Closing Bell - Closing Bell Overtime: Goldman’s AI Software Playbook; Top Picks in Precious Metals and Small Caps 10/8/25

Episode Date: October 8, 2025

Markets weigh the ripple effects of the ongoing government shutdown as Kevin Mahn (Hennion & Walsh Asset Management) gives his analysis. John Ciampaglia (Sprott Asset Management) responds to Ray Dalio’s bold call to put 15% of portfolios in gold. Goldman Sachs’ Kash Rangan joins from San Francisco to discuss the key debates around the AI trade in software stocks. Our Robert Frank digs into where the crypto rich are really spending, and Federated Hermes’ Stephen DiNichilo breaks down a rally in small caps. Plus, a look ahead to Delta’s earnings with Jefferies’ Sheila Kahyaoglu. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That's the end of regulation. Newvation Bio ringing the closing belt in New York Stock Exchange, turned therapeutics doing the owners at the NASDAQ. Markets bouncing back after a down day. The S&P 500 now up seven of the last eight sessions. It just closed at a new record high right along with the NASDAQ. And we're still waiting for it to settle. But the Russell 2000 looks like it's closing at a record high as well. We go back a little further. It has been six months since the market lows following the tariff turmoil of early April. The S&P 500 closed below 5,000 on April 8th. It was the only day that happened, dating back to February of 2024. It's up 35% since then. Tech and industrials, the top sectors today, Staples Energy, the

decliners, another all-time high for gold as well. Yesterday, topping 4,000 for the first time, now trading closer to 4,100. Well, that's the scorecard on Wall Street, but winter stay late. Welcome to closing bell overtime. I'm John Fort in San Francisco, and Morgan Brennan, of course, back at CNBC headquarters, and we've got much more on that record run in gold. Some big names saying stock up, but there's one person who says, yes, gold is hot now, but over the wrong run, stocks always outperform. We'll debate it. And the weather's getting cooler.

The leaves are turning. Must be earning season. Delta Airlines reporting tomorrow, everything you need to know before those numbers. Well, let's begin with the markets as stocks resume their winning ways. yesterday's tech losers became today's tech winners. Christina Partsenevelas is here in studio and she's got more on today's record action. Yeah, you said it, the S&P 500, Nasdaq hitting fresh record closes today with the AI trade catching a bounce after Tuesday's selloff. And that's helping utilities as well as industrials, both sectors hitting all-time highs along with tech.

Caterpillar leading the Dow while Qantas services pacing industrials really got a lift today from a truest price target increase as well. But much of these moves really boils down to the continued buildout of AI. infrastructure. Not a day goes by. We know this without another new headline on this theme. NVIDIA's CEO Jensen Wong was interviewed on CNBC this morning, stating that demand for computing has, quote, gone up substantially with demand for AI growing exponentially. His bullish comments really driving the entire sector higher. Invidia, custom chipmakers Marvell, Broadcom, all closing higher in the day. AMD hitting an all-time high, up 40, at least 41% week to date on pace for its best weekly gain since April,

2016, all of this, though, is a powerful reminder that the AI trade really remains the dominant force driving this market to new highs. John? Sure does. Christina, thanks. Let's get a check now on bonds as we got minutes from the Fed's latest meeting, the one where they did cut rates. Rick Santelli joins us now from Chicago. Rick. Indeed, it wasn't only the Fed minutes everybody was paying attention to. It was also the 10-year auction. If you look at a six-hour chart of 10-year yields, a little past the middle of the chart. to the right. You'll see where yields spiked up at one Eastern. Well, one Eastern is when the results of the auction hit the wires. And we then proceeded to make the high yields of the session. And if you look at a week-to-date chart, basically what we've done is we've come back

to very close to unchanged on the week. We settled right around 413 on Friday. We're hovering basically at that level, unchanged on the day as well. If we look at the big stellar mover over the last couple days, it's the dollar index. Here's a month-to-date chart of the dollar. Right now, it's up about 1.15% so far on a month, and it's on pace to close at the highest level since the very first day of August. Let's call it two months. So even though, as many guests have pointed out, we're closed for seven days. Equities, at least two out of the three indices are cooking in Greece. The dollar's having a very nice run. And interest rates, a big bit of a yawn, although the auction metrics weren't bad, but we sold off and made the high yields

after that. There's a lot more going on than just supply. Tomorrow's 30-year bond auction. We ought to observe that at one Eastern to see if when it ends, it has the same reaction as the market did today pushing yields higher. Morgan, back to you. Rick Santelli, thank you. Well, we mentioned it before, but today is the six-month anniversary of the tariff crash low. The S&P 500 is up 35% since Our next guest says a return of volatility would not be surprising, but growth opportunities still exist. So let's bring in Henyon and Walsh, Asset Management President and CIO, Kevin Mon. Kevin, it's great to have you back here on set. I mean, 35% gain in the S&P in six months.

