Closing Bell - Closing Bell Overtime: Intel CEO Exclusive, the case for a 50-basis-point cut, Apple’s supply and demand question 9/16/24

Episode Date: September 16, 2024

Intel CEO Pat Gelsinger joins for an exclusive interview after a slew of news, including billions more in CHIPS Act funding, an expanded partnership with AWS, and a plan to set up a separate internal governance structure for its foundry business. Evercore ISI’s Julian Emanuel discusses the prospects of a 50-basis-point rate cut at this week’s Fed meeting. Bank of America Securities analyst Wamsi Mohan talks about demand for the latest iPhone Pro, as Apple’s stock takes a leg lower. Plus a side effect of the Fed decision that could add cash to Americans’ wallets, and the latest on the historic Polaris Dawn spaceflight.

That's the end of regulation. Lemonade ringing the closing bell at the New York Stock Exchange. First Citizens Bank shares doing the honors at the Nasdaq. Well, Fed decision week kicking off with the Dow closing at a new record. As investors question just how big the cut will be on Wednesday. Though the Nasdaq notably lagging, dragged down by Apple. That's the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. And we will have a major interview coming your way.

Intel CEO Pat Gelsinger joins us exclusively after news today that the company will receive up to $3 billion more from the CHIPS Act to make semiconductors for the government. News that sent the stock to the top of the Dow today up 6.5%. Military contracting. Plus, we will talk to Bank of America's Apple analyst about the pressure on that name today as reports circulate about potentially softer demand for the newest iPhone Pro. But let's break down today's action first with our first guest.

Joining us now is Julian Emanuel from Evercore ISI. Julian, it's great to have you today. I mean, it's a mixed picture for the major averages, but you've got gold at a record high, industrials at a record high, utilities, staples, health care, and we also have real estate at a two-year high. How does it speak to the dynamics in this market as you do have this debate about 25 versus 50 basis point cut come Wednesday? Well, obviously, the debate is basically raging. It's been almost the sole topic of conversation with clients today. But the bigger picture is the cutting cycle is going to

start, number one. And number two, when you think about it again, people became very defensively positioned sort of that first week in September, still thinking about the last time that both the Fed and the Bank of Japan announced on interest rates at the end of July and into August. And you saw a massive amount of volatility. So from that perspective, the market really is unencumbered, in our view, to go higher into year end, despite what could be a little bit of volatility in the next couple of days. Julian, hold on just a second. We see crossing the wire some further news about Intel. The company announcing, let's see, more detail around a major customer for its foundry business, AWS, that's Amazon Web Services, calling this a multi-year,

multi-billion dollar deal. In an expanded collaboration, Intel says it will produce an AI fabric chip on its Intel 18A process, which is its most advanced. Now, headlines last week had investors questioning the readiness of this 18A process. So this is perhaps a vote of confidence there. Under this deal, Intel is also planning to create a custom Xeon 6 chip for AWS on its Intel 3 process. That's an extension of an existing relationship. So the stock moving higher still here in overtime, up another 7% on this news. And so, you know, if you were wondering why Pat Gelsinger is coming to talk

to us in just a few minutes, here's another piece of it, Morgan. Talk about votes of conference for that foundry business, which we know has been very much in focus for Intel here, particularly in recent weeks coming off of last earnings and a suspended dividend and all the like. Yeah, for sure. Now, the stock has been down big. Remember, it was a 30 bucks a share not too long ago, and it was down to 30 bucks a share. So post-earnings, it took a dive. But both of these are pieces of needed good news for Intel and perhaps a sense that some of the bad news rumors that were out there are at least counterbalanced by other news.

So, Julian, I was going to ask you more about 25 versus 50 basis point cuts and what you're factoring in and what history has taught us about this process, especially after Ed Hyman flipped to a soft landing thesis just last week. And that made a lot of news in of itself for the markets. But now I'm going to shift to AI because you've done a lot of work on AI and the impacts to the market, the AI trades that we've seen. And so on a day where semiconductors were under pressure, but now you get this news from Intel, which is outperforming everything else in that sector. Your thoughts on where AI goes from here? Well, when you think about sort of really going back to July, we call it an air pocket. AI has

been in an air pocket, a digestive phase, something that was very typical during the internet-led rally of the mid and late 1990s. Obviously, AI, we think, continues to have long-term viability. And we really think we're still in the early innings when you see major companies, you know, one of the world's largest retailers talking about the benefits of AI, when you see more deals like you've seen in what has otherwise been a weak semiconductor's tape today. But we do think that ultimately what's happening is that the benefits of AI are starting to be recognized and will be monetized into 2025, in particular by companies away from the enablers and the hyperscalers. Looks like, do we have more of that news crossing on Intel?

