Closing Bell - Closing Bell Overtime: Nvidia CEO Jensen Huang Talks AI Growth & ServiceNow CEO Bill McDermott On How Customers Are Using Its Tools; JPMorgan’s Jennifer Nason On IPO Window 5/8/24

Episode Date: May 8, 2024

Jon Fortt sits down with Nvidia CEO Jensen Huang in Las Vegas, talking the growth of AI, how customers are using tools and partnerships. Plus, ServiceNow CEO Doug McDermott on what’s next for the industry. JPMorgan Global Chairman of Investment Banking Jennifer Nason talks how tech companies are balancing capital return with AI investment. Earnings from Airbnb, Arm, Robinhood, Instacart, Klaviyo and more.

Well that's a square crowd on Wall Street but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan at CNBC headquarters. And I'm John Ford joining you today from Las Vegas at ServiceNow's Knowledge 2024 conference. Coming up we're going to hear exclusively from ServiceNow CEO Bill McDermott and NVIDIA CEO Jensen Huang as the rubber meets the road in AI with some investors questioning whether the near-term impact has been overhyped. But we begin with the market as we await a flood of earnings in the next few minutes. Arm Holdings, Airbnb, Robinhood, Instacart, and Klaviyo to name a few. Joining us now is CNBC Senior Markets Commentator Mike Santoli. Mike, unchanged.

We're unchanged on the S&P right now. Literally, it looks like, I mean, you want to talk about a tight trading range or a holding pattern. Here we are. It's incredible. Yeah, I'm looking right now. Sometimes we love the at least three decimal point unchanged move. What it does show you, Morgan, is that the market is in a relatively comfortable zone. We've had this nice little comeback off the lows of a couple of weeks ago, and we're really lying in wait for the next influential macro data point. That would be inflation numbers next week. And on the way there, it seems like things are fine in terms of banks working well, more stocks up than down almost every day, although today was a close call. And I do think you're able to separate out

some of these big earnings misses for now and sort of rotate around those weak areas. And that's kept the overall index steady. Yeah. I mean, realizing today that we are basically unchanged on the S&P ahead of this, we had had a four-day winning streak. It was a 3.4 percent gain for the S&P 500, the biggest four-day gain that we've seen since November. So perhaps not surprising to see a little bit of churn here. Nonetheless, John just just touched on it. The debate about whether the AI trade is getting long in the tooth, especially after you saw Astera Labs put up a strong report in the last 24 hours and that stock fell more than 9%. And then other tech names, maybe not AI levered, but other tech names like Shopify also trading markedly lower today.

Yeah, I think there is a collective question happening now about whether in the short term, the known beneficiaries of AI have have overshot or at least properly priced in the opportunity. And then everything else that was riding along with the theme maybe got off sides. And so I think we go through these phases. It's impossible to declare, you know, in a really persuasive way that it's anything like done or transitioning to something different. But that has been happening right here. And it's really been subtle for a few months. If you look at like when the the mag seven peaked, when the big platform companies peaked relative to the market, it goes back to February or even late January. So it shows you the market's been looking for other ways to kind of hang in there. And it's doing so by things like

financials and certainly industrials as well, which, depending on how you look at them, all also have leverage to the long term investment. Yeah. And of course, speaking of AI, a name that we're watching closely here after the bell is armed. Those results are out. We're going through those. We'll bring them momentarily. In the meantime, what we're seeing in the bond market, we had an auction yesterday that was well-received, three-year Treasury bill auction, well-received. Today, with the 10 years, maybe not quite so much. We've got, and we're going to Instacart earnings, actually. So stay right there, Mike. Julia Borson has the numbers.

Julia. Hey, Morgan. Instacart beating on the top and bottom line. Revenues of $820 million in the quarter, beating estimates of $793 million. You see shares are up nearly 4% now. Now, earnings of $0.43 per share look like a big win from the 2 cent per share loss that was anticipated. This comes as the company's gross transaction value, GTV, was $8.3 billion in the quarter, topping estimates of $8.1 billion.