Who would have thunk it? Who would have thunk it? But if history serves as a guide, investors have multiple reasons to be optimistic ahead. First, another anniversary. This current bull market is hitting its three-year mark. And going back over the last 50 years, each bull market. that hit its three-year milestone, continue to move forward from there with an average duration of eight years. Perhaps we got another five years ahead. Second reason involves the Federal

Reserve. Going back over the last 40 years, the Federal Reserve has cut interest rates on eight different instances when they pause for six months or more, just as they did in September. Now, in half of those instances, the economy moved into recession. That's not our base case here. In the other half of those instances, the stock market moved higher by about 8% over the next six months and 15% over the next 12 months. So there are reasons to be optimistic ahead. But I wouldn't be surprised to see some more volatility ahead. When that volatility comes, money will come off the sidelines. It will prevent those short-term pullbacks from coming corrections.

And I think we melt upward as we close the year of 2025. Why do you think we haven't seen so much volatility as of late? Is it just because we're waiting for our next big catalyst? I believe right now that the market is optimistic that the Fed's going to cut interest rates two more times this year. And the longer the shutdown takes, the more likely that at least we get another rate cut in October because they have no more data to operate up on. Secondly, we continue to hear more and more announcements about this AI infrastructure buildout. Even NVIDIA's CEO, Jensen Juana, suggested by the end of this decade, we could see $3 to $4 trillion in AI infrastructure. investment. We're around 600 billion right now. That's a lot more money being spent ahead.

So if you're looking to follow the money, look to lean into AI infrastructure plays and maybe even some aerospace and defense plays. Kevin, what does it mean to you in this market that good news seems to matter so much, especially if it's coming from the mouths of Sam Altman or Jensen Wong? But the bad news doesn't stick to the pen. It's like a teflon market. I mean, is that a challenging or perhaps troubling signal about the optimism, or is it a sense that the market can power through? Over the short term, I believe it's a sense that the market can power through. Over the long term, I've seen reasons to be concerned.

Look at the current valuations of the S&P 500 right now. They're both trading above their five and 10-year averages. We've had over 30 record closes this year, on top of 57 record closes last year. Investors shouldn't consider that type of growth to continue that much longer. But that doesn't mean there aren't growth opportunities underlying these markets. And I think if you continue to follow the money, as I mentioned earlier, you're going to find those pockets of growth opportunities. But now may be the time John to diversify and look to some of those undervalued areas of the market. Health care is one of them.

But I don't believe it's large cap pharmaceutical that you want to lead into. You want to lean into smaller cap biotech because M&A activity is going to pick up there as large cap farmer continues to get hit by headwinds of, price controls and also patent expiration. That feels dangerous, though, Kevin, in a market where the small caps have not responded the way so many have hoped or expected, where bigger's been better. And even if you look outside of stocks, real estate is in short supply and at valuation highs, gold is trading above 4,000. The diversification pipelines of the past just don't seem to be available in the same way. And another area to look at for diversification, though, John, is bonds. One area of bonds right now, municipal bonds have underperform other fixed income asset

classes year to date. But that's because so many municipal issuers rush forward with new issuance because they were fearful that the tax-exempt provision of municipal bonds would be taken away in the one big, beautiful bill act. That wasn't the case, and now we're seeing less supply ahead. And I don't care what the asset class or what the security type is. Anytime there's less supply and increasing demand, pricers are going to move higher. So, So bonds may be a good area to diversify into, in addition to international stocks, which continue to outperform U.S. stocks, even though no one pretty much is talking about them. All right. Kevin Mon, great to have you here on set.

Thank you. Thank you. With record closes for the NASDAQ, for the S&P, and it looks like the Russell 2000 came in just a point or too shy of a new record closing high. John? Yeah, markets seem to be shaking off. The government shutdown and all other kinds of bad news for now, as we were just saying. We're on day eight, and the latest efforts to get closer to a resolution so far have failed.