We do. It looks like there's more news coming out of Intel. I want to get to Intel announcing it is slowing down its manufacturing rollout in Europe, but continuing on pace in the U.S. Intel has been making a number of moves lately to conserve cash. They announced layoffs some months ago, including as a part of earnings. Also, Intel is setting up a separate governance structure for Intel Foundry. That is the manufacturing piece of the business, the very costly manufacturing piece of the business, setting up a separate governance structure within Intel. Some will interpret this as making it potentially easier to separate the profitable design business that Intel has from the capital-intensive foundry manufacturing business,

though Intel has said that it does not have plans to do that specifically. And of course, all of this news comes after just two hours ago, the company announced it has won up to $3 billion in more CHIPS Act funding for the Secure Enclave program, making chips for the Department of Defense. So we've got the Secure Enclave news. We've got the expanded AWS partnership, including an AI chip fabric on the 18a process and then we have this geographic slowdown in europe with continued investments in the u.s which you would expect with all of this government funding promise though intel doesn't have it in pocket uh quite yet and uh this separation internally um internally is important a governance separation between the foundry business and the rest of Intel. This might also give some of Intel's

competitors more confidence that this is a separate foundry business that they're sharing their details with, not with Intel's design business. It's a key point to make. And certainly, Julian, I guess we're going to go back to you for just a broader markets question before we do dig deeper into this news with Intel CEO Pat Gelsinger exclusively in just a few minutes. And that is, you said 6K all the way. How much does a 50 basis point matter, cut matter to the market here? And just how much does election strife matter as well, especially on a day where you wrote that you do think that yesterday's scare on West Palm Beach has a definite effect towards moving the odds closer to 50 basis points.

And of course, that scare being a second assassination attempt on Trump. Yeah, no question. You went from Friday afternoon at a 50-50 shot for 50 basis points to today, 65 percent likelihood. What we would say here is this one of these times when you consider both the election and the monetary policy uncertainty, there's lots of reasons to be agitated about the short-term direction of the market. But longer term, there's two things to remember. Number one, 2024 has been a remarkable return to earnings growth, not just at the MAG-7 level, but at the other 493. We think that continues into 2025. That underpins the market.

And then the other thing is that, again, people got a bit more defensive into September. And what we've seen is the years where there's presidential elections and there's double digit gains on Labor Day, the market has finished higher than it was on Labor Day, six times out of six, 100 percent track record. We don't think it's different this time. Yeah. Although it's rough when September starts bad before Labor Day and that happened, too. So who knows? But I take your point.

You're still sticking to six thousand. Certainly not out of the question. Julian Emanuel, too. So who knows? But I take your point. You're still sticking to six thousand. And certainly not out of the question. Julian Emanuel, thanks. Well, let's turn now to another individual stock, Apple. That stock sliding on reports of demand for the new iPhone 16 pro lower than expected. Joining us is BFA Securities senior IT hardware analyst Wamsi Mohan. That's a buy rating on Apple. Wamsi, we can see perhaps, well, definitely that the weeks of wait for these phones to ship less than they've been in the past, but we don't know how many Apple has made. So if they made more of some of these higher end models than they have in the

past, then this might not be a demand problem after all. How do you read it? Yeah, thanks for having me, John. Look, I think you hit the nail on the head, right? Like, it's always a balance between supply and demand. What we do know right now is that the lead times or the amount of days it's going to take for your phone to get to you is a little bit lower than last year. And this is across the board. Well, we also heard from the supply chain earlier this year that they started the manufacturing process a little bit lower than last year. And this is across the board. Well, we also heard from the supply chain earlier this year that they started the manufacturing process a little earlier, possibly to circumvent any supply chain issues. And secondarily, if you remember last year, for the pro models, particularly the Pro Max with the Tetra Prism lens, there was also a delay associated with that, which kind of delayed and caused some elongated lead times last year.

