Closing Bell - Closing Bell Overtime: Idris Elba On AI; Klaviyo CEO On Life In The Public Markets 5/9/24

Episode Date: May 9, 2024

The Dow is on its longest winning streak of the year after gaining more than 300 points today; Ariel Investments’ Charles Bobrinskoy breaks down where things stand in the market. Earnings from Dropbox, Akamai, Sweetgreen and Unity. Klaviyo CEO Andrew Bialecki on life in the public markets so far after raising its guidance in its third earnings report. Nvidia-backed CoreWeave just raised $1.1B; CEO Michael Intrator on what’s ahead for the company and AI. Idris Elba is ServiceNow’s new spokesperson. Jon Fortt sits down with him to talk AI’s impact on tech, culture and more.

Well, there you have it. Seven days of green in a row for the Dow as the market melts up, gains momentum. You've got the S&P closing back above 5,200 as well. That is the scorecard on Wall Street today, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Fort will be joining us a little later in the show with a special guest you do not want to miss. And also coming up this hour, earnings from Dropbox, Akamai, Unity, Sweetgreen and more. Plus, we're on IPO pricing watch as Chinese electric vehicle maker Zeker gets ready to list tomorrow and begin trading at the New York Stock Exchange. As we await those earnings, though, we're going to begin with the market with the Dow notching its longest winning streak of the

year. Joining us now is Aerial Investments Vice Chairman Charlie Babrinskoy. Charlie, it's great to have you on. I mean, in a week where we haven't had very many meaningful catalysts for the broader market, the fact that we are seeing this, dare I call it, a melt up here and one that is not being powered by tech. Tech is largely underperforming this week. What does that tell us? Tell us that value is finally having a period in the sun. There were a lot of stocks that were very, very cheap banks, investment banks, some industrials, some building product companies that were trading at eight, nine, 10, 11 times earnings, a lot less than the 21 of the S&P and the 40s of tech. So there was a lot of value out there. And all that value needs

to perform is for the Fed to not do anything stupid, for the Fed to eventually bring the short end down to where it should be, somewhere under the long end, so that we have a normally sloped yield curve, which is what we should have. And if that happens, these companies are going to do fine. And they're very attractively priced right now. How much hinges on the Fed beginning to cut rates? Because this has been such a crucial part of the story for stocks. And yet, given what we've seen in terms of inflation readings being a little stickier lately, more hawkish Fed talk in general in recent weeks, recent months,

and then the market pricing out some of those cuts until later in the year. Does it still matter? It absolutely matters. I mean, just the math of interest rate matters a lot. If you do an Excel spreadsheet and you do a discounted cash flow of future earnings, you can see the power of a cut in interest rates and the power of an increase in interest rates. And right now, it's having real effects on the market. The very high short-term rates are starting to bite in real ways in housing, in autos, in the payments that people are making monthly. I think we've been consistent on your show, Morgan, in saying we didn't really care when the Fed started cutting, but we need the Fed to eventually turn the yield curve into a normal curve, where short-term money costs less than long term money.

We've had this crazy situation with very high short term rates. So it does matter. It doesn't matter what month they start cutting. But eventually we do need them to start cutting. So what does this mean in terms of where you're invested right now and how you are thinking about those parts of the market? I mean, you just talked about autos. You talked about housing. I know that there are names that you are invested in that are keenly exposed to those areas of the market. Yeah, and the market hasn't liked them for a long time because, so names like Mohawk Carpeting,

I think we've talked to you about every episode that I come on. They're the leader in floor coverings, all kinds of luxury vinyl tile, carpets, et cetera. Resideo is the old Honeywell thermostat business. And both of these names have been trading for less than 10 times earnings. So when people talk about how expensive the market is, they're not talking about these kinds of value names. And then banks are trading at very reasonable prices.

I always talk about Goldman Sachs, how people fought for 50 years to become a Goldman Sachs partner, which meant you could buy stock at book. And Goldman Sachs has been trading to the public at basically book value for the last two or three years. So they've been very attractively priced. But you're absolutely right. The market was very nervous of how they would behave in a recession. And so we do need the Fed eventually to stop putting its throat on the neck of the economy. OK, Charlie, stay with us because we're starting to get some results here. First, we have a news alert on Zeker IPO pricing. Deirdre Bosa has the details. Hi, Dee. Hey, Morgan. We're just getting news that Chinese EV maker Zeker has price shares at $21 apiece.

