Closing Bell - Closing Bell Overtime: Mobileye CEO Shares Growth Plan and Highlights from Capital Markets Day; C3 AI CEO On Blowout Quarter 12/9/24

Episode Date: December 9, 2024

The Nasdaq takes center stage with major earnings reports from Oracle, MongoDB, and C3 AI. Jefferies Analyst Brent Thill joins to break down Oracle's results, while C3 AI CEO Tom Siebel offers insights on his company’s performance. Mobileye CEO Amnon Shashua shares key takeaways from Investor Day and the company’s China business. Plus, a market panel featuring Jill Carey Hall of BofA and Dana D’Auria of Envestnet discusses the state of SMID-cap strategy.

That's the end of regulation. Brinker International ringing the closing bell at the New York Stock Exchange and Plains Holdings doing the honors at the NASDAQ. Stocks closing near session lows as NVIDIA and a number of other tech and communication services stocks drag the averages lower. That's the scorecard on Wall Street, but the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. Yeah, we've got a big hour of breaking earnings results on the way from Oracle, Toll Brothers, MongoDB, Planet Labs, and C3.ai, plus access. You're only going to get on overtime, an exclusive interview with C3.ai CEO Tom Siebel before his call with Wall Street. And the CEO of Mobileye will join us with the big takeaways from today's investor day after that stock got a boost in the regular trading session. But first, let's get to the market action.

Joining us is Jill Carey-Hall of B of A Global Research and Investnet co-CIO Dana Doria. It's great to have you both here. And Dana, I'm going to kick this off with you because, yeah, we're starting off the new week in the red here with all the major averages showing some losses. And tech led the way with the weakness today. But in general, recently, we have actually seen a pickup in leadership among the big tech names. So what does that tell us about positioning looking to 2025? Well, I think as a starter, we know that we're in a risk on environment since the election. I think there's a lot of exuberance in the market. And, you know, whereas we had some cyclicality going on before,

you know, movements into financials, movements into more value-oriented plays, it's not surprising. And certainly with Tesla leading, given the relationship there, it's not surprising that we would see, you know, a rotation back. I also think to a certain extent,

it shows, you know, there's breadth in the market, right? That we can move from one set of stocks to another and back and that you can see strength there. I do think also you've got to dig into these different, of course, MAG7 stocks. I mean, as a group, as a monolith, they're 33 percent. It's very concentrated, et cetera. But there's, you know, some quality plays, maybe more among some versus more of a risk on type of a play among others. So big as they are, they're not a monolith. And the reasons for the growth there could be differing, right? Some of them, even I think for years now, have

been more of a defensive play for the market. Okay. Jill, want to get your thoughts on whether you buy into small caps, especially given the weakness we've seen so far this month? Right. You know, I think small caps are interesting because, you know, near term, maybe we continue to see into your end some momentum and positioning in the size segment's been pretty light. But I think as we look ahead to 2025, I'm actually still relatively cautious on the Russell 2000. I think mid caps could actually be a better spot because I think there are certainly some positive tailwinds when you think about prospects for for deregulation and, you know, cyclical growth picking up. But the some of the post-election policy risk around tariffs or around immigration reform could actually be a much bigger hit to small cap earnings than to the other size segments. And that's coming at a time when,

for one, refinancing risk has reemerged, as we've seen multiple rate cuts get priced out of the market in recent weeks. And small cap earnings have still been struggling to come out of a recession. Going into this year, analysts were expecting that by the second quarter, profits growth for the small caps would already be in the mid-teens and outpacing large caps. And that's gotten pushed out a year entirely. We're still in this profits recession for small caps. We're likely to see a pickup, but we still haven't seen a lot of evidence that that's actually happening. Estimates have still been coming down in that size segment, whereas they've kind of stabilized and started coming up a bit for mid-caps. So we think mid

might be the better area for 2025. Interesting. Dana, given that we're now more than a month into the post-election trade on the Trump win, I wonder what this means for bonds, for fixed income, given that the market seems to expect that maybe rates won't come down at the rate that some had expected because maybe some of Trump's policies that we're starting to get wind of could be inflationary? Yeah, I mean, you're certainly hitting on, I think, a theme that the market's been grappling with, right? So certainly an expectation. And this market has been for the last year overshooting on expectations of rate cuts. So it's not surprising that maybe that had continued to go on.