Let's bring in Emily Wilkins from Washington. Emily. Hey, John, well, yeah, you know, if you look at this afternoon's vote on reopening the government, not much has changed this week. Once again, the measure failed, and neither side is blinking in this standoff here. No real change from past votes in terms of who's voting for, who's voting against. But look behind the scenes for a minute. I've been speaking with senators, and they tell me that there are bipartisan, conversations about how to move forward. So they are talking. I spoke with Senators Mark

Wayne Mullen and Lisa Murkowski today. I do understand that we're in a, we're in a situation where negotiations have to take place. And in those negotiations, sometimes there's a lot of give and take. The conversations are ongoing. And I think that that's, that's important. Well, talks might be bipartisan behind the scenes. Tensions are erupting in public. around the Capitol. Two Democratic senators, Mark Kelly and Ruben Gallego, were criticizing House Republicans for not negotiating on health care when Speaker Mike Johnson approached them. The three lawmakers, as well as Congressman Mike Lawler, got into a very heated discussion of whose fault the shutdown was. And then Lawler and Minority Leader Hakeem Jeffries also got into

a bit of a public spat just a little bit ago. Now, minority leader, sorry, majority leader, rather, John Thune in the Senate is planning more votes to fund the government this week. But it is just not clear that anything is going to change soon. And there's no real sign to an end of this shutdown. Morgan. All right. Emily Wilkins, thank you. Well, coming up, Jovey Aviation lowered by nearly 10%.

We're going to tell you why. Why it's not alone. Plus, gold had been a hot trade for 2025. It's up 54%. It's way outperforming the S&P 500. But historically, stocks have been the better bet. Is something different this time? Overtime is back in two.

Welcome back at Stocks Store. More companies are taking advantage of their gains by selling more of their shares. Jobie Aviation filing to sell $500 million of common stock. We got that news right here in overtime yesterday. Those shares fell 8% on that news today. Iron, this is a name known to Overtime viewers. This is the Bitcoin Minor turned data center play. It's offering as much as $875 million in convertible notes.

Those shares also fell. And Live Nation offering $1.3 billion in convertible notes, also finishing the day lower. But even though all of those names are down today, they are up big since those April lows six months ago. Very big in some cases with some of these names, John. Yeah, for sure. Well, turning now to gold, it posted its 44th record closed so far this year

after crossing 4,000. It's also pacing for its eighth straight weekly gain. As gold climbs and the shutdown drags on, some major investors are recommending people increase their gold exposure. Ridgewater Associates founder, Ray Dalio, is calling gold an excellent diversifier and saying investors should have 15% of their portfolio in gold. And double lines Jeffrey Gunlack has said 25% waiting is not excessive. But others on our air are waving some red flags on that trade, such as Josh Brown from Ridholt's wealth management.

It's really bad financial advice. Consult with a financial advisor or financial planner, before you put 25% of your net worth into a commodity. People need to forget there's a lot of recency, people need to remember, there's a lot of recency bias here and people should not forget that like any commodity, gold has boom bus cycles, it's perfectly normal, has unbelievable bull markets like the one that we're in right now.

It's also had periods like very recently, topped in 2011, didn't get back to that high until 2021. That's an entire decade of no returns. In the meanwhile, stocks did really well. Silver's been a hot trade, too, up 67% this year. But to Josh Brown's point, today's silver finally passed. It's 2011 high. Still hasn't gotten back to its all-time high set in 1980.

So are medals just having some temporary shine or has something permanently changed? Joining us now is John Champagne, Sprott Asset Management CEO. Sprott has several ETFs focused on gold. gold and silver. John, what do you say? Is it different now with gold? Is it going to double maybe again over the next three to five years? Yeah, well, gold is obviously having its best year since 1979.

And what gold is doing this year is not typical. It is not designed to go up 50% a year. And even last year, it was up about 25%. And barely anybody noticed. And I think it's important to reflect on what signal the price of gold is sending the market, and it's basically a lot of uncertainty, a lot of risk, and some concerns about things like the dollar and U.S. Treasuries and U.S. T-Bills, which have obviously been the reserve asset for many decades, and whether it's foreign central banks or individual

investors or institutions, there's clearly some substitution going on between treasuries and T-bills and gold. And it's not so much people leaving stocks. I think it's people replacing their typical allocations to bonds and instead going to fiscal gold. And John, how much of this might come down to the difference between the way a Ray Dalio or a Jeffrey Gunlack invest and the way most people, even relatively high net worth people invest? I mean, it's bad for most people to get in and out of trades frequently or in large amounts. Dollar cost averaging, having a set strategy tends to make more sense. Is that part of what people should keep in mind when they're considering how much gold to hold and for how long?