So at the end of the day, the lead time is one indicator. It's not the only indicator. And frankly, I think Apple has been making more pro models because that's what they've seen consumers want. And so it's kind of logical that they improved supply on the one hand, they geared up for better demand, and now we'll see how it plays out over the next whole year, really, right? So the pre-order is a very short window of time, and it really comes down to what was supply versus demand. And it's not equal across all regions, so it's really interesting to see how this will unfold over time. I think the week through really will be in December when we get the December quarter guidance of how this really looks

as a cycle. And Wamsi, there's a broader than usual gap between the capabilities in the highest end iPhone and some of the others when you look at the AI capabilities. In the past year, it's mostly been, okay, how many camera lenses do you have on the back? But now with these AI capabilities built in, there's that. And this is launching mainly in the U.S. and English language countries first and in some of the bigger population countries, China and India later. The AI features will, which one might expect, will spur demand. So as investors think about what kind of significance to place on the initial sales over the whole cycle, should we perhaps expect a different sort of build because the AI features in some areas are coming later and those might spark demand? Yeah, absolutely. I think the cadence of this refresh is so interesting, John, because every year it's just you get the new hardware,

you know what you got on the new hardware and that's really it. Right. And you get the new hardware, you know what you got on the new hardware, and that's really it, right? And you get the new iOS. This year, because the feature's functionality itself is staggered, it really drives a very different kind of cadence in people's minds of, oh, like, am I going to future-proof my investment, number one? So in the U.S., absolutely, you're going to go for it now.

But if you look in other regions, as Apple intelligence rolls out, it is going to make a difference in the rate and pace of adoption across different regions, which is different from any other cycle we've seen. So really, the software upgrades matter a lot in this cycle. And so you'll have this constant sort of, you know, improvements to the functionality of the phone across different regions. So we actually think North America will be the first, right, and then you'll get a cadence where China could actually be second, followed by EU third, because I think things will move a little faster in China than in EU. But we'll see if that plays out. But our thesis is that you will get this elongation in terms of the cadence of the replacement. And that'll play out through the whole year and frankly into next year as well, right? So 2026 is going to be a big year as well

because now you'll have much better feature functionality all baked in. So in a two-year view, you can get mid to high single digit unit growth each year. And that's very unusual from a typical cycle where you either get a boom bust sort of just within the course of that year. So do you buy Apple then right now in anticipation of this and given the fact that you have that intel, that clarity over the next couple of years that you don't normally have, or do you focus your money elsewhere, whether it's on supply chain partners, which are also under pressure today, or some of the semi names that have been selling off or elsewhere? Yeah, look, Morgan, I think that Apple as an investment, particularly at turbulent times, has proven to be tremendous. Right. So as we look at potential volatility, whether it's the Fed decision, whether it be, you know, the AI maybe cycle potentially being somewhat at risk

or making people nervous. We can look at across so many different reasons why Apple checks the box in defensiveness and sort of relative outperformance at such times in particular. And we think that we're kind of in a little bit of a turbulent time when the market's kind of still pretty close to all time highs. And so it does make for a very defensive, but yet a company where you can expect estimate revisions will continue to be positive. And I think that's the crux of it. The crux of it is the stability of the cash flows and knowing that estimate revisions will actually work in your favor as opposed to against you. If consumer demand were to drop a little bit, it actually doesn't change that number for Apple in terms of earnings power by a whole ton. And that's the safety and the reliability you can get with owning Apple right

here, right now. All right. Giving us a lowdown. Wamsi Mohan, thank you. Let's turn now to CNBC Senior Markets Commentator Mike Santoli for a look at how the average stock is performing as we get closer to an expected Fed rate cut. Mike? Yeah, John, much better after really a drought of performance by the typical stock against the S&P 500. But take a look first at the three months, or actually quarter to date, of the equal weighted Russell 1000. The entire large cap universe weighted equally. That's the CTF vastly outperforming the S&P 500 and also pretty much at a recent high. Now, the all time high for the Russell 1000 equal weight is all the way back to November of 2021, almost three years ago. It's point four percent from that right now. So it's been kind of this long sideways and down period and finally recovering as people look ahead to a potential rate cut as a trigger for maybe a more inclusive market. We obviously remains to be seen. Take a look here at the percentage of S&P 500 individual stocks that have been outperforming the S&P index