But, yeah, you know, when you look at policies such as tariffs, there's absolutely the possibility of, you know, inflation that Powell really hadn't entirely snuffed out. And already we know inflation can tend to come in waves, you know, being stoked again. And that's sort of the fly in the ointment in everything that the market is looking at right now. So certainly, I think it's possible that we're higher for longer. I think, you know, at this stage of the game, given the unemployment rate ticking up a little bit, we're probably looking at a rate cut in December. But, you know, where that end rate lands and how quickly we see these rate cuts, you know, the Fed will remain data dependent. They'll continue to watch what's going on with inflation.

And just to the comments on small caps as well, I think it's right on point that there's volatility in that, right? And I'm certainly a proponent of small caps over the long haul, but they are interest rate sensitive. They are gonna have higher beta to some of these decisions

that are gonna come out about some of this stuff. So whereas we've seen small caps maybe benefited from things like, hey, not as much international exposure, so the tariffs aren't an issue, there's still a lot in those policy decisions that can flip that. So I think the interest rates and a variety of things have an impact there. We're ready to do C3 AI results. We are. Those are out. The stock is heading higher. Let me get those numbers to you. C3 AI has a beat on the top and bottom lines. Revenue comes in at $94.3 million for the quarter versus $ 91 expected and also well above guidance. EPS comes in at a loss of six cents versus a loss of 16 cents expected. Now for Q3, the guide also above expectations.

C3 guiding to a midpoint of 98 million dollars in revenue versus expectations of 97.6 for the full year, guiding to a range of $378 to $398 million versus a lower expected range of $370 to $395. We'll have a lot more on this quarter in just a bit when Tom Siebel, the CEO, joins us. Let's see. Jill, I want to go to you on this next one then. As we think about where we go in 2025, particularly now with the mega caps, and we'll throw Oracle and the likes of that in there too, Broadcom, because those results are out. It's up. Hold on. Those results are out. Seema Modi is ready with them. Seema.

Hey, John, we have second quarter results from Oracle, a 147 adjusted on earnings per share. That's a one cent miss on its bottom line. Revenue came in line at fourteen point one billion dollars, John. And it's non-gap operating margins of 43 percent. That also came in line at $14.1 billion, John, and it's non-gap operating margins of 43%. That also came in line with expectations. We have comments here from Oracle CEO Safra Katz, who's really talking about the strength that the company is seeing in cloud infrastructure, which is basically helping a lot of their customers, the hyperscalers, to specifically migrate data into the cloud, which is then used for AI purposes. She says record level of AI demand drove Oracle Cloud infrastructure revenue up 52% in the second quarter. That is

above Evercore ISI's estimate of 50%. And Katz goes on to say that it's a much higher growth rate than any of our hyperscale cloud infrastructure competitors. And that growth in the AI segment of our infrastructure business was quote extraordinary. We're looking at shares though down about 9%. We've been talking all day, John, about the big run-up we've seen in shares of Oracle this year. So perhaps expectations were a bit high going in. Okay. Yeah, we have to hear what they have to say on the call. They usually give more on the guidance there. Jill, back to you on the likes of Oracle. I'm throwing it in there with the mega caps because at least before this report, and I think

it still is, the market cap was above a half a trillion dollars. Given that you're wary on small caps and that rates might stay higher, some growth-friendly policies, can investors stay with the mega caps and super large caps like Oracle and above? Well, within large caps, we actually like the equal weighted S&P 500 over the cap weighted index. I think, you know, while there are certainly some of the large tech stocks and Magnificent 7 stocks that may still be attractive, overall, we are in an environment where growth is slowing for the Magnificent 7. It's been higher and better than the rest of the S&P 500 in terms of earnings

growth. But now as you look into 2025, those are starting to converge a bit. So we get growth slowing for that cohort, growth picking up for the rest of the market. And that should drive more price sensitivity. We like value over growth. Many of those names are also much more extended on valuations or crowded by active managers who have largely been more underweight, a lot of the cyclicals or higher beta stocks. So we see more opportunity in that segment of the market than in some of the mega cap growth names. Okay. Jill Carey-Hall and Dana D'Oria, thanks for kicking off the hour with us. Well, we've got more earnings to bring you. MongoDB results are out and Deirdre Bosa has

the numbers. Hi, Dee. Hey, Morgan. Shares are surging. They're up more than 10%. It is a beat on the top and bottom lines with guidance better than expected. In terms of EPS, $1.16 adjusted versus only 69 cents estimated by the street. Revenue also beat there, $529 million versus $502 million expected. As I mentioned as well, fourth quarter guidance better than the street was expecting. Also, a bit of news here on an executive shuffle. The COO and CFO, Michael Gordon, will be stepping down at the end of the fiscal year. That's January of 2025. The company has commenced an executive search and is looking both internally and externally to evaluate options. So there you have it, guys. Strong beat, up more than 10% still. All right.