Yeah, I mean, we've been advocates for gold since it was $250 an ounce. So we've been, you know, kind of beating this drum for a long time. And our view is obviously it's the ballast in your portfolio. It helps you stay invested in other asset classes. It historically has been a safe haven currency alternative when things in markets become dislocated. And obviously we're in a period where a number of different markets, are unsettled. And so we always view it as a long-term strategic holding. It really depends. Five to 15 percent, I think, is a reasonable amount for most investors. Obviously, we see central

banks in the world moving their FX reserves to targets in that range, some even higher. And we think this is a part of a long-term secular trend. And it's interesting that institutions are starting to mimic the central banks in terms of moving away from treasuries and T-Bes. bills to physical gold as a safe haven investment. Yeah, we keep hearing about de-dollarization and also this idea of a debasement trade, to your point on how all this is fueling gold. I'm curious what you think of the moves we've seen, not only in silver, which seems to be playing a catch-up trade here, but also more recently platinum and even

perhaps now Palladium. Yeah, we've seen big moves in platinum breaking out a multi-year kind of trading ranges. It's very bullish. I think the platinum story is obviously. more about shortage. We had very sub-economic prices for a very long time, did not encourage any kind of platinum mine development. These are very old mines. And there's just a natural scarcity to these metals. Silver is obviously a bit of a hybrid metal being, you know, part monetary and part industrial in nature. And silver, as you mentioned, the beginning of the show is finally starting

to approach, you know, its recent hype from 2011. We think silver is clear. in the midst of a catch-up trade, and we think it has a lot more room to go. All right. John Shampalia, thanks for joining us. I know you guys focus on critical materials, too, so I have to come back and talk to us about that as well. So much going on in this sector right now. Well, Materials is one of the best performing sectors today, thanks in large part to some positive analysts' comments on Caterpillar as we stick with mining here. But the best sector today, as is often the case, to check. So coming up, we will take a look at one area of the market that's being overlooked in this AI rally and why that could be

concerning to some. We'll be right back. Welcome back. While AI giants like Nvidia and Open AI continue to dominate the headlines and the market action, another corner of the market is quietly slipping. Consumer cyclicals. This is typically a barometer of household confidence and economic momentum. Those are showing signs of strain. So senior markets commentator, Mike Santoli, is here with a closer look at this dynamic. Mike. Mike. Yes, Morgan. So it's still a somewhat subtle pattern. It's not a full breakdown, but I do think it's notable in something that you want to monitor. So this is the equal weighted consumer discretionary ETF, part of the S&P 500. It is now rolled over below the equal weighted S&P in general. So the broader 500

stocks equally weighted. You see that kind of slipping to an underperformance mode. Now, a lot of times what you want to watch is how cyclicals are doing relative to defensive, such as health care and staples. Health care's had that big bump. It's almost converging. with consumer discretionary, and then Staples, you've got nothing really coming from there. So it's not necessarily a hunker down and get ready for an economic slowdown message, but it's a little bit of a waning leadership from those consumer cyclical areas. Now, take a look at some of the mixed messages in the actual data. Payrolls relative to overall consumption among households.

There's been, oh, sorry, this is the first one here. Here's one reason why you might actually be, okay, so here we are. So ADP payrolls, right? Private sector payrolls, you've seen how they've really cracked and pretty much gone to minimal levels near zero. However, personal consumption year over year has held up. You don't often see that kind of divergence here. A lot of it is higher in affluent households. A lot of it is people aren't getting laid off, even if job growth is not particularly strong. Another reason why maybe the overall consumer is cushioned is household balance sheets are in decent shape. That was that prior chart. It shows you debt service, obligations among all households relative to disposable income. Now, it's up off those pandemic lows and everybody had stimulus and paid down their debt, but it's still well below the typical levels you've seen both before recessions and just in general over the last 40 years or so. That's super fascinating. I think you could also, and I know there's debate on whether this is a good thing or bad thing. We also have more Americans owning more stocks right now and stocks

obviously at record highs. I wonder if we need to be talking more about immigration impact on some of these parts of the market, including some of those consumer-facing companies, because we've heard it from analysts and others that have come on, just even in recent days saying, for example, the Hispanic demographic is showing a lot of soft spending right now, perhaps because of immigration policy and dynamics there. And I do wonder whether that needs to be factored into how we're looking at this data and why maybe some of it's not coinciding in the way it has historically. It's absolutely a part of the story, and certainly on the labor supply question. That's definitely one of the reasons why you have this kind of no real job growth,

but also not much left since labor supply has been diminished by immigration crackdown. Yep, you're seeing things like certain retail chains. I mean, some of the weaker performers are in the dollar store area, for example. However, more recently, you look at things like casinos, hotels, travel related, and of course, housing related. They've all been kind of weak. So I do think it's part of the story. I don't know if it has full explanatory power. All right. Mike said, Antole, thank you. See you again in just a bit. Now it's time for a CNBC News update with Julia Borson. Julia.