That is the top of its range, according to a few reports, it will begin trading tomorrow on the New York Stock Exchange under the ticker ZK. A $21 share would give an evaluation of more than $5 billion. And guys, this will represent the biggest U.S. IPO by a Chinese-based company since 2021. Back to you. All right, Deirdre Bosa, thank you. Akamai earnings are out. Pippa Stevens has the numbers. Hi, Pippa. Hey, Morgan. The stock is dropping here on week Q2 guidance, but starting here with the first quarter, it was mixed 164 adjusted EPS. That was three cents ahead of estimates. Revenue coming in at 987 million. That was a little bit short of the 989 million that Wall Street was expecting, but it is that guidance for Q2. They see revenue between 967 and 986 million versus the one billion expected with EPS guidance also Q2. They see revenue between $967 and $986 million versus the $1 billion expected with EPS guidance also coming in light. Now, the company did attribute the weakness in

their full-year guidance to the strengthening U.S. dollar, as well as large social media customer optimization costs, and then slowing traffic growth across the industry. The stock now down 8 percent. Morgan? All right. Pippa Stevens, thank you. Charlie, it is interesting because we've seen a number of companies just in the last couple of days, some of them in tech and software, some of them in other industries that have given us softer guidance. How does it speak to the thesis that is out there and perhaps arguably pushing stocks more broadly higher right now, that the economy is starting to slow and maybe perhaps we are starting to see this materialization of a soft landing. I'm glad you brought this up, Morgan, because this is a little bit of a change in what I've

said from previous conversations with you. We are seeing a little bit of softness, particularly in companies that deal with the middle market consumer, maybe a little bit of the lower end. Those consumers have had a lot of cash from government programs, from the Fed flooding the money supply. And we're starting to see that tighten up a little bit. Nothing dramatic yet. We're not ready to call a recession. But I will say the risk of a recession, because the consumer gets weaker for the first time, I am starting to see that trend get more scary to me. And so I'm

again, not calling for a recession, but the risks are higher. Today's unemployment claims were higher, unexpectedly higher. We're going to see the inflation numbers this week that are going to be very important. And we're starting to see that in some of the more services oriented part of the economy, consumer facing part of the economy, too, through this earnings season. And case in point, I know you like MSG, MSG Entertainment, and then the MSG sports business as well. We saw MSG Entertainment miss on the top line today. That stock actually fell a bit. Is this an example of what we're seeing in terms of the consumer beginning to maybe tighten the belt a little bit more, some softness in some areas that have been really, really, really strong.

Yeah, that was a bit of a head scratcher. We do own MSGE, which is the company that owns the garden itself. And the commentary was very positive. Concerts continue to sell out. People spend a lot of money at the concerts. Obviously, the Knicks and Rangers are doing well, which has more people coming into Madison Square Garden. So all of those things seem strong. But I will admit the revenue was a little softer than we would have hoped. Now, the stock had done very well coming into today's announcement. And so there was probably a little bit of sell the news. But it wasn't the blowout quarter on a revenue perspective that, frankly, I had been expecting. Okay. Pippa Stevens, we're going to go back to you for Dropbox earnings.

Hey, Morgan. Well, it is a top and bottom line beat for Dropbox, $0.58 adjusted. That was $0.08 ahead of estimates. Revenue here coming in at $631 million, a little bit ahead of the $629 million. Dropbox also said that paying users came in above Wall Street's expectations. And we will get guidance from the company on the call. The stock up 5 percent. Morgan. All right, Pippa. Thank you.

Sweet, sweet green earnings are out to Kate Rogers has those numbers for us. Kate. Hey there, Morgan. And that stock is higher by nearly 3 percent actually right now. So this company reporting a loss of 23 cents. We are not comparing that number. Revenues, though, a beat here for the quarter, 158 million, better than the 152 million that analysts were looking for. Same store sales change of 5 percent. The company says that is consistent

with the prior year period. AUVs of 2.9 million in the quarter, also consistent with the prior year period. The company's CEO, Jonathan Neiman, saying in a statement, quote, we delivered positive adjusted EBITDA during a traditionally slower first quarter and remain confident that our strategy positions sweet green for success today, as well as for long term capital efficient, profitable growth. I want to remind viewers, too, this is the best performing restaurant stock of the year so far. It's up more than 100 percent, Morgan, year to date. Back over to you. Salads, I guess, given a plug to salads there. Kate Rogers, thank you. Charlie, in some ways this goes back to the conversation we were just having about the consumer. And arguably the fact that we are seeing this increasing bifurcation in the consumer,

the fact that the lower-end consumer, even some of the middle class, does seem to be getting a little more strained, and you're seeing softness there. But the higher-end consumer, which arguably is what Sweet Greens is targeting, very similarly to, say, a Chipotle, which put up strong numbers recently, too. How does that carry weight for the broader, I guess, bucket of this part of the economy? So I think the way to think about this is for the affluent, the money supply doesn't really matter much. How much money you have in your pocket, how much you have in your checking account is not how wealthy you feel if you are a wealthy person. But if you are a middle class or a working class, you very much care about how much cash you have in the bank in your pocket.