Continuing that trend of smaller software names doing well this earnings season. D, thanks. Now let's turn to Senior Markets Commentator Mike Santoli for a look at where the wild things are in this market. Mike? Yeah, John, you have to kind of look inside a little bit. You see the S&P 500's broad trend is really just hanging in there fine, although we have paused a little bit starting this month. The equal weighted S&P is down a percent and a half December to date. That's only six trading days.

And you're up less than one percent since we first hit six thousand back in November 11th, I guess. So it's about a month. We're up less than one percent, but we're holding the gains on the mega cap level on the market cap weighted S&P 500. Now, some real hot areas within the market that have really consumed a lot of the energy. Take a look at a few names that pull back hard today. This is just a short term 10 day chart, but it shows you essentially big gains over multiple days and then a reversal lower. Almost everything is happening downstream of crypto. You did have a reversal intraday in Bitcoin. MicroStrategy, obviously, directly related. AppLove and, I mean, presumably, and ViReports, people expected it to get into the S&P 500 as if that was a reason to bid it up crazily. Over a few days, it did not get in

when the S&P announced some new entrants and it backed away. And then, of course, Palantir has been this own self-sustaining momentum story to the upside. So we're seeing a little bit of a very short-term rethink profit-taking right there. Nothing changes anything, but there's some instability within the market that's being masked by the mega caps. Now take a look at NVIDIA versus the Equal Weight Semis. Within this sector, it seems to me there's a bit of a seesaw trade going on, playing the dispersion of Nvidia relative to the rest, especially if you look since Nvidia reported earnings November 20th. You see, Nvidia's kind of done

not much of anything and actually had a little bit of a downward tilt here while you have the average semiconductor stock going up. Obviously, Nvidia is the big known growth story, the quality in the group. And you see how it's essentially almost trading reverse of the rest of the sector. We'll see if that holds up. Sometimes this is just about crowded positioning, kind of rectifying itself in the short term, guys. So interesting, Mike, that the S&P itself has not been wild, but so many of the things that have influenced our thinking about the market overall have been. I wonder if that suggests, or maybe it's too early, that the overall index might be able to weather turbulence in individual, even a couple of mega cap names at

a time. It seems so far that is exactly the case. Now, a lot of the stuff that's really consuming a lot of that speculative aggression is outside the S&P. Right. So it's not literally not even measured in there. You know, look, there's also a case to be made that the overall market is saying it's kind of revving for a broader acceleration. Or maybe we're going to even get, you know, stretching even further as we get into year. And who knows exactly how it breaks from here. But all I see on the smaller cap, a tech centric side, you mentioned the software names, is people trying to relive the nuttiness of 2021. It's an echo boom of those times when we really did go up in a way. And the rest of the market is saying, actually, we're just kind of anchoring to better earnings and the Fed's going to cut rates and and all those other known quantities.

All right. Mike Santoli, we'll see a little bit later this hour. Thank you. We're just getting started here on overtime. Up next, analyst reaction to Oracle's earnings as that stock falls hard after hitting a record high in today's trading, now down about 8 percent. Plus, the CEO of C3 AI is going to join us ahead of his analyst call with his first comments on quarterly results as that stock heads higher. Overtime's back in two. Welcome back to Overtime. Earnings from Planet Labs are out and the stock is losing altitude fast. The commercial space company, which is an Earth observation, reported a loss of per share of two cents. That was better than the estimated loss of four cents per share.

But revenue of $61 million, that was an increase of 11 percent. It was light of analyst estimates for $63 million. Fourth quarter revenue guidance also light at $61 to $63 million versus estimates of $66.6 million. John, I would also just note they talk about the fact that their Pelican 2 with NVIDIA Jetson platform is shipped and ready to launch. Why that matters? Because we talk about the opportunity for AI compute with all the data that's collected for space. And Planet Labs is one of those companies that is now building out the hardware with this next-gen satellite to do just that. So it's one of the many things to watch here.