itself. It's pretty much as high as it gets. This is over the last 60 days, so-called three months of trading. And you see this line. What I find interesting is that it typically has happened either in bear markets when the index itself is really struggling and the largest stocks are going down the most or in bubbly type markets like in early 2021. I don't think we have either of those right now. What we really do have is this attempted rotation away from the few giant winners to the rest of the market. But of course, you will notice it's happened in the context of some downside chop and some corrective action since mid-July. So we'll see how that plays out from here. In theory, the variations among valuations within the index and all these other things seem to suggest it should be a ripe stock picking environment.

But, of course, it's easier said than done sometimes, John. All right. Mike Santoli, thank you. See you again in just a bit. Now, when we come back, Intel CEO Pat Gelsinger joins us for an exclusive interview after the company announced a multibillion-dollar foundry partnership with AWS, a cash-preserving manufacturing build-out pause in Europe, and up to $3 billion in additional funding from the CHIPS Act and plans for a separate governance structure for that foundry business. Overtime's back in two. Welcome back. Shares of Intel soaring in overtime, now up more than eight and a half percent.

As we just reported moments ago, AWS becoming a major customer for Intel's foundry business, including its highest end 18A process, and the company will set up a separate internal governance structure for that foundry business. Now, this comes after Intel announced it was awarded up to $3 billion in additional government funding under the CHIPS Act for the Secure Enclave program. Joining us now in an exclusive interview, Intel CEO Pat Gelsinger. Pat, good to see you. So, last time I talked to you a few weeks ago, the stock was headed down. Right now, today, the stock is headed up on the coming together of some of the things that you said Intel is going to do. I got to ask specifically about 18A here. Interesting to see that mentioned with this AWS announcement because there were some rumors last week about Broadcom and whether 18A was up to

snuff and working out. What can you tell us about the significance of this expanded AWS relationship, particularly when it comes to 18A and the readiness of it? Yeah, thanks, John, and always a pleasure to be with you and the team at CNBC. Well, you know, this is a big announcement today. Amazon's been a partner of Intel for many years, but we've just taken it to a whole new level. Obviously, the 18A foundry agreement for their AI networking is a big deal. And Amazon is a discerning customer. They are, you know, really sent us through our paces to prove that 18A is up to snuff. And it's up to snuff.

And that's part of the announcement today. We also announced a custom version of Xeon 6 that we're doing with them. And together, these two really emphasize the better together, both the foundry progress as well as the product's momentum. But I'm particularly proud, as you suggest, that this really shows the momentum of 18A. It's healthy. It's making great progress. And as a foundry, we see a numerous set of customer pipeline opportunities in front of us. A very big day. When can we expect, I'm not expecting a date because I don't want to, I mean, you had a big announcement today, so I'm not trying to press you to, but when can we expect more 18A deal type announcements that might give investors confidence that this isn't just a one-off?

Yeah, and as we said, some customers are reluctant to give their names because of some of the competitive dynamics. But we've seen a large uptick in the amount of customer pipeline activity that we have underway since we released the PDK or the design specs that customers could start to use. So I do see that we'll have a number of these that are making good progress and do hope to be able to make additional announcements in the future. But the momentum has definitely increased since the July release of the PDK. And the AWS announcement today was just a proof point of that momentum. And we're looking forward to even better things to come. Okay, Pat. Now, I believe the Intel board met last week, was it to discuss a wide range of things? And you're coming back saying you are pausing some of the manufacturing build-out in a couple of places in Europe here, presumably to preserve cash. And, you know, you've been a target of criticism for the scale and speed of

this manufacturing build-out. Did the board endorse the overall strategy of continuing this foundry and manufacturing build- out? Yeah, and overall, it was a very important board meeting, and I and the board are aligned in the go-forward strategy for Intel Foundry. And as we looked at that, it was very important to say we're moving to this next phase of the foundry journey. You know, we had this pace that we needed to go through to catch up, to get back to a competitive process technology, to build some capacity flexibility. And as we move to this next phase, it's much more about building efficiency into that and making sure that we have good shareholder return for those significant investments that we're now seeing