And that's what M2 measures from the Fed. And what that is showing is that the money supply after booming higher during COVID has actually come down for the first time in history over the last year. We've never had a decrease in the money supply. We had one in the last year, again, up from a big increase during COVID. So I think things are getting tighter. That doesn't affect millionaires and billionaires, but it does affect the person who, the working class. And that is what we're seeing in companies that are exposed to that more middle market consumer. So that is, again, why I'm changing my tune a little bit about the strength of the economy. The middle class working consumer is no longer as flush as they were as recently as three months ago.

Okay. Charlie Babrinskoy, thanks for joining us. Thanks for having me, Morgan. All right. Well, the S&P finishing higher today, 52.14 as it moved back above that key resistance level. Let's get to CNBC Senior Markets Commentator Mike Santoli, who's got the whole world in his charts today. Mike. Yes. Trying to travel a little bit here, Morgan. So the U.S. outperformance over the rest of the world in equities has been so clear and so prevailing for so long. It's worth a closer look at kind of where that advantage comes from. Here you see the S&P 500 over two years up way more than ACWX. That is all equity markets outside the U.S.

However, on the right there, right riding this line is the equal weighted S&P 500. So the average U.S. stock and all foreign stocks have basically been exactly the same chart for two years. And so the advantage here, of course, is the very largest stocks at the top of the S&P 500. This has started to change a little bit in the last month. You've had foreign outperformance over the U.S. market, as you've been talking about with mega cap tech taking a breather here. So we might see a little bit of rotation. I think the most important thing, though, is all three of these charts are in pretty good shape. And in fact, what you're seeing with the Equal Weight and ACWX is two-year highs out of a long-term trading range. So mostly on the positive side here. Now, earnings, the major support. How have the consensus earnings forecast for the S&P 500 held up through reporting

season? Pretty well. The key one here, 2024, this is projected earnings growth right around 9%. And so this is basically the turn of the year. And so this is how each year's consensus has evolved over time. You see last year had a big step down, you know, going into the calendar year. That's the normal formation. Usually you see revised down, and then you have companies beat them. So the fact that we're holding steady is positive in the high single digits, and this is the early read on 2025. We'll see how that holds up as the quarters go on, Morgan. I just want to make sure I'm reading this last chart right.

We're talking about consensus estimates, or are we talking about actual? Okay. Yep. So this is, yeah, exactly. This is consensus for the full calendar year in each case. Got it. All right. So here's my other question for you on this.

The fact that mega cap tech hasn't been sort of propelling this recent rally we're seeing in the market right now, despite the fact that we know that it has helped buoy consensus estimates in general in the last couple of years. How telling is that? And how much does that speak to AI versus everything else in this market? At this point, what I think it reflects is the fact that the earnings growth is also supposed to broaden out in the coming quarters. So mega cap growth kind of did a lot of its job in terms of dominating earnings and supporting the overall index profits for, you know, really the better part of two years. And now it seems like there should be a transition. And this is based on, you know, the bottom up estimates toward better earnings growth for a lot of other companies, which, by the way, you know, have not even been earning as much as they did in 2021 or 22 in many cases. So they're still on the comeback trail, even as mega cap tech seems like

maybe they're pausing just in terms or decelerating in terms of their own earnings growth. Yeah, there's probably a lot we can dig into there in terms of also maybe AI deployment through these other industries starting to show up, cost cutting in general and normalization from the pandemic, which is still happening in some markets or some sectors, I should say. Mike, we'll see you later this hour. Thanks. When we come back, recent IPO Klaviyo is soaring today after the market automation platform topped earnings estimates and gave solid guidance. Actually raised guidance. We're going to talk to the company's CEO about the quarter and about life so far as a public company.

And later, we will be joined by the CEO of CoreWeave. This is the AI cloud company backed by NVIDIA that just raised funding at a $19 billion valuation, almost triple its previous valuation. Overtime is back in two. Welcome back to Overtime. Unity Software earnings are out. Steve Kovach has the numbers. Steve. Yeah, Morgan. Shares are taking a hit here down about 5% after a wider than or bigger than expected loss per share. And but even though revenue still beats.

So let me go over the numbers here. Loss per share of 75 cents were showing. Street was looking for 63 cents. That's really dragging things down here. And it was a beat on revenue, though, $460 million versus $431.6 million Street was looking for. Also, Q2 guidance for profit guidance, that is, under expectations as well. And I'll also note that a new CEO for this company was named last week. It's former Zynga chief operating officer Matthew Bromberg. He's going to be taking over on May 15th from interim CEO Jim Whitehurst, who will move over to an exec chair board seat on the board.