Nonetheless, shares of Planet Labs are under pressure. It's also been one of those commercial space stocks to fly high since the election, as we do talk about Doge and other ways that the government may consider contracting moving forward. Okay. Pelican 2 is a next-gen satellite? Yes. Okay. With NVIDIA's Jetson platform. So one of the things to watch there. Okay. Well, shares of Oracle are under pressure after the tech giant reported an earnings miss just moments ago. Joining us now is Jeffries analyst Brent Thill. He has a buy rating and a $220 price target on the stock. Brent, it's good to have you on. So let's start right there. Your takeaway from this report, especially since at least where AI specifically is concerned,

a lot of bullish commentary and an OCI growth rate that seems to be a little bit better than street expectations. Yeah, Morgan, it was a mediocre print. You know, revenue was inside their guide. Earnings missed street by a penny inside their guide. And then OCI was 49 percent growth, but we think we needed over 50. Last quarter, they were 52. So growth rates are decelerating. So the entire run-up in Oracle stock has been based on this backlog number. It's not been based on revenue. The backlog growth has been phenomenal. It's still good, but the growth is fading. So I think we have a what you call a pretty right down the middle. No excitement. No, no bells and whistles on this print. And software's had a huge run up here in the fourth quarter, as we call it.

It's been the mullet trade. It's been all business for three quarters. Then we got a little bit of a party here in the last month. But that effectively is these numbers aren't good enough to continue that that run that we've seen. How much of this is potentially seasonality or just choppiness, especially given the fact that Oracle has a large and growing book of government business? And at least here in the U.S., we are operating on a continuing resolution. So you're not seeing a lot of those contracting dollars go out the door. Yeah, I think it's a good point. We think federal will be really good for Oracle over the next couple of years, partly because of Larry's relationship with Elon Musk, partly because

if you look at what Musk has been tweeting about how bad the federal government systems are, Oracle has a really strong presence inside federal. So we think short term there's going to be some disruption. But I think over the next year or two, this will be a huge catalyst for Oracle to have a better federal business, partly because of their relationships, partly because they've been in for quite some time. And they run a lot of the legacy systems that Musk, again, I think he's had two tweets today talking about how bad the software is. So everyone's saying, well, Doge is bad for software. It looks from my interpretation that the federal government's about to go through a massive software upgrade

based on how bad Musk thinks the systems are. So that should be good for Oracle. It'll be good for other providers in our space around federal that have exposure in that space. Brent, how much of Oracle's backlog, you bring that up as an important number, has been because of demand specifically for Oracle versus lack of supply at hyperscalers overall? We've seen others sort of send their overage toward Oracle because I imagine if their capacity starts to open up, there starts to be more capacity overall among the hyperscalers. If it hasn't been mostly or almost all customers coming specifically for Oracle, it could have a disproportionate impact, couldn't it, on Oracle's backlog?

That's right, John. I think, again, Amazon, Google, and Microsoft are better positioned than Oracle in this market. I think a lot of the success has been to exactly what you're talking about. You couldn't get enough capacity from others. They had to go to Oracle. Oracle has, obviously, an amazing presence inside on-premise workloads. They have a great applications business, which others don't. So there's some advantages on Oracle's own that they have. But I think a lot of this is because of the overage and you had to go, hey, you had to go there. It wasn't that the products were ahead. We think in many ways, Oracle was behind the others. So again, I think the risk is if we see this and we've said this,

even the partnerships with the hyperscalers, we do think that Microsoft and Amazon are better positioned. Having gone to the AWS conference last week, I mean, it's incredible the momentum that they're seeing. You just don't feel that same momentum when you talk to the Oracle installed base. So relatively

speaking, Amazon, Microsoft more momentum. But again, Oracle's got some great opportunities, especially given those on-prem and federal workloads coming. All right, Brent, thanks. Oracle's off the overtime lows, but still down about six and a half percent. Well, coming up next, the CEO of C3 AI, which has rocketed higher since the election, further here in overtime, joins us with his first comments on earnings as that stock heads higher by more than 16%. And later, Elon Musk versus Big Defense. We'll hear from the CEO of Lockheed Martin with his response to a viral tweet from Musk slamming the company's F-35 program.