Now, Instacart's outlook for the second quarter was, top line was pretty much in range, a range of $8 to $8.15 billion, but forecasted adjusted EBITDA for Q2 in a range of $180 to $190 million, that is above the $169 million street account estimate. The company also appointing a new CFO effective immediately, Emily Reuter, who until now has served as VP of Finance. They say their current CFO stepping down. And CEO Fiji Simo saying in her letter to shareholders that they are focused on selection, affordability and quality. Shares now up about 2 percent. Back over to you. All right. Julia Boorstin, thank you. Mike Santoli. I mean, when we talk about Instacart or Klaviyo, which we're awaiting, or the arm results, which we know

our team is going through right now, we're talking about the class of 2023 in terms of IPOs. And then, of course, with Instacart specifically coming, what, about a week after DoorDash on a day as well where we saw a big move from Uber. What does this tell us? Yeah, obviously better to have the guidance raised on cash flow and more or less affirmed on top line. You know, Instacart, for as much as it feels like kind of a boom company, it's actually not growing that fast, like 10 percent top line this year, slowing down next year. So you want to see, you know, incremental potential growth on top of that, probably why the market's taking it better. All right. We've got Airbnb earnings out. Seema Modi has the numbers. Hi, Seema. Hi, Morgan. Airbnb delivering a strong first quarter earnings beat of 41 cents versus the 24 cent estimate. Revenue came in higher than

expected and gross bookings value up 12% year over year. That is higher than what Wall Street was predicting. While nights and experiences grew by 9.5%, that is a slight deceleration from the fourth quarter's 12% growth rate. And then looking ahead, second quarter revenue guidance from Airbnb did come in a little light. And in regards to pricing, Airbnb says it saw, and here's the key word, modest, a modest 3% increase in overall average daily rates. So perhaps a sign that homeowners are being a bit more flexible as to how they're pricing their homes. Company says looking ahead to the peak summer travel season, they are already experiencing robust demand for travel

around international events such as the Olympics and the Euro Cup. We're seeing shares down about 5% here. Perhaps it has to do with that Q2 guide. Morgan. All right, Seema Modi, thank you. We've got Robinhood earnings out as well. Kate Rooney has the numbers. Kate. Hey there, Morgan.

So it was a strong beat for Robinhood in the first quarter thanks to a surge in deposit growth. EPS, bottom line, 18 cents. That was a 12 cent beat. Better than expected. That was on record revenue of 618 million, up 40% year over year. Net deposits really standing out here, guys. 11.2 billion under management at this point. And they say that the net positive transfers were coming from every major incumbent brokerage firm. That was 44 percent growth in terms of deposits there. Sequentially, retirement balances. This is key. Diversifying away from just that trading revenue, crossing $4 billion. That was more than double from the

prior quarter. Average retirement transfer sizes in terms of money coming in, $90,000. And then those deposits also driving what looks like strong interest income, up 22 percent for the quarter there. Robinhood seeing strong margin expansion as well, adjusted EBITDA margins 40%. That was up from 26% a year ago. And then seeing more revenue per user, $104 versus $93 expected. That was a 35% jump. Monthly actives pretty much in line with street estimates at $24 million.

And then transaction revenue, still really the bread and butter for Robinhood and the top line. It was up 59% fueled really by cryptocurrency trading, making up about a third of that transaction revenue. It was up 232% year-over-year options. And then equities revenue up 16% and 44% respectively. And then other revenue sources, guys, grew 35%, driven by some of the gold subscription revenue offerings there. So diversifying revenue a bit. We are going to talk to Vlad Tenev, the co-founder and CEO of Robinhood. We're here in Menlo Park.

We're going to talk about all that, guys. That's coming up later on Last Call. Back over to you. All right, Kate Rooney, thank you. With shares up 3.5 percent right now. Mike Santoli, want to get your thoughts on Robinhood, especially that commentary that they're basically taking market share to a certain degree from all of the other online brokerages.

It sounds like some pretty strong numbers there. Yeah, I understand why they emphasize that. But these are tiny numbers relative to the size of the rest of the industry. I know that they want to sort of say we're not just a trading app. And that is showing that it is the case. I'm much more interested in the upside in average revenue per user. At over $100 this year, it was at $103. I mean, even by the end of the year, it wasn't supposed to be any higher than like $98 in terms of average revenue per user annually.

So that shows you active trading in all the areas that they benefit from, like crypto and options, especially obviously driving things on that front. So, yep, they're on this path to becoming more diversified. But I don't think Schwab's sitting there saying, oh, no, Robinhood got $11 billion in the quarter. It's still very small average account size at Robinhood as well. So they have some work to do on that side. But in the meantime, I mean, this quarter estimate started at one cent December 31st, and they came in at 18. So clearly they have momentum. Airbnb, meantime, down 7 percent right now in overtime.