Morgan, I'll send it back over to you. Shares down 5%. Steve Kovach, thank you. Shares and marketing automation platform Klaviyo rallying today on the back of earnings. Its best daily performance since the IPO last September. The company beating on the top and bottom lines, raising its full year guidance. Joining us now exclusively, Klaviyo CEO and co-founder Andrew Bialecki. Andrew, it's great to have you back on the show. I'm going to start right there. The fact that you beat and raised and did so at a time where many of your peers and many other companies within this space more broadly that have the exposure you do to small and medium sized businesses have been much more challenged.

What gives you the confidence to raise guidance? Yeah, thanks for having us. First, I just want to thank our team for all the hard work, our customers for continuing to inspire and push us. You know, we're really happy with our first quarter results. 35 percent revenue growth year-on-year, 14% free cash flow margin. And we continue to expand the number of customers we're working with. We now have over 140,000 businesses running on Klaviyo, great brands like TaylorMade, Liquid Death, Hoppy, Mattel, everything from the fast-growing brands to iconic brands we all know.

And we're seeing a lot of progress in both our mid-market enterprise, larger businesses, moving to Klaviyo, as well as internationally, where we're seeing both SMBs and mid-market businesses as we continue to address them. We launched a bunch of products last week to help international customers. We finally have Klaviyo in languages other than English. We've expanded availability for SMS products. So we're off to a great start and we're excited about the rest of the year. How big is the opportunity in international for you? We think we have a long way to go.

You know, since Klaviyo started, you know, it didn't take us long to have customers in over 80 countries. But we knew that, you know, we have to match up to them. So that's why we're really excited. Last week, we launched a new feature, Portfolio. We realized a lot of our European and Asian customers, I mean, they're working across markets. If you're in the UK, you're probably selling to customers in France, in Germany, across the continent. So we released some product that helps you work across regions, understand, you know,

how customers are performing country by country, use best practices, and the great part is all that functionality works, not just for international customers, but also for our mid-market enterprise customers that are say, managing multiple brands and want to look across those brands to figure out where their best practices

and how they can optimize across multiple business units. So talk to me about AI and the implementation of those capabilities there. And I ask that as we're coming out of an earning season where we saw digital advertising and marketing really strong, in part because of the opportunities that AI is unlocking when it comes to more targeted advertising and marketing and the like? Yeah, absolutely. So we think about our artificial intelligence strategy in three parts.

The first is increasing productivity. So if you're a marketer or you're building customer experiences, we just want you to be able to run more experiments. That's why Klaviyo AI includes features like segmentation AI, forms AI, email AI. All of these are to help people create more marketing campaigns so they can run more experiments. And then on top of that, we have optimization.

We're using artificial intelligence and machine learning to help you optimize marketing campaigns. We had a customer of ours, Tata Harper. They had some web content on their website to help get more people to sign up for email and SMS. Using our artificial intelligence, they will automatically generate dozens of variations, increased conversion rate by 65%. And that translates into real dollars. So optimization. And then finally, helping people expand their marketing strategy. One thing we realized for a lot of companies is they kind of know the basics, four or five things they should be doing, but it's hard for them to discover pockets of customers that say, bought one product, but

don't even know about the rest of their lineup. So using artificial intelligence, we're able to discover those and automatically create campaigns for customers. So I think across all those things, we can tie that back directly to revenue growth, and we're, really good uptake. Over 20 percent of our customers are using, you know, Klaviyo AI, you know, on a recurring basis. Yeah. You do have this partnership with Shopify as well. We saw that company report earnings yesterday. Stock fell pretty dramatically on what was seen as softer guidance by the market.

Walk me through the benefits there and how much room there is left to expand within that partnership. And given the fact that this, this is a two-parter, given the fact that this is your third earnings as a public company CEO, what that process has looked like so far? Sure. So first, we love working with Shopify. You know, our product teams are, you know, go-to-market teams. I mean, there's a lot of collaboration because we have very similar customer ethos. We care a lot about making customers successful and maximizing their success. You know, so look, we've worked with, you know, Shopify and we continue to see growth for us, you know, moving up into the mid-market enterprise, see a lot of demand there.

And we talked about international growth. That's another real bright spot for us. European growth was up over 40% year on year. And then when it comes to being a public company, one thing hasn't changed. We're still laser focused on delivering for customers. We wake up every day thinking about what products we can bring to market that will help them grow faster and power more digital relationships. The one thing that has been a nice benefit is, you know, now when I talk to customers, a lot more of them, especially new customers, they know who we are. So I think that brand recognition and knowing that, you know, we're a company that's built

for the long run helps build up a lot of trust. Okay. Andrew Bialicki, Klaviyo CEO, thanks for joining me. Thanks. Up next, the results are in from Norfolk Southern's annual shareholder meeting where investors voted on an activist proposal to overhaul the company's board and management. We're going to break down what happened and what the key players told me

would qualify as a win in their minds ahead of this outcome. And take a look at Yelp falling in overtime. Despite a sizable beat on the bottom line, earnings of 20 cents per share versus estimates of 6 cents, revenue in line at $333 million. You can see shares right now down about 5%. Stay with us. Welcome back to Overtime. We've been bringing you the story of the activist battle at rail company Norfolk Southern.