And check out shares of Eli Lilly right now. The company just announcing a new $15 billion buyback. It also hiked its quarterly dividend by 15% to $1.50 per share. Stock's up about 1%. Stay with us. Welcome back. C3.ai stock soaring right now at more than 15% after Q2 numbers beat on the top and bottom line. Margins coming in higher than expected. The guide strong as well. Joining us now exclusively before the earnings call is C3.ai chairman and CEO Tom Siebel.

Tom, what a coincidence having you on the same day as Oracle, your former stock stomping grounds, but your stock is doing a lot better here in overtime. We talked about the Microsoft partnership at Ignite, but let's talk about this quarter and what went particularly right and clarify what happened with engineering services here? Because services people misunderstood, I think, last quarter. Well, I think everything went right, John. Growth was exceptional. It exceeded our expectations. We had 29 percent year over year growth. Talk about prioritized engineering services. This is software that we deliver to our customers. When a customer asks us, a large, important customer, like a Shell or a Baker Hughes or Cargill or United States government, whoever it might be,

to take a feature that we have in our roadmap for the future and deliver it now, we charge for that. And it looks like software. It smells like software. It is software. They use it over the life of their agreement, but that is called a prioritized engineering service. And due to a change in the accounting regulations that came with ASE 606 about 2019 or 2020, you have to account for that as professional services. But if you count the subscription revenue and the prioritized engineering services, I think it accounts for 96% of our revenue in the quarter. So that is very high quality, very high margin revenue. In the release, you point out that in the previous

quarter, Q2, you closed 62% of total agreements through the partner network. How much is the partner network becoming important in understanding the customer need and getting their speed to value locked in as more and more customers really start to pursue getting benefits from their data? John, the partner Network is just everything. Whether we're dealing with Google Cloud, with AWS, with the huge partnership that we announced with Microsoft. Microsoft, the largest software company on the planet Earth, has now taken all of C3 AI's products and put it on their price list, sellable by their salespeople, on their paper, under their contracts, all their salespeople

get commissioned. So this is huge. C3 AI just went from order of 100 salespeople to order of tens of thousands of salespeople overnight. So the partner network is everything. It's something I think where it is a core competence. We're particularly good at it. And with the, you know, we do great work with AWS. We do a lot of good work with Google Cloud, Booz Allen in the federal space, Raytheon in the

federal space. And now this Microsoft relationship is huge, huge, huge. Tom, it's great to have you on. I was just talking with John during the commercial break. I was at the Reagan National Defense Forum over the weekend, and five years ago, you would look at the sponsorship list for what is one of the biggest defense conferences of the year, and it was Boeing and other big defense primes that were sort of in the key sponsorship positions. This year, it's Palantirir and it's all of these software and tech companies and AI startups that are sponsoring that event. And I think it really speaks to the role that tech is now playing when it comes to defense and overall government work. So if you could just

speak to how that book of business is growing versus the commercial business right now. Yeah, I was there too, Liz. Unfortunately, I didn't see you, but it was, you know, very clear, you know, as you listen to the keynotes and you listen to the panels, there were no discussions about submarines. There were no discussion about aircraft. There was no discussion about, I mean, about autonomous vehicles. There was one subject, AI applications, AI applications, AI applications, and AI applications, all sponsored by software companies. It was really quite remarkable. I think we're going to see exceptionally rapid growth in the federal space, particularly with people like Elon advising the president. I think we're going to see fundamental changes in the way that AI technologies and other technologies are procured. You know, that being said, you know, what we're seeing in demand in enterprise AI applications,

both in the federal and the civilian space, you know, kind of sounds like this is a huge sucking sound at global scale. So this is a dramatically growing market. And I think we're very well positioned to serve that market now with Microsoft and other partners. Well, C3 AI stock touching overtime highs above 18 and a half percent as you're talking. Tom Siebel will let you get ready for that analyst call coming up. Thanks for joining us first on Overtime. C3AI CEO. Thank you, John. I don't think I'm surprised to hear that he was at that event. We're going to talk a little bit more about that in just a short while here. But in the meantime, it is time for a CNBC News update with Leslie Picker. Leslie. Hey, Morgan. Police

in Pennsylvania are questioning a man in connection with the fatal shooting of UnitedHealthcare CEO Brian Thompson. Officials say the man, Luigi Mangione, was arrested on gun charges, but not for the CEO's killing. The NYPD, who are now in Altoona, Pennsylvania, questioning Mangione, say he was found with a ghost gun and silencer similar to what was used to kill Thompson last week, as well as a three-page document that some news outlets have described as a manifesto, which spoke to his potential motivations. Rupert Murdoch failing in his bid to change his family trust, according to the New York