the end of the tunnel, as we say, 18A's health. And so what we've agreed is to be very focused on the efficiency of those capital investments, focused on the U.S. investments first in Oregon, Arizona, New Mexico, and the Ohio project. And we're pausing our European and Germany and Poland for two years and pausing the Malaysian project as well. Obviously, we've built flexibility so we can scale up. But first, it's show good financial return from the investments, great support from the board of directors. When we started this, John, you know, this was a three and a half year journey that we started aligned. We reviewed that thoroughly and we're committed to the future together.

OK, now you're in a cost crunch right now. You've been cutting workers, now delaying these expensive capital projects. There's been, especially since earnings, a lot of criticism of you as a CEO. Are you confident that you and the board are on the same page on your future at Intel? We've gone through a very intense time and reviewed the strategy, and I'm committed, they're committed, the partnership is strong. As we finish the board meeting, we clearly have laid out these steps in the future. And today's proof points, the Amazon partnership, the secure enclave, the foundry subsidiary, agreeing and seeing the great progress that we've done on these cost measures. All of these align us to the future that gives not just finishing the journey that we started together three and a half years ago,

but also assuring that we have the financial wherewithal, the balance sheet that allows us to finish what we started. I and the board are fully committed to that strategy and quite confident that with today's proof points, we're well on our way to fulfilling exactly what we've laid out to do together. Pat, it's Morgan. It's great to have you on the show. I want to go back to the Foundry subsidiary that you just mentioned because you are standing up this independent subsidiary internally within the company. I mean, we've seen the reports in recent weeks about the possibility of Intel considering portfolio changes, the possibility of a split of its product design and manufacturing businesses. What should investors read into this subsidiary being stood up right now? Yeah, and there's really three things that we're trying to accomplish. One is, it is distinct. You know, it different operating requirements and for that service organization like a

foundry is very different than a products organization and we need to have the operational skills to make that great. But second, customers are all also looking for their factory to be distinct from the Intel products and finally we're looking for capital optimization opportunities, investment opportunities that are distinct for the foundry from the products. And those are the objectives of setting up a specific subsidiary. But it's clearly better together. And I think the Amazon announcement today reinforces that very clearly.

It's a foundry as well as a product partnership with the Amazon Web Services agreements today. So distinct, but better together. So this is not a precursor to you spinning out that business? No, distinct, but better together. And we do see that that better together is so important because the wafers, right, the cash flows from the Intel products into foundries is very critical. You know, that's the optimization point for the technologies. But increasingly, as you see with the Amazon announcement today,

more customers want to be able to view this as their factory, their manufacturing as well. And that's why setting the subsidiary structure up, having clear governance and more accountability for those external foundry customers is so important as well. Tell me what this overall you think means for Intel. There's a lot of concern about the data center business, the amount of challenge that that's under, how that affects margins revenue coming in the door as you're spending

on the Foundry and manufacturing side. With these announcements today, how much better do you think those costs and revenues are in balance? And, you know, should we expect more of this realignment? Well, we laid out following our Q2 earnings call a clear plan on the cost reductions, the CapEx savings, the other cost improvements, the implications that that has on headcount or site strategy. And we're well underway on delivering exactly against that plan. That and these changes that we've made for the overall manufacturing footprint, we're confident that we have the balance sheet and getting a process of

de-levering that gives us the ability to finish what we need to from a financial perspective and begin delivering to our shareholders better returns as we go forward. And something that I know that this is very important for us and one that we've spent a lot of time with the board looking at, that we do have the financial capacity to finish what we started. And we believe the steps that we've taken clearly allow us to do that. And we're executing those very effectively and finding good momentum. We're going to finish them quickly and then move on to the next phase of getting back to delivering the best things that our customers want for the future on both the foundry and the product side. Clearly the product side,

redoubling around the x86 franchise for both client and data center. And again, today's announcement with AWS reinforces that particularly on the custom x86 side of the data center business as well. And the stock is up more than 8.5% right now in overtime after being up more than six in the half percent right now in overtime after being up more than six in the regular session. Pat Gelsinger, CEO of Intel, thanks for joining us

here on Overtime. And we were just talking about the 18A process. Don't miss much more on the chips industry when Jim Cramer speaks exclusively with Broadcom's CEO, perhaps checking out that 18A process on Mad Money, that 6 p.m. Mad Money today. All right. Well, after the break, Mike Santoli explores a side effect of the Fed's rate-cutting cycle that could put cash back into Americans' pockets. And check out shares of Box in overtime, moving lower after the company proposed a secondary offering of up to $400 million worth of convertible senior notes. Overtime, we'll be right back.

