit of a black box for a lot of the people who are looking at the broader credit picture. And I wonder how much of an impact do you think it's having these more consumer-friendly terms that Affirm has, for example,

versus these credit card rates that are going up so high? I've seen some up well above 30%. I think that's exactly what we started this company to do, to unbundle the credit card, which is a wonderful user interface. It's the best payment user interface ever created, perhaps, but it's also completely opaque. You don't know when you're going to be done paying off that swipe, no matter how convenient it is the idea of a firm is to be the antidote for any transaction be it a small 80 to 100 transaction which is what these pain 2 and pain 30 things that we just announced are real about to pay in 39 months which is you know something that's a lot more for a multi-thousand dollar workout equipment

for your home each one of those transactions is separate and you get total transparency into the cost and a timeline to pay it off the The interest does not compound, so you know exactly how many dollars of interest at most you'll ever pay. It's just really, really easy to use. And the impact speaks for itself. When we integrate with merchants, they report up to 80% to even 100% increase of the average ticket that they sell because consumers feel more confident buying with Buy Now pay later instead of the credit card and we very quickly get from five to sometimes all the way up to 30 share of wallet at the merchant which means that consumers are buying where the otherwise wouldn't have so max it's it's morgan i'm looking at this data here in my notes that you have a firm

has a dramatically lower delinquency rate than the ones that we're seeing, which are ticking higher for credit cards right now. How much does that speak to your underwriting prowess? How much does it speak to the impact interest rates, high interest rates are having on consumers right now? It's fundamentally the outcome of three things. Number one, we really are first and foremost an engineering and math company. We take data, we ask our merchants to share a lot more data than they traditionally do with credit card companies because we can extend more credit to consumers that way when we understand more about the purchase. So we really are quite good at underwriting and the data speaks for itself. Two, each one of the transactions is underwritten

separately. And so we know exactly when you or whoever's borrowing is too close to overextending themselves. We're not afraid to say, hey, this is a really good thing that you have in mind, but we don't think you can afford it. You either need to give us some data that tells us we're getting you wrong, we need to re-under data that tells us we're getting you wrong. We need to re-underwrite you. Or perhaps you should take the time to save up a little bit or make a slightly larger down payment, etc. And three, just more sort of a technical reason why we are superior to credit cards. Each one of these transactions on average is done something like four or five months from inception.

So these very short term transactions, relatively speaking, just give us more flexibility when we decide what sort of a credit outcomes we want to see in the business. All right, Max Levchin, wish we had more time. Big news from you today, big move for the stock, up 11%, the CEO of a firm. Well, we've got a news alert on OpenAI. Elon Musk has withdrawn a lawsuit against OpenAI, originally filed earlier this year. That lawsuit for breach of contract alleged that CEO Sam Altman and others at the company abandoned the founding mission to develop AI, quote, for the benefit of humanity broadly. The withdrawal comes as Musk has posted heated rhetoric on X surrounding Apple's partnership with OpenAI, including a threat to ban Apple devices at his companies if Apple integrates OpenAI at the OS level.

All right. Yeah, but he's not suing. Okay, we'll continue to monitor that one. In the meantime, NVIDIA has been Wall Street's AI darling, but data center company Vertiv has been significantly outperforming even NVIDIA over the last year. Up next, the company's CEO will join us exclusively. Welcome back. Vertiv Holdings, the maker of cooling systems for data centers as well as power systems, has been on a tear.

It's up more than 300% in the past year, even outpacing NVIDIA. Joining us now in an exclusive interview is Vertiv CEO Gio Albertazzi. Gio, it's great to have you on the show. Of course, I'm going to start right there. And that is the fact that you might be in the business of cooling systems for data centers. Your stock's been on fire and certainly growth, even just looking at your last earnings report, has been very, very strong as well. What is propelling it when we talk about data centers? Is this all AI related? Well, first of all, thank you for having me here today. Certainly, we're very happy about the trajectory we're on in the business.

But if you look at the industry, the data center industry, and we've been playing in this space for competing in this space for decades and certainly have the largest portfolio, the most complete offering for data center infrastructure. Well, that data center infrastructure is growing and AI is further accelerating that growth. So we are very well positioned in a very good market that is going to accelerate further. How quickly can you convert those orders, that backlog, into actual projects and deliver on those data centers? And I ask that knowing that there have been perhaps some supply chain and capacity constraints along the way versus the demand we're seeing. Well, that's a general situation for the industry.