Times, citing a sealed court document, a Nevada commissioner ruled against Murdoch's attempt to give full control of his media empire to his son, Lachlan. The judge said Rupert Murdoch and his son acted in, quote, bad faith to change the trust. The trust they were trying to change divides control of News Corp, equally among Murdoch's four eldest children after his death. And Merriam-Webster has named polarization its 2024 word of the year. The dictionary publisher said the word is now commonly used to mean causing strong disagreement between opposing factions or groupings. A little sad that that's the word of the year, but I guess that's the state of the world these days. Back to you.

I strongly disagree with that choice. Good one, John. Polarizing decision. Polarizing decision, yeah. Leslie Picker, thank you. A number of deals in the news today, including a multi-billion dollar ad industry tie-up, a major merger in the insurance space, and rumors of a Hershey acquisition. And there's one group of stocks that stands to benefit from more M&A, no matter what happens and where it comes from.

We're going to explain next. And later, shares of Mobileye getting a lift as the autonomous driving tech firm hosts its Investor Day. It's still down sharply for the year. Mobileye's CEO is going to join us exclusively to break down his message to investors and his roadmap for full self-driving technology. We'll be right back. Welcome back to Overtime. Toll Brothers earnings are out. Diana Olick has the numbers. Diana.

Well, John, it was a nice beat on the top and bottom line for luxury homebuilder Toll Brothers. EPS came in at $4.63 a share versus estimates of $4.33. Revenue of $3.26 billion versus estimates of $3.169 billion. Deliveries up 25 percent year over year. And in the commentary, CEO Doug Yearley said, since the start of our fiscal 2025, six weeks ago, we have seen strong demand, which is encouraging as we approach the beginning of the spring selling season in mid-January. We are well positioned with communities in over 60 markets across 24 states. He also said that last year we increased community counts by 10 percent and are targeting a similar increase in fiscal 2025.

We talked about this toll increasing its price points, its geographical locations, etc., as well as its spec homes that it's selling. So, again, a nice beat for toll in Q4. As they say, they reported a record year. Back to you guys. All right. Diane Olick, thank you. President Trump's imminent return to the White House is already jump-starting the M&A space.

Ad firm Interpublic Group closing higher today after agreeing to merge with ad company Omnicom Group in a deal set to create the largest advertising company in the world. And shares of Hershey soared after reports said Mondelez is considering a takeover of that company. There's also a big deal in the insurance industry, too. So let's bring back Mike Santoli for his take on what this means for the investment banking sector. Mike. Yeah, Morgan. Well, first of all, there seems to be some pent-up demand for dealmaking. We can see this in terms of the volumes each year going back into the 2009 period.

And this is inflation adjusted. So this is total global M&A volumes. You see how low we've been tracking recently. In fact, back to those periods of the post-global financial crisis, we had a really impaired economy and corporate balance sheets are very weak. In contrast, we've been in an expansion. Corporate balance sheets have been strong, but there's been a hesitancy to do deals. I don't think it's just for regulatory reasons. There's also this sense out there that, you know, the absolute dominance of a handful of companies has made it a little bit of a tougher call to decide to go buy something else. But right now, you're right. We have sort of unleashed these expectations

that we have some catch up to do in dealmaking. Take a look at the shares of several M&A advisory specialist investment banks, along with Goldman Sachs here. So there's Evercore. Here's Lazard. This is Perella Weinberg. Those are really quite focused, not exclusively, but quite focused on advisory work. You see these massive moves, not just since the election, even before that. But then we've stepped higher. Goldman Sachs, of course, big M&A banker as well, volume-wise, but is a more diversified firm. I think it says a couple of things. One, people are probably correct that there's a lot more deal talks happening, but also, two, that maybe the market has kind of run ahead of this to a fair degree. So you actually have to start seeing some of that