Welcome back to Overtime. With bond yields falling and the Fed about to ease, could there be a boom coming in mortgage refinancing? Well, let's ask Mike Santoli. Mike. Yeah, Morgan, the math starts to point in that direction. B of A highlighting that mortgage yields or mortgage rates, 30-year mortgage rates, have now gone below the average level of mortgages that were taken out near the lows in 2022 to 2024,

suggesting that so many of them are in the money. So there's some advantage in refinancing. So this chart shows that mortgage rates going below that average outstanding mortgage level. And this is the refinancing index. It's inverted. So as that number goes down, refinancing activities going up. So you see how heavy the refinancing activity was back then. And it's way, way below that, in fact, low by historical standards. So it would just be one other cushion potentially against a slowdown in consumer spending if there were some borrowers who wanted to take advantage of locking in slightly lower rates. This is interesting. It reminds me of what Matt Ishby of United Wholesale Mortgage said to us on this show last week. He was basically like, we're already seeing it. We're already seeing a boost in refi activity. And if I'm recalling correctly, I think he said five percent tends to be the magic rate where you see

things really unlock in terms of mortgage rates. Yes. And, you know, we're some distance from there. But without a doubt, I do think that's what people have in their heads. There's a certain level at which it makes sense to do it. I think the other piece, of course, is people are waiting for new mortgage apps to pick up more. It seems like there's a little bit of hesitation on both the seller and buyer side in terms of transactions. But for the time being, refinancing activity can refresh household balance sheets along the way. All right. Mike Santoli, thank you. It's time now for a CNBC News update with Bertha Coombs. Bertha. Hi, John. A Pakistani man with alleged ties to Iran pled not guilty today to charges connected to an alleged plot to assassinate an American politician.

Court papers do not name any potential individuals who a chief merchant may have been targeting. And they also see no attacks were made. If convicted, merchant faces maximum of life in prison. Donations from the crypto industry have reached about $190 million this election cycle, with Cameron and Tyler Winklevoss in the lead as the biggest individual crypto donors. According to data from the Federal Election Commission, the twins gave a combined $10.1 million, with much of it to Trump-related PACs. And in the Carolinas, 6 million residents are under a flood watch after an unnamed storm dumped historic amounts of rain in the region in a matter of hours. The National Weather Service said over 15 inches of rain fell over parts of the state so far, but more rain is expected, along with possible isolated tornadoes. Back over to you.

Bertha Coombs, thank you. Up next, the CEO of online sneaker marketplace StockX joins us to talk about the company's new partnership with Walmart. And check out the names hitting record highs today. T-Mobile, Lenar, Costco, Blackstone, and MasterCard all on that list. Overtime will be right back. Welcome back to Overtime. Walmart recently teaming up with reseller StockX to list pre-verified sneakers such as Nike Jordan 1s, New Balance, and Asics, to name a few. Joining us now to discuss the partnership is StockX CEO Scott Cutler. Scott, it's great to have you on the show. I'm

going to start right there because this news was announced about two weeks ago. Since then, you've started to roll out on Walmart's marketplace. What have been the results? What's been the traction among consumers so far? It's been exciting. You know, we chose Walmart because for a couple of things. One, it's the largest retailer, not only in the U.S., but the largest in the world, reaching hundreds of millions of customers. We're able to match that demand with supply from StockX partners around the world to be able to really deliver a great experience. Walmart has been making a strategic push into marketplaces, and we wanted to be one of the first brands to partner with them as they're reaching a new audience through this marketplace experience. I can think