John, the FBI reportedly fired three special agents who worked in connection with special counsel Jack Smith's investigation of now President Trump. That's according to NBC News, which says the agents were part of a public corruption squad that was involved in subpoenaing phone calls records from members of Congress during their investigation into the president's alleged attempts to overturn the 2020 election. The last of the 10 inmates who broke out of a New Orleans jail five months ago is behind bars, the U.S. Marshal's Service says they arrested Derek Groves in Atlanta who had been convicted of murder and was facing life in prison. The inmates originally escaped by crawling through a hole

behind a toilet inside the jail. And Blue Origin successfully completed its 15th human spaceflight of its new Shepard program today. The six-member crew is on NS36. It continued to a maximum altitude of about 66 miles where they experienced weightlessness. The new Shepherd program has now flown 80 people into space, including Blue Origin owner Jeff Bezos and pop star Katie Perry. Back over to you. Julia, thanks. Well, just about three years ago, the markets hit a cycle low in late 2022. Short time later, ChatGPT was released, kicking off a three-year AI rally that's seen the NASDAQ more than double, up 115%. But many are starting to work. wonder what's next for the AI boom. Does it start to fizzle out or just move to new places?

Up next, we're looking at some key questions around AI, maybe getting you some answers. We'll be right back. Welcome back to overtime on yet another record day from markets. The Dow closing one point lower, but the S&P 500 and the NASDAQ both closing at new records. The rest of 2000 falling just two points shy of a new record close. And we'll have more on the small caps coming up. But Apple also just shy of a record high. That's about a dollar below its close on the day after Christmas in 2024. It is yet to make a new high this year

and we just got September sales numbers from Costco. $26.5 billion of net sales. Now that's an increase of 8% from last year and you can see those shares are up 2% more than 2% right now here in overtime. Nice. All right. Well meantime, Jensen Huang confirming

this morning to CNBC that Nvidia did take part in XAI's latest fundraising round. And while some investors are beginning to sound the alarm on a potential AI bubble as the numbers grow larger and larger. Wong is saying his only regret is not investing more across the board. One of the things that we invested in Open AI early on, my only regret is that we didn't invest more.

You know, the only regret I have about XAI, we're an investor already. The only regret I have is I didn't give him more money. We're always looking for great startups to invest in. One of my favorite ones was CoreWeave. Right. My only regret is I didn't invest enough. Now, in my conversation yesterday with Michael Dell, he was also bullish saying he's seeing no signs of slowing demand. I'm sure at some point there'll be too many of these things built, but we don't see any signs of that.

And look, there have been periods in the past where there's like a digestion cycle. But based on the demand signal we see and what we're hearing from customers, customers. We're watching. Carefully understand what's going on. It seems like the demand is very solid. Speaking of Dell, shares they're having their best day of 9% since April after yesterday's analyst meeting and Jensen's comments this morning hitting nearly an 18-month high. Let's shift now from hardware to software. Joining us now here in San Francisco is Cash Rangan, Goldman Sachs, senior software analyst. His team putting out a note this week. Good to have you here.

Good to be back here in the Bay Area. So, fundamental question here, is Open AI becoming a single point of failure for the AI economy? People talk about it being a circular. I don't think it really is circular because they're taking money from a lot of places and putting money back out to a lot of different places. But is it becoming a single point of failure that hasn't yet proven its case? Yeah, a point of failure for the entire AI economy. Yeah. It's certainly the case that there's a good case to be made for their funding and the merits of that funding as to whether, I think the impact that I primarily focus on is what does it mean for software, the Microsoft and Oracle's and Salesforce of the world, right? So there is certainly to be a case we made that requires a lot of capital, and you're going to have to do it with debt because we've tapped out the ability of the hypers balance sheets to be able to fund the first round of

building out these data centers. So I think the thing that I'm looking for is the enterprise adoption of AI. So consumers, certainly you've seen very good adoption, and that's one of the points we make in our collaborative report that Goldman Sachs put out on Monday across Internet, semiconductors, and software, that you're starting to see the effect of this happen in the Internet, consumer-oriented and markets are starting to see that impact. But the thing that I've tried to focus on is the enterprise market,

where is the return on investment in the enterprise market. You've seen that happen in a narrow couple of silos, coding. Obviously, everybody knows about cursor, how AI is great at software development, et cetera. Outside of that, maybe customer support, the revenue picture across the tail of enterprise software segments is still a little feeble. And that is the thing that we're flagging in the report that we're not yet at a point where we've hit the sweet spot in the stuff that matters to me and my clients. Along those lines, we just saw Qualtricks doing this. you know, $6.75 billion deal for another player in the experience software space. It's kind of playing in the same area as Adobe and Salesforce. Seeing about a third of their customers,