activity happen and some of these deals close for these guys to get paid, John. All right. Mike Santoli, thank you. Well, up next, the CEO of Lockheed Martin on the future of its F-35 fighter jets, which have been publicly criticized by Elon Musk and others associated with the incoming Trump administration. Be right back. Over the weekend at the Oregon National Defense Forum, I was joined by, among others, Jim Taklett, the CEO and chairman of Lockheed Martin, for a panel focused on securing space. But I also asked Taklett to respond to renewed criticism of the stealthy F-35, which Lockheed makes, after Elon Musk recently slammed the fighter jet on X in favor of more spending on drones,

even as the aircraft was integral to Israel's widespread retaliatory strikes on Iran back in October. It goes back to multiple options and redundancy, having different approaches that an adversary cannot with one fell swoop take out your entire mission capability. So and you have to have a time scale to this right. Drones are absolutely going to be part of the future of the air dominance app or the air dominance mission but we have to methodically step through where we are at time zero, what aircraft do we have today, what command and control systems do we have today, what missiles do we have today what command and control systems do we have today what missiles do we have today what does the uh potential adversary have and how are they using it

and step forward and bringing in that technology i'm pretty sure that a 25 000 drone will have no effect on a jet on a chinese j20 jet when you see 40 J-20s coming across the Taiwan street, you better have 200 NGADs or F-35s or F-22s to meet them, or you will lose and you will lose right away. And the Israelis did demonstrate this in one of their missions, which was precision strike. They used, they didn't say, the Israeli government has not said what aircraft they used, but an ally that was involved in it, one of their senior officials said it was fifth generation. If you add fifth generation in the same sentence as Israel, you can come to your own conclusion. And that mission was so successful, it basically eliminated the sophisticated Iranian air defense system and a number of very

specialized targets to take out their entire ballistic missile production system without losing a single airplane. I mean this is an amazing demonstration of where this technology is. We can augment this technology and we are and this is public so I can say it but we demonstrated the Secretary of the Air Force about two months ago in a classified setting and a month before that in an unclassified setting that we can right now have an f-35 pilot has a knee board with a tablet on it just like you've probably gotten your briefcase and he or she can control eight collaborative combat aircraft

off an iPad while still flying the jet and do it effectively. So F-35s were also used in yesterday's U.S. strikes in Syria on ISIS targets as well. Speaking of drones, unmanned systems and the AI to operate them has been a big focus. A flurry of companies, including publicly traded Kratos and Uniform startups like Andrel Industries and Shield AI were in attendance this past weekend. In light of Doge and a possible shift in defense spending priorities expected under Trump, companies offering products at lower cost

with an ability to deliver quickly are making their cases. So take AeroVironment, which makes the Puma reconnaissance drone and the Switchblade loitering munitions. CEO Waheed Nawabi telling me,rence, as we have long understood it, is no longer efficient. We're faced with a complete different set of threats and adversaries around the world. The type of war that we fought for the last 50 to 100 years since World War II, it's just not the same. It's completely shifted. And so what we have to do is change as a country. What do I mean by that? If one of our adversaries, for example,

China, launched tens of thousands of these small lethal drones coming at us that has AI and autonomy software that they don't need GPS signals and they don't need any communication with an operator and they are coming at us at a swarm, what are we going to do as a country? What are we going to do as a society? That is the fundamental question that we have to answer because that's what's going on in Ukraine today. And we envisioned that a decade plus ago. And we said the U.S. has to shift. Our industrial base has to get ready for this. So, cataract drone technology is taking on greater importance. Capabilities not widespread and deployed to protect many critical infrastructure or even events like this one, where hundreds of Pentagon officials, policymakers, and industry executives

were gathering. In fact, a mystery drone actually made an appearance at the conference on Saturday. Well, outgoing Defense Secretary Lloyd Austin just signed a classified counter drone strategy last week. And companies, including AeroVironment, which is now buying Blue Halo, are investing in the capability. Speaking of M&A, the entire AeroVironment interview is available on CNBC.com, where Nawabi goes into great detail about drone warfighting, which we know is very much in focus, John. The other thing I'd note is all those hmms that you were hearing in that commentary from TakeLit was actually Congressman Rob Whitman, who is on the House Armed Services Committee. So case in point, a lawmaker who was weighing in verbally in that answer, who crafts some of the policy that's going to matter when it comes to defense spending for the future. Interesting stuff.