Today, we bring you the results. Norfolk Southern stock closing lower after this morning's shareholder vote resulted in three of Ancora's nominees winning seats on the board. That was shy of the seven sought to create a majority and oust the current management team. Current CEO Alan Shaw retaining his seat and his job with this outcome. I spoke with both sides leading up to the vote, and I asked Shaw and Ancora's alternatives president, Jim Chadwick, how they would define success given the fact that there were various ways this could play out. Whenever you're trying to change out the CEO, and that's what's required to drive ultimate value in the company, it requires a greater amount of change and support on the board.

If you don't have really the numbers on the board to make that happen, a board that is prone to making bad decisions will continue to make bad decisions. For us, success is driving long-term shareholder value, and it's doing it in a safe and responsible manner. And there's only one vision that does that. And that's our vision, the balance, safety, productivity, and growth, and drive long-term shareholder value. We're on the right path. We've got the right leadership team. We're focused on productivity. And we're targeting 400 to 500 basis points of productivity in the second half of this year and a sub-60 OR in the next three to four years. And Cora today saying, quote, given that we have no standstill agreement and a

clear mandate from a critical mass of shareholders, we will continue to hold Shaw to account and push for the appointment of a qualified operator who can actually drive shareholder value. Norfolk Southern, for its part, commenting, quote, moving forward, we will continue building on the significant progress Alan Shaw, John Orr, the COO, and the entire team have already achieved. Analysts today noting the railroad has already shifted strategy significantly since this proxy fight went public, including a new COO with Orr implementing some aspects of precision scheduled railroading. And as JP Morgan puts it, quote, a clear focus on operating and financial performance with outlined measurable targets that were lacking before Ancora's involvement. So shares of Norfolk Southern are down about 4 percent since February 1st,

when Ancora took its proxy fight public. Well, it's time now for a CNBC News update with Bertha Coombs. Bertha. Hey, Morgan. Testimony ending for the day in the Donald Trump hush money trial. The judge is now hearing motions from the defense, including a request that the former president be allowed to respond publicly to what Stormy Daniels said during her testimony on the stand. has yet to rule. Senior executives at the Department of Veteran Affairs improperly got almost $11 million in bonuses last year, with several taking home more than $100,000, according to a new report from the department's inspector general, reviewed by the Washington Post. The bonuses were supposed to go to recruitment and retention, as well as the

processing of veterans' benefits. The report says much of the money is still being recovered. And former NBA player Glenn Big Baby Davis, who won a championship with the Celtics, sentenced to 40 months in federal prison plus probation today for his conviction in an alleged scheme to defraud the league's benefits plan. About two dozen people, including a number of former players, have been sentenced for filing false medical claims. Morgan.

Bertha Coombs, thank you. When we come back, Mike Santoli returns with a look at a potential bullish sign for defensive sectors like utilities and consumer staples. And later, the CEO of NVIDIA-backed startup CoreWeave, which just raised funds at a $19 billion valuation on his company's positioning in the AI boom. Stay with us. Welcome back. Mike Santoli is back with a look at where the lagged effects of higher Treasury yields are showing up in the market. Mike. Yeah, Morgan. Well, those lagged effects

have been tough to find to date. I mean, economists expected that, you know, 500 basis points of Fed tightening a huge surge in bond yields would already have really slowed the economy more than it has beyond just housing. We know a lot of reasons for that. Our old friend Jim Paulson, market economist, points to this interesting relationship, which shows treasury yields. Now, treasury yields are inverted in that orange line. So the higher yields go, the lower that line goes. And it's pushed forward 18 months, suggesting that after 18 months, higher yields start to bite, at least in terms of cyclical versus defensive sectors in the market. That's the argument here, that if the pattern holds, that we should start to see defensive stocks, maybe we are already starting

to see something like this, start to do better relative to cyclical ones such as tech and financials and industrials and consumer discretionary. So we'll see if this holds up. This has been a cycle, Morgan, that's broken a lot of the old rules. But I do find this one interesting to say that maybe we shouldn't even have expected those lagged effects to be evident, at least not to this point just yet. Yeah, that chart says a lot. Mike Santoli, thank you. We have some news on Apple. Let's get to Steve Kovac for more. Steve. Hey there, Morgan. Yeah, Apple is apologizing for that controversial crush iPad ad that everyone's been talking about for the last 48 hours or so. And they're going to pull the ad from television. They, in this apology to Ad Age, that's the trade publication covering