Zig Serif and the CEO telling me, really engaging with AI. So he seems to be investing in this area, which would seem to suggest he expects a payoff. Do you expect that kind of payoff? Well, not closer to the details of Quatrix, but let's say that if you're doing a big deal like this, you're seeing a lot of AI activity. Everybody's seeing the AI activity. I think time will tell if the AI translates into recurring, sticky, repeatable revenue stream. Because a lot of the AI activity today is revenue, but not annualized revenue. It's not recurring revenue. It's a high rate of churn. A lot of experimentation pilot projects that are going on. And this is where I don't want to sound like I'm only bullish on the public companies. Clearly, a lot of private companies in the

next several years are going to be fabulous stocks for our investors. But the one thing that people are discounting is that there is a fair amount of distribution and leverage and customer base and maturity in what an Adobe or a Salesforce or a service now or work they are going to put out. We've seen the early signs of some mature products that are coming out. And so those are the revenues that are held by contractual obligations that are really worthy of a multiple because they are profitable, repeating, contractually obligated, again, going back to that. So that's the stuff that we've not seen yet from the private company landscape. It seems like there's a clear, pretty clear to me anyway, bifurcation between certain infrastructure players like the hyperscalers

that are building out, at least trying to with a certain degree of responsibility. They're public companies, they've got a report, how much they're spending. They're trying to design their own chips so that they can drive performance without having to rely solely on in. But then you've got a different class being driven in part by Open AI that's maybe building a bit more on spec, maybe Oracle participating a bit in that. Is there a similar bifurcation in enterprise software between the names that you see having AI growth now that you expect to be sustainable and those who haven't put their story together quite so well? Yeah, I think it definitely is a spectrum. The revenue contribution in absolute dollars and the contribution to the growth, rate is going to tell us who's got their AI story right. So we're at a point where an enterprise

software after a gut-runching slowdown starting 2022, 2023, in the past four to three quarters, things have been stable. And so stable is good. That's the first derivative. And once you start to see the AI contribution, and I think at the top of the picking order would be Salesforce doing about 1.3, 1.4 billion dollars in revenue. And then after that would be Adobe, 250 million in annualized revenue and then you got workday at 150-ish or so. And then there is a, listen, I mean, there are companies are into it that are even deeper in the AI game. When the AI contribution starts to inflect your top-line growth rate, you start to see some acceleration, then the AI means death-nill for software, death-nell for SaaS. This is really has to take a bit of a backseat

because what you're seeing right now in equity prices, stocks trading at five times revenue, You know, good, very, very good businesses that are putting up solid double-digit, top-line growth rate in 20, 25 points of free cash flow margin, paid at extremely depressed valuation. So the longer-term picture of what AI does to the seeds market employment is TBD. Clearly, there isn't anything to look at the current state of a fashion, say the seed model is dying. I think there's an overreaction right now. My belief is that the SaaS companies, to varying degrees, at the top of the game, you got a sales force that is invested heavily in this. and to some degree into it, ServiceNow is going to be a vanguard in this space. They've made some, to your point about the acquisition that you pointed out,

ServiceNow made a brilliant acquisition of a company called Moveworks, right? So you're starting to see the SaaS companies quietly make these billion-dollar, two-billion-dollar tech aqua-hire type acquisitions, and they've got enough fuel in the tank. I would not discount those guys as being too old-garde. That'll be a big narrative shift if and when it happens, cash will have to have you back then and in between then on it. Thanks for joining this here on time.

Well, speaking of AI, the CEO of CoreWeave, Mike and Trader, is going to be speaking with Jim Kramer just a few, or he did speak to him just a few minutes ago, discussing the idea that AI is in a circular investment environment. And here's what he had to say. The largest tech companies in the world are purchasing this infrastructure because they have demand. There's nothing circular about that.

It's a fundamental infrastructure buildout that's taking place. And when you have such a massive scale investment in infrastructure, it is not unusual to see partnerships as people try to serve infrastructure to the consumers. It happens in other markets. It's happening in this market. We can catch the entire interview tonight on Mad Money. It kicks off at 6 p.m. Eastern. Bitcoin's Furious Rally has created 70,000 new crypto millionaires over the past year. They may be surprised by what they're spending their newfound wealth on. That's next.