Speaking of autonomy, Mobileye, a big winner today, but shares of the autonomous driving technology company still down about 60 percent this year. Up next, the company's CEO joins us exclusively with his roadmap for investors and for full self-driving tech. We'll be right back. Welcome back to Overtime. Shares of Mobileye revved higher today after the company kicked off its capital markets day in Munich, Germany, and showcased real-world demos of its supervision and drive systems. Joining us now in an exclusive interview is Mobileye's CEO, Amnon Shashua. Amnon, good to see you again. It's been a while. So I'm really interested in this autonomy roadmap

you laid out and what it means for Mobileye versus Tesla and Google's Waymo. You've got supervision technology where you need somebody in the driver's seat Waymo. You've got supervision technology where you need somebody in the driver's seat paying attention. You've got a robo-taxi, which does its own thing. Explain, please, your argument that your technology is going to end up being lower cost, higher quality. Hello, John. It's good to be with you. Yes, it was our first capital markets day since our IPO. We had people come over and test drive Polestar 4 and Zika and also the IDBuzz, our robot taxi, driving an hour-long and deep urban roads in Munich,

completely hands-free, no interventions whatsoever. And Polestar 4 and Zika are production vehicles. Polestar 4 is coming out now in Europe and hopefully during next year also in the US. And what this shows is a low-cost system, just cameras and a front-facing radar that with 11 cameras provides the necessary perception and AI stack to drive hands-free, but it requires supervision. It requires what we call eyes-on. The next product in the stack we call Chauffeur,

which with additional ladders and additional radars and at some configuration also with our imaging radars, provides a level three on highways. This is a project we're doing with Audi. We investors, you know, prototype vehicles of that. And then Drive, which is a robo-taxi on a platform called IDBuzz partnership with VW. There are already about 100 such vehicles, test-driven in Munich, in Hamburg, in Austin, Texas, and soon in more cities. Okay. And they get to production in about two years.

So self-driving, both the hands-off, chauffeur and robo-taxi are going to be, you project much higher revenue for you guys than basic ADAS, the advanced driver assistance systems, which you're selling today. You presented a version of a chart today. I think we can show representing how your revenue mix is going to be different by the end of the day. Walk investors through how adoption is going to work both in countries and through OEMs. So when we're talking about adoption of supervision, today we have supervision in China and in 2026, starting in the West with the Volkswagen Group, Audi, Porsche and additional brands of Volkswagen.

We are in deep engagement with about nine of our ten biggest OEMs at different stages of nomination. Some of those are really at the finish line. We showed that even if we stay with the current volumes, by the end of the decade, we can triple our revenue. And this is with a very conservative assumption that our volumes do not grow, which I believe will grow substantially. So we're talking about a big spike in revenue. Okay, so right now, kind of zooming out a bit, Intel still owns a vast majority of Mobileye. The company's in a CEO transition right now, a bit of a capital crunch, frankly. Does it matter to you, does it matter to Mobileye if Intel maintains the size of its stake or sells

it? Well, Intel has always been helpful, and even today they're very helpful. We have a strong board, and Intel board members are very helpful. But Mobileye is independent on pursuing its day-to-day business. So whatever is happening at Intel, positive or challenging, has no bearings on our business. Finally, China, with the incoming Trump administration, is expected to be some inflammation of the relationship, perhaps, between the U.S. and China. Does that at all complicate mobilized position, or do you feel that based on your work through OEMs, it's safe? We have experienced a short-term challenge,

especially in related to China and related to this US-China divide and related to local for local as a kind of a strategic move. But I think we reduced our exposure to China. So I think next year, 2025, we kind of took a very conservative approach on our forecast for China

so that we will not be affected by the volatility that is going on there. But yes, there is going to be volatility. There was volatility, and there will continue to be volatility with respect to China. All right. Big update from you at Mobileye in this Capital Markets Day. I'm Anshash, who I appreciate you joining us here on Overtime with that. Up next, all the overtime earnings movers that need to be on your radar ahead of Oracle's analyst call at the top of the hour. Some big earnings movers this hour.

Oracle is lower after a mixed quarter with earnings missing and revenue matching estimates. Those shares are down about 5% now. C3AI jumping after a much narrower than expected loss per share. CEO Tom Siebel just telling us earlier that everything went right for the quarter. And apparently Wall Street agrees because shares are up 15%. Yeah, Mongo interesting too. Mongo is interesting too. Well, that's going to do it for us here at Overtime.