about previous conversations I've had with the folks at eBay over the years when they started to get into collectibles and what goes into that authentication process, she said. And so I'm curious what that looks like for you at StockX and what Walmart requires in this partnership on its marketplace as well. When you look at what it takes to deliver a marketplace experience, particularly in this category of collectible items, whether that be sneakers or apparel, one of the most important things is your ability to actually verify the product that's being delivered to the consumers. And so when we look back at StockX experience in this space, we've verified over 55 million items. We've built out an incredible technology, a database, a knowledge base that we're able to apply against these categories to deliver this experience. And now we're really looking at how do we continue

to build on that relationship of trust, but be able to distribute where other customers are at. And so when we look at Walmart, it's really that ability to deliver the trusted experience that we're known for and our brand and be able to meet customers wherever they might be. Hey, Scott, it's good to see you. It's been a while. So earlier, just a while ago, you had a verification report at StockX where you said you've turned away more than $600 million worth of products that sort of failed your authentication process. But a couple of years ago, Nike sued you guys, basically saying your authentication process wasn't good enough. Where's the disconnect? Why aren't the likes of Nike welcoming a StockX with open arms? Well, again, when you think about it, our role is to actually match a seller and a buyer and

they'd be able to stand in the middle and verify that product. And that verification is an extensive process. It's a process that's looking at lots of different things. Is the right size? Is the right color? Is it an authentic product? And so when we look about delivering that experience, we're leveraging our technology and we're leveraging our data to be able to deliver that trusted experience against product that we don't buy, that we don't own, that we're delivering through those sellers. And that's really what our brand stands for. And we stand behind that process. And then we're there to protect the customer from receiving product that would otherwise

get to them if we didn't play our role. So if you have more inbound eyeballs from the likes of a Walmart and their platform, does that mean that you have to invest that much more in the authentication process? Because it's likely that if Walmart is a new avenue for sellers to potentially sell their wares, I imagine you're going to be getting a lot more stuff that needs to be checked. So for us, the sellers are still coming through our platform and we have hundreds of thousands of sellers and we're sourcing sellers and supply from where brands are placing that product. And that comes 50% of our supply is coming from outside of the United States. So these are sellers that we have a strong relationship with.

We've got a history with. But we're bringing that supply into our marketplace, putting our stamp of approval on that verification process. And then we put a tag on that shoe or that item. And that tells the customer that we've stood behind the best work that we can do. And if there's any reason that we fail to be able to deliver that experience, we have the customers back. We can guarantee that experience and be able to make sure that customer is satisfied with the product that we're receiving through StockX. Now, again, through multiple channels. Okay. So if I step back and ask you a macro question,

since it is a week where we're getting a Fed cut expected, we got retail sales tomorrow, what are you seeing in terms of consumer behavior? Well, you have to step back and remember that if you look at U.S. GDP, 70% of U.S. GDP is personal consumption. And that personal consumption obviously is divided among the things that we're required to obviously is divided among the things that we're required to spend money on and the things that we have discretionary opportunities around. And the place where we serve is really in that discretionary purchase. What we're seeing is that customers are being a lot more selective about what they are spending money on. They're very much focused on value. We had a really strong back-to-school season.

And this year, again, with a tight consumer, you're seeing the consumer show up in those retail moments, which back-to-school was a really great example of that. But they're also showing up with a lot more discretion in what they're spending their dollars on. Okay. Scott Cutler of StockX, thanks for joining us. Thanks. Well, Microsoft's latest co-pilot update features new AI agents. Up next, find out what else the company introduced and whether its AI tools are catching on with customers in Overtime Returns. Welcome back to Overtime. Microsoft unveiling new Copilot tools, including AI agents.

But will these features be enough to move the needle for potential customers? Steve Kovach is here with details. Steve? The question since Copilot launched about a year ago. But, look, let me go over what Microsoft today unveiled here, packing loads of new features into Copilot, specifically the version it sells to businesses that work with apps we all know about, Outlook, Word, and Teams. Now, there's way too much to go over here. We'd be here all day if I tried to say everything they announced, but some of the new updates include CoPilot coming to Excel for the first time to help with data analysis and better tools for prioritizing messages in your

inbox, plus those agency mentions. Now, look, all of that is good, but what investors really want to know is how well CoPilot is selling, and we just still don't know. Microsoft did give some stats today, some fresh stats, that is, showing growth in Copilot users, but it's lacking a lot of the information and doesn't give us a very clear picture of how well Copilot is performing nearly a year after its launch. Now, there's new Copilot stats include 60% of Fortune 500 companies are using Copilot today, and daily Copilot users have nearly doubled quarter over quarter. And finally, customers with at least 10,000 Copilot seats more than doubled quarter over quarter. Now, look, that is all growth, no denying that, but we don't know off of what base.