the ad industry, the head of Apple's advertising saying, quote, we missed the mark with this video and we're sorry, end quote, and also pulling it again from television. Now this, we're showing it right here. This is the ad that showed all those gizmos and gadgets being kind of squished down into an iPad. It was supposed to show how thin this new iPad Pro is that they announced a couple days ago, but instead people took offense to it, showing how it's kind of ruining human creativity, taking all these real-world objects and digitizing them. So we won't be seeing this ad. This might be the last time you see it, Morgan. All right. Steve Kovach, thank you. Speaking of creative community, up next, John Fort sits down with ServiceNow's new pitchman, John.

Yeah, Idris Elba, Morgan, is talking for ServiceNow about AI. And as a creative himself, both an actor and a musician, he's well positioned to do it. So talk to him about a range of things. We're going to get his perspective when we come right back. Welcome back. Mike Santoli is back with a look at where the lagged effects of higher Treasury yields are showing up in the market. Mike. Yeah, Morgan. Well, those lagged effects have been tough to find to date. I mean, economists expected that, you know, 500 basis points of Fed tightening a huge surge in bond yields would already have really slowed the economy more than it has beyond just housing. We know a lot of reasons for that. Our old friend Jim Paulson,

market economist, points to this interesting relationship, which shows treasury yields. Now, treasury yields are inverted in that orange line. So the higher yields go, the lower that line goes. And it's pushed forward 18 months, suggesting that after 18 months, higher yields start to bite, at least in terms of cyclical versus defensive sectors in the market. That's the argument here, that if the pattern holds, that we should start to see defensive stocks, maybe we are already starting to see something like this, start to do better relative to cyclical ones such as, you know, tech and financials and industrials and consumer discretionary. So we'll see if this holds up.

This has been a cycle, Morgan, that's broken a lot of the old rules. But I do find this one interesting to say that maybe we shouldn't even have expected those lagged effects to be evident, at least not to this point just yet. Yeah, that chart says a lot. Mike Santoli, thank you. We have some news on Apple. Let's get to Steve Kovac for more. Steve. Hey there, Morgan. Yeah, Apple is apologizing for that controversial crush iPad ad that everyone's been talking about for the last 48 hours or so. And they're going to pull the ad from television. And this apology to Ad Age, that's the trade publication covering the ad industry. The head of Apple's advertising saying, quote, we missed the mark with this video and we're sorry, end quote. And also pulling it again from television.

Now, we're showing it right here. This is the ad that showed all those gizmos and gadgets being kind of squished down into an iPad. It was supposed to show how thin this new iPad Pro is that they announced a couple days ago, but instead people took offense to it, showing how it's kind of ruining human creativity, taking all these real-world objects and digitizing them. So we won't be seeing this ad. This might be the last time you see it, Morgan. All right.

Steve Kovach, thank you. Sure. Speaking of creative community, up next, John Fort sits down with ServiceNow's new pitchman, John. Yeah, Idris Elba, Morgan, is talking for ServiceNow about AI. And as a creative himself, both an actor and a musician, he's well positioned to do it. So talk to him about a range of things where you can get his perspective when we come right back. you you you you you you you you Welcome back to Overtime. Yesterday, John Fort was in Las Vegas.

He brought us interviews with NVIDIA CEO Jensen Huang and ServiceNow CEO Bill McDermott from ServiceNow's Knowledge 2024 conference. He's back. He's got one more conversation from this conference with superstar actor, DJ, and entrepreneur Idris Elba. John. That's right. I'm in Greencastle, Indiana this time, Morgan.

You know, DePaul University, my home away from home, but had to bring you this from Idris Elba. I talked to him, connected to the ServiceNow stuff. He's doing some ads for them, but really he's a creative, right? Actor, entrepreneur, musician. And primarily I wanted his take on how AI is affecting the creative process. Artificial intelligence from autofocus on your phone to predictive text has always been there. It's always been a part of our lives. And as a creator, I suspect you can only enhance what you've got. I always like to say that it's artificial intelligence

and actual intelligence. You can't use one without the other. So in my opinion, it's never going to take over the creative process. It's going to enhance it. But of course, yes, I see people are a little bit trepidatious about it. I think the pandemic definitely accelerated what's happening to us right now because we had to find innovative ways to connect and continue. Human beings are like water. They'll just keep moving. And if it gets blocked, they'll find a crack. So this is what's happened, I think, and it's accelerated it. It does mean that, you know, people can work and are connected from different parts of the world. And we're seeing that more and more.