Welcome back to overtime. Space Mobile continued to soar higher. It finished up 8.5% today. The satellite operator building a direct-to-cell service. It's expanding its agreement with Verizon. This is now a definitive commercial agreement to provide space-based cell service in the U.S. beginning next year. ASTS also has a big deal with AT&T.

Other satellite communications names traded higher in sympathy on this news today. Names like Viasat, Arridium, Global Star, even Echo Star. AST in particular, though, has had an incredible run, nearly quadrupling here to date. Now, roughly 70,000 new crypto millionaires have been minted just over the last year, and those new crypto rich are spending their wealth at a faster pace than stock market investors. Are Robert Frank sticking into what they're spending it on. Robert? John, great to see.

Well, the market cap of crypto has increased by $2 trillion just over the past year. There are now over 240,000 people with crypto holdings worth more than a million dollars. That's according to a new report from Henley and Partners and New World. world wealth. There are 450 people with more than $100 million of crypto and 36 crypto billionaires. That's up from just six of them two years ago. So how will all that new wealth be spent? Well, new research by a group of economists found that for every dollar that crypto investors gain in wealth, they spend about 10 cents. So that would equate to about $200 billion in additional spending this year. And their top purchase right now is real estate.

The study found that locations with large crypto populations saw larger gains in home prices when they saw crypto rallying. So a strong connection there for more on the new crypto wealthy and how they're spending and investing their money. Sign up for the Inside Wealth newsletter out tomorrow morning at cnbc.com slash inside wealth. That's cnbc.com slash inside wealth. John? All right. Robert, thanks. Ironically, maybe they should have bought gold.

Well, small caps doubling the performance of the S&P 500 since the beginning of August. Up next, the top portfolio manager tells us whether the Russell can keep delivering outsized gains. And later, we'll discuss whether Delta's earnings tomorrow could spark a comeback for airline stocks. Over time, we'll be right back. Welcome back. Let's turn to small caps. The Russell 2000 actually outperforming the S&P 500 since the closing lows after Liberation Day, when we saw that shakeout in the market around tariff announcements.

although it hasn't been all smooth sailing for the small cap index since then. The Russell hitting record highs just this week. Joining us now is Steven DeNiccolo. Stephen, it's great to have you on. And I think that's a pretty interesting stat right there. The fact that the Russell 2000 is up 41% in six months versus the S&P up 35%. What's driving it? Can it continue?

Sure. Look, it has been a long, dark, old winter straight out of a Charles Dickens novel for small caps. on a relative basis versus large caps. But what we're seeing is really since Liberation Day, you've seen this outperformance over the last six months. And small caps have underperformed the S&P 500 for the last 10 years. And so if you look at that long-term valuation,

we have never been at a cheaper spot than today, small caps versus large caps. And what makes these stocks go up? It's very simple, Morgan. It's earnings growth. You have been in an earnings recession for small caps For a number of reasons, since 2022, the earnings have been down. Now, what you have seen since May 2025, you saw one of the biggest cuts in forward estimates

for small caps that we have ever seen before. That is setting up a very positive environment going forward. Expectations are low, and you're seeing those earnings pivot positive. When earnings go up, stocks go up. And when you take it to a point where we had the big, beautiful bill, now what we think is going to happen is a big, beautiful, broad market. You're seeing it in IPOs. September was one of the biggest IPO markets on record. You're seeing it in takeouts in our own portfolio in the Federated Kaufman Small Cap Fund. We've had nine takeouts this year. You take that all together,

and it's a very, very exciting moment here for small caps. Interesting. And certainly a lot of small caps more domestically focused. We talk about that quite a bit. How much so hinges, and I ask this on a day where we got Fed Minutes that I would argue lean to maybe a little bit more. hawkish than I think I was expecting or the markets were expecting. How much hinges on more rate cuts? Look, we at Federated have a pretty bullish view in the overall market. We're seeing the market going to about 8,700 by 2027. And in that, we have a number of interest rate cuts by the Fed. And we think the Fed is going to cut not because they have to, but because they can. And it's going to be driven by lower inflation and lower wage growth. This is a low

inflation Goldilocks growth environment that we see that is buttressed by technology that keeps costs down. And we think it's going to be a great environment for longer duration assets like small caps. Okay. Very quickly. I got 30 seconds here. One name you like. Sure. Let's talk about Centauri. The ticker is CTRI. A lot of discussion about AI and increases in electricity demand. Our electric grid in the U.S. was bad before anybody even plugged an iPhone into the wall. Now you you take into all of these data centers that are being built in the U.S., and we're going to have electricity growth for the first time in 30 years. Centauri is a small cap way that's down because there's been a bunch of stock sales that were not great timed. But we think it's a fantastic

point to be buying that stock. Stephen's Niccolo. Thanks for joining us. Thanks for having me. Well, Delta shares have been taken off since early April after a rough start to the year. Up next, the top analyst on how you should trade the carrier ahead of its earnings tomorrow. Be right back. Back, prepare, if you will, for tomorrow's trade today. On the economic front, we'll get weekly jobless claims. An earnings season begins tomorrow when Delta, PepsiCo, and Levi Strauss report their quarterly results.