So there are still more questions than answers about a product. Microsoft has basically been revolving the entire company around, but Microsoft is still making money from artificial intelligence on the cloud side. That's, of course, thanks to its partnership with OpenAI and so many other AI companies. Microsoft runs those AI services in its Azure cloud, and it shows revenue there has been continuing to grow, guys. So maybe not necessarily, or it's unclear how it's benefiting from Copilot. The Azure story is very clear. We know it's growing like gangbusters. Okay.

That's some good context there. Steve Kobach, thank you. Well, forget the economy. The real soft landing just happened in the Gulf of Mexico. We've got those details about the end of the historic Polaris Dawn mission straight ahead. We have breaking news on the apparent assassination attempt against President Trump. And Emily Wilkins has the details for us. Hi, Emily.

Hey, Morgan. Well, yes, we just heard from a press release down in West Palm Beach where the acting secret service acting director said that Trump and Harris have been under the highest level possible of security since July, since that incident, the first assassination attempt on former President Trump's life. We also heard from the sheriff in West Palm Beach, Rick Bradshaw. He said that currently Mar-a-Lago is under the highest possible security as well. So really heightened security either before this incident and now, of course, after this incident. We also heard from the FBI that the suspect, Ryan Ruth, was also the suspect in a 2019 tip that the FBI received that a felon had had a firearm, illegal possession of one. Now,

the FBI said they did follow that tip, but the complainant was unable to provide any evidence. We heard in this presser that the investigation is still very much in the early stages. They're still looking through the suspect's social media. And of course, we'll be keeping an eye out for more information on exactly what happened here and how someone was able to get so close to Trump with that rifle. Guys? All right. Our Emily Wilkins, thank you. Now, up next, an update on the historic Polaris Dawn mission

and one space-related stock that's up more than 9x in six months. Be right back. Well, early Sunday morning, the Polaris Dawn crew splashing down in their SpaceX Dragon capsule off the Florida coast, ending a history-making five-day mission in which the crew, commanded by Shift 4's Jared Isaacman, flew at a record altitude around Earth, tested Starlink communications via a global music concert of Star Wars Rey's theme, and perhaps most famously, conducted a spacewalk as Isaacman became the first private citizen ever to step into space. Now, with its CEO back on Earth, shares have shifted four, finishing today higher. But another space news. AST Space Mobile CEO and founder Abel Avalon joining me earlier today as

the direct-to-sell satellite operator's first five Bluebird spacecraft are fully deployed in coming weeks and early non-continuous service for the U.S. government is launched. We are building the next batch of satellites. We had 17 of them in process right now. We start launching them starting early next year. There will be a launch campaign that we will announce pretty soon. And we expect to ramp up our production rate. We're building 17 today. We expect in the near future to get a capacity of 72 per year. So AST hopes to get to continuous service in the U.S. by early 2026,

partnering with AT&T, Verizon, and a number of others. It's raised more cash by recently redeeming stock warrants. ASTS has a fervent retail investor base. Shares rocketed in anticipation of last week's launch, trading as high as $38 per share in mid-August. It was a $2 stock back in May. ASTS has sold off some since then, but Wall Street has taken notice. Deutsche Bank just recently boosted its price target to $63 a share. You can see finishing here today at just under $30 a share.

For more on AST's Constellation, scan the QR code for Manifest Space or download wherever you get your podcasts. I'd also just note, John, that retail base, people showed up apparently in buses to the launch early, early Thursday morning. Retail investors to watch it themselves. Wow. Okay. Quite an hour we've had, including Intel, both in the regular session and overtime. Surging. I'll be talking more about that in just a minute. Yeah. In the meantime, we've got retail sales on tap tomorrow. An FOMC meeting kicks off as well. That does it for us here at Overtime.