This productivity allows that connectivity to happen. But the truth is, you still need human beings behind it. Even whether I'm in a studio in London and the director's in LA, we're still connected by the technology. So I think it can be a multiplier. It's just very different from the way we used to do things, you know? Now, I mentioned the reason why I was talking to Elba is because of his work with ServiceNow. And a part of the reason why he's doing that, he's working to build an ecologically sustainable economy on an island off the coast of West Africa. And ServiceNow CEO offered to help. There's a beautiful island off the coast of Sierra Leone. Sierra Leone is probably known for adversity.

There's some of the civil wars, some of the blood diamonds, things that are negative. However, beautiful Sierra Leone, West Africa generally is beautiful. So I wanted to get an opportunity to sort of demonstrate that the government and I have been working on this beautiful island called Shebro to turn it into essentially an eco-city, take advantage of the innovations know, the innovations that are happening around sustainable energy, around, you know, people, workforce, how we can connect people, giving jobs, tourism, you know, it's this real beautiful sandbox opportunity. It's been a long time in the making. And for context, your father's family is from there, right?

That's right. My mom's from Ghana. My dad's from Sierra Leone. And I went to Sierra Leone for the first time in 2019, just before the pandemic. And I grew up on stories about my parents wanting to go back to Sierra Leone. So long story short, when you're trying to build an eco-city,'s nothing more important than how, you know, you run it, how the connectivity works, you know, everything from how people live on the island to travel on the island to get to the island. And that's where, you know, ServiceNow and I really collaborated on thinking around that. What is the smartest way to do that?

You know, implementing systems that could help. And technology is definitely a part of it. And, you know, when we think about, well, some of us, when we think about Africa, we're not necessarily putting the sort of techno ladder in the forefront of that window. And finally, I spoke with Elba about the role of human creativity in business and the importance of diverse experiences and really training AI models. When I'm thinking about how to inspire, you know, the next set of creatives from Africa, for example, I have to really think about how do I get to them? At this day and age, going there is not exactly the option. I'm going to go through technology, usually. I'm going

to find ways to connect and tell the story of inspiration through technology. I think that young entrepreneurs, you know, my wife and I have been really sort of advocates for agriculture, you know, especially with this food security debate. And we're realizing that technology lives right at the heart of that crisis. You know, young farmers are using technology to, you know, more advanced than some Western countries in a way to help them get around climate crisis and food crisis. So from a creative perspective, if I tell a story about a farmer who created a floating farm, you know, the likelihood is that someone is going to try and emulate that. And before you know it, it becomes real. And what I'm trying to say is that with the adoption of technology, with the adoption of, you know, processes like the One Service Now that I'm helping, you know, to campaign, these things can be a reality.

Okay. campaign this this these things can be a reality okay um when we think about wakanda and we think about the the vision of you know uh ryan coogler and marvel you know it was beautiful to watch but the truth is is that you know why not why can't we have uh cities in the future like that? And that story in 100 years, people will look back at that and say, yo, actually, people were thinking about this and it was in movies, but look at us now. And I think that process, I think we have to be intentional about it. And so, Morgan, across all of these different industries, we're seeing everybody's thinking about AI at the very highest level, how it's going to change their industries and how they can use it. Yeah, I can see why ServiceNow is partnering up with Alba. I mean, he's just so well-spoken on so many of these topics, especially where tech as a multiplier is concerned. I'll tell you his comments, John,

about the creative process and the fact that AI will enhance it reminded me a little bit, totally different industry, but reminded me a little bit of the comments from Honeywell's CEO to me earlier this week, where he was talking about how they're deploying it within their own company, on their own factory floors, et cetera, and that it's enhancing the jobs of their existing workforce. I mean, it was a big debate last year. Now, as we start to see it deployed in real time, it does seem to be more and more of this shift to this conversation around enhancement. And, you know, I'm passionate about education as well as part of the reason why I'm here at, again, DePaul University, Greencastle, Indiana. I'm going to be talking about AI

here as well, not just from the perspective of professors wondering, are students using it to write papers, but how do we use it to enhance the media experience? How do we use it to enhance the classroom experience? So really it is everywhere. All right. Looking forward to hearing about it. Have a good trip. John, thank you. Well, NVIDIA-backed AI cloud company CoreWeave, reportedly now valued at $19 billion after its latest funding round, up next. The company's CEO on whether he has any plans to cash in on the AI craze by going public. We're moving from the world of producing software to producing intelligence, digital intelligence. And this industry is going through its renaissance, moving from producing software, creating tools that people use, to now intelligence that people, that engage people.