Also, don't miss PepsiCo's CEO breaking down those numbers in the first on CNBC interview, 10 a.m. on Squawk on the street. Now let's get you set up for Delta results with our next guest, Jeffrey's Aerospace and Defense Analyst, Sheila Kai Ilo. Sheila, it's great to have you back on. Let's start right there. How does Delta set the stage for airline earnings and broader industrials? Sure. So what we're looking for with Delta is flat price in the third quarter, from down 2% in the first half. So we're looking for an economic improvement on pricing

and scheduled capacity cuts coming into the second half of this year and improving into 2026. So we'll see if you get that. That'll be driven by corporate coming back, mainline improving a little bit, and of course the premium passengers. Sheila, should investors ignore the shutdown's potential impact on airlines, even though it's still dragging on? For the most part, across our coverage, whether it's aerospace defense, you could largely ignore it. On the airlines, it'll have some hit. As an example, in 2018, 2019, it was a 1 to 2% hit for Southwest and United, which are the most government exposed, not so much for Delta. Is Delta, if you had to choose one, going to the journey season, is it Delta or is it something else?

We have buys on Delta United, where our estimates are 10% above the street. We're 10% below on Air Canada and American as an example. So those are two favorites into the quarter. Delta already revised upward slightly in mid-September, revising up their revenue guidance from the low end to the high end, but also said their costs were higher because of weather-related costs. We like Delta. We think it's going to be a bellwether.

We'll see if they could print flat pricing, which would be the signal of improvement we're expected. in the market for the second half and going into next year, especially given airlines are still trading at a 50% discount to the market. So they could regain some multiple momentum, as well as EPS growth. What are your favorite of your defense-connected names with the markets here at highs? The large caps have largely underperformed. Looking at Lockheed, it's been the worst performer year to date. LHX has been one of the better times. Where has worked has been small caps to Stephen's credit, you know, Kratos, Aero Environment, stocks like that have really run up

100%, 200% this year. So we actually really need to see the budget move forward. Contracts like Golden Dome, the Navy Fighter, actually get awarded because some of these stocks are running on it, the small caps especially. Our favorite name is LHX and an IT services provider named Lidos. Yeah. And of course there's a now a possibility that we get that downselect for that Navy next-gen fighter, maybe as soon as this week, according to reports, we'll have to see. I'll ask about the aerospace side, too. I mean, with all the airlines cutting capacity, can they get enough of the future planes that they've ordered and is the supply chain primed for it? This is the most popular question we get, Morgan, so thanks for asking it.

If you get a plane, do you retire an old one? Does it mean you go along Boeing and short GE? Not necessarily. We think both could work. Boeing and GE have been two of our favorite names. G has had a great run. Boeing, we think, is going to announce some charges in the quarter, $4 billion of non-cash charges, $2 billion of cash push out for next year. So we're below the street by 20% on that one for next year's cash on the triple 7x being moved down. But supply chain is actually working. 737's on a roll from 24 a month produced last year.

We're in the mid-30s this year going up to 42 next year. So we think they could keep that cadence. 787's also doing well. They started out the year, only producing five a month. Now they're at seven a month, going to eight of the months. So productivity is actually working with Boeing for the first time. They're having some development program delays just given the FAA. So we'll see what happens there.

All right. Shia Kailu. Thank you. Morgan, I said we'd get jobless claims tomorrow, but then I just mentioned the government shutdown. But, of course, we probably won't get much of anything unless we get a lot out of Congress, which has tended not to happen these days. Yeah, we will get that 30-year treasury auction at 1 p.m. Eastern, though, and we do get some earnings after the bell, including Applied Digital Group and Levi.

So we'll continue to see what the read-through there is on the consumer side, on the apparel side as well. Yeah, and once again, the story today is Jensen Wong driving some market momentum and action with some positive comments. Yeah, record highs for the NASDAQ for the S&P and just a strong market in general today. That does it for us here at overtime.