The industry is in a situation which demand exceeds in general supply. So it's a good place to be. We have a strong backlog. We have grown our backlog as we reported in our earnings call almost a couple of months ago. But when we think about the backlog and the speed at which we convert an order, it really depends on what type of market and what type of data center market we serve. but in general, we think there's something between nine and 12 and 18 months of order to revenue conversion time. Gio, good to see you.

You said on your earnings call back in late April that you had seen the pipeline for AI projects more than double in the previous two months. So my question is, when should we, writ large, expect to see a real inflection point for liquid cooling in the data center? Well, first of all, I'd like to know when we talk about the AI pipeline, we talk the entire infrastructure. So the entire infrastructure is power from grid to chip. It is cooling from the server all the way to extraction, heat ejection, heat rejection, and also heat reuse. So it's a much larger portion than just the liquid cooling.

But liquid cooling is accelerating and is accelerating now. We believe that 2024 is the year in which the big acceleration of liquid cooling will happen. But liquid cooling is just the first segment of the thermal chain, as we like to call it. So the heat goes out of the server through liquid cooling, and that needs to be extracted from the building, converted, reused. But there is a lot of also air cooling that still happens inside a data center and will continue to happen even in a full high density AI data center. All right.

That's such a fascinating story. Gio Albertazzi, CEO of Vertiv, thanks for joining us. We hope you'll come back to discuss it further. With great pleasure. Thank you for having me. We're just moments away from Oracle and Rubrics analyst calls. Coming up, Mike Santoli takes a closer look at Oracle's comeback as a cloud and AI play. And news just crossing on GameStop. Yeah, that one. The company saying it is completed its at-the- Secondary offering of 75 million shares first announced on June 7th, raising approximately $2.14 billion in gross proceeds. We'll be right back. Oracle's earnings call set to kick off in just a few minutes, and the stock is jumping up nearly 9%.

Up next, Mike Santoli is going to look at why Wall Street is less bullish on Oracle than it is for rivals like Microsoft and Salesforce. Welcome back. Let's get another check on Oracle. Those shares are jumping, even though earnings and revenue missed estimates now of about 9%. The conference call will start in just a few moments. Let's bring in Mike Santoli for a look at Oracle's long-term performance, which, Mike, is surprising. Yeah, it probably is surprising to most, Morgan. Now, it seems like Oracle's kind of playing catch-up in cloud services and AI, but look at this going back to the very end of 1998 compared to Microsoft. Oracle is the better aggregate performer over that period

of time. Look at what a bubbly stock Oracle was back in the heart of the tech bubble going into the top in 2000. Obviously, it was smaller at the time than Microsoft, which was the largest stock. Also, over this span, or at least over the last 20 years, Oracle has bought back half of its shares. So essentially, you've got half the number of shares now as 20 years ago. It's been a slow growth, cash flow story. Now take a look at how the street views Oracle right now, because it's not necessarily one of these widely embraced software stories. The street loves Microsoft, loves Salesforce, loves ServiceNow.

Oracle, it's kind of mixed on. Why is that? Well, it's been a slow growth story for a while. They don't seem to have necessarily the entrenched franchise in the fast growing businesses that the street would like. Some troublesome acquisitions. It's a bit of a roll up. All of that boiled together, though. I suggest maybe there is still a wall of worry, a reservoir of doubt that can be fed off of if Oracle continues to deliver, guys. Okay. Mike Santoli, thank you. And of course, John, we're going to get more in terms of reads on AI and tech with Broadcom and with Adobe later this week as well. And then more on the consumer front, too, when you get earnings from Cignet and also one of the restaurant chains,

not to mention Fed and CPI tomorrow. Yeah, for sure. I got to go back, though, to the mega caps and the three biggest Microsoft, Apple, Nvidia. With this seven plus percent move that Apple made today, it's now one percent away from Microsoft in market cap. Right. So it's close to perhaps reclaiming the crown there. And there's a single-digit percentage move separating NVIDIA in third place from Microsoft in first place, less than 10% apart right now. So anybody's game. Anything could happen. I mean, it's really fascinating, especially as Apple does play this catch-up trade in terms of AI. It did take, what, 12 hours, 24 hours for the market to digest what Apple actually presented to it yesterday.

You were kind of first on the ball with that one. Yeah, I've been saying for a long time, Apple is a systems company. They're vertically integrated. When they move, it can have an impact quickly. All right, well, record closes for S&P and NASDAQ today, CPI in the morning, Fed in the afternoon. Tomorrow, that does it for us here at Overtime. Fast money starts now.