Well, that was NVIDIA CEO Jensen Huang yesterday speaking to our John Ford at the industry, on the industry renaissance happening in AI. One of the companies NVIDIA has backed to meet the demand for specialized cloud infrastructure to power the AI boom is CoreWeave. Last week, the startup raised $1.1 billion in funding that has reportedly grown its valuation to $19 billion. Joining me now exclusively to discuss is the CEO and co-founder of CoreWeave, Michael Entrader. Michael, it's great to have you back on the show. I want to start right there with your response to Huang's comments about this renaissance,

especially given the fact that you are sitting on such huge access to those GPUs that have been so hard to come by from NVIDIA. So, first of all, thank you for having me back. It's great to be back. Following Jensen and Hidras, I feel like those are some pretty big shoes for me but um um you know look it's it's it's been a um it's been a phenomenal uh run for us you know and and the the 1.1 billion dollars has just been an incredible validation the investors that have commenced for us has been an incredible validation of the way that we're approaching building the infrastructure that is really standing up the uh the revolution that's going on within artificial intelligence. And so it's been a great run for us. And we're really excited about where we are and excited about how we're going to progress over the next couple of years, especially since you have been growing your footprint pretty dramatically?

Last year, you expanded data center footprint from three to 14. What does $1.1 billion now enable you to do? Yeah, so we're expanding in a lot of different ways. And so by the end of the year, we will be in 28 data centers. We've expanded into Europe. We have an office in London. We have data centers in London and Spain and up in the Nordics. We have data centers across the U.S. And, you know, it's really put us in an incredible position, not only to invest in the infrastructure, but really to invest in the people and invest into the software stack that is so necessary to be able to manage this type of infrastructure at such amazing scale

to enable us to really build the intelligence that Jensen was speaking to. When you talk about investing into the software stack, what does that look like, especially as we are 24 hours out from Huang talking about the role of NVIDIA in inferencing, for example? I mean, we know that CoreWeave is an alternative cloud provider. You're basically taking on the hyperscalers. So what does that enable through that process? Yeah, it's an interesting position that we play in the market, right, where we've really built our business from the ground up to be able to serve the particular use cases and the particular way that compute is consumed by these artificial intelligence and kind of massive scale parallelized consumers, right?

The amount of compute that they consume, the way that they compute, the type of compute, the speed and flexibility that they require. We've really built our software stack, our hardware stack, right up from the ground, making the decisions without any compromise to be able to deliver the highest quality experience to those type of consumers. We're not really built as the legacy clouds were to be able to support everything for everybody. Really trying to narrow down on a specific use case on a specific way that compute was going to be used and make sure that we built from the ground up to be as good as you can be at that one particular way that compute gets

consumed to build artificial intelligence. So then I guess, how does that speak to how this competitive landscape is evolving? Because on the one hand, you're competing with hyperscalers. On the other, I would imagine there's an increasing opportunity to supplement capacity, case in point, perhaps your deal with Microsoft last year. And you're seeing some of these deep-pocketed incumbents, Microsoft, Amazon, Alphabet, get more competitive, potentially more competitive on price. They're also starting to custom design their own silicon. So as that begins to roll out, what happens next? Yeah, so look, once again, we really have built our business on the idea that our solution is the correct solution. It's really been built to be able to support these type of consumers.

And these type of consumers can be AI labs. Those are, you know, when you think about going out and using artificial intelligence or you're sitting at your desk and you make a query, you make an inference request on the models, there's a reasonably good chance that at the end of the day, you're going to be hitting our infrastructure with those queries. And so our business plan is really built around the idea that by building such an excellent environment for delivering this compute, regardless if it is for training of these models or serving of these models. We're really built to be able to stand that up and deliver compute, regardless of whether it's to a cloud player, whether it's to an AI lab, or whether it's to an enterprise consumer.

Okay. Michael Entrader of CoreWeave, thanks for joining me here. Thank you very much. Appreciate it. Good to have you back. Up next, all the overtime earnings movers that should be on your radar as we count down to the conference calls from Dropbox, Unity and Sweetgreen. Welcome back to Overtime. Software company JFrog under pressure right now. Earnings and revenue topping analyst expectations. Guidance was in line, but billings came in below fact set estimates. Those shares are down about 9% right now. And GenDigital moving in the other direction. The cybersecurity company formerly known as Norton LifeLock seeing record revenue and increasing operating margin. Guidance coming in about line. Those shares are up about 5%. Now let's

get you set up for tomorrow. We have a break from earnings, but we're getting preliminary results from Consumer Sentiment. This comes after lots of commentary on the consumer from many earnings reports this week. We're also going to get Fed speak from Fed Governor Michelle Bowman, Dallas Fed President Lori Logan and CNBC's Steve Leisman speaking with Minneapolis Fed President Neil Kashkari and Chicago Fed's Austin Goolsbee tomorrow, 2 p.m. Eastern, on Power Lunch. That's going to do it for us here at Overtime.