Mike, I mean, we are starting to see some cooling in certain aspects where the travel trade is concerned and how consumers are spending their money. This was obviously in focus with Disney, perhaps too in focus with Disney and the move we saw on the stock there yesterday. But here it is with Airbnb with guidance that was a little light for Q2 as well and price increases, daily rates that are quote-unquote modest. For sure. I really think this is a bit of a sore point in terms of investors and their assumptions about the service economy and how strong consumer demand in general is going to be. So I get why the market's reacting like this.

Very interested to hear the commentary on the call about what they're seeing kind of right here and now in terms of consumer demand and trade down and all the rest of it, because it's really been this sort of accumulation of anecdote about consumers getting more price sensitive and maybe having a little bit less energy on the lower end. And we'll see if that's confirmed. All right. Well, we've got Klaviyo earnings out as well. Pippa Stevens has those numbers. Pippa. Hey, Morgan, the stock is jumping here up nearly 8 percent after a top and bottom line beat for Klaviyo.

EPS coming in at 13 cents adjusted. That was two cents ahead of estimates. Revenue at 210 million, also ahead of the 202 million expected. The company's Q2 revenue guidance was essentially in line with estimates. And for the full year, they now see revenue between $899 and $907 million, also ahead of the $893 million that Wall Street was looking for. The company said it now has over 146,000 customers and noted that its revenue was up 35% year over year. That stock up nearly 8%.

Morgan? All right. Pippa Stevens, thank you. Don't miss an exclusive interview with Klaviyo's CEO and co-founder tomorrow, right here, kicking off at 4 p.m. Eastern on Overtime. Mike Santoli, going to go back to you here. Klaviyo, definitely drawing a juxtaposition to what we saw from shop this morning. Shopify. Yeah, a little bit, although I also think you have to consider the setup here. Been a very,

very weak stock. Klaviyo has going into it and probably traders spent the entire day expecting the worst from anything related to it. So seeing some relief right here again, it's going to be all about, I think, what they say about small and medium-sized business and whether they're seeing a little bit of slowdown there, because I'd say for the last two or three months, that's been a focal point in a lot of areas, like Adobe and other software vendors as well, have been flagging the possibility that maybe there's deceleration in that area. Yeah, I know we've got something like 85 or 87 percent of S&P 500 companies once we get through the rest of this week will have reported for this earnings season. Attention

turns to the retailers, which start to report next week and in the weeks after that. Given the fact that we're getting this mixed read on the consumer, how how much does this set up those reports as a catalyst? OK, we're going to hold on to that question. We've got those arm holdings earnings out. Christina Parts and Evelis is going to give us the numbers. So what we're seeing is a full year guidance basically in line for this company. They make money off of royalty and licenses for their chip architecture. EPS and Q4, 36 cents adjusted. So that was a beat. Revenues of $928 million, still a beat as well. The issue is QN EPS, so slightly higher and the full year in line. So that seems to be

what we're seeing right now. License revenue coming in at $414 million. That's a 60% year over year increase, a little bit higher, but you can see the stock reacting quite negatively right now, down 8%. I can come back with more in a bit. Thank you. Okay. Christina, thank you. Mike, I'm going to go back to you because I know we were talking about consumer and what the next catalysts are going to be in terms of how traders react to that part of the market. But then, of course, we do have this arm result where the bar was set high, as we've been talking about with some of these other names.

Yes. Bar definitely set high, as we've been talking about with some of these other names. Yes, bar definitely set high. Again, estimates for the current quarter went up by 50 percent over the course of the quarter for the first quarter, that is. So falling short of that expensive stock, you know, 70 times, you know, next fiscal year earnings. So that's the that's your knee jerk reaction at a time when semi related stocks have also hit a little bit of a soggy stretch here in the last couple of months. Terry Rowland. All right. Mike, thanks. And now after the break, ServiceNow CEO Bill McDermott is right here sitting next to me here in Vegas.

We're going to have the latest on the company's cloud and AI efforts, and later exclusive conversation with Bill and NVIDIA CEO Jensen Huang as that stock sits within striding distance of all time highs. Morgan. Also ahead, John, a rare interview with JP Morgan's global chairman of investment banking, Jennifer Nason, with her take on the market and the outlook for IPOs and M&A and more. Overtime is back in two. Welcome back to Overtime. ServiceNow announcing new collaborations today in generative AI with Microsoft, with IBM, with NVIDIA, also at Knowledge 2024 here in Las Vegas. ServiceNow CEO Bill McDermott joins me now exclusively. Bill, I want to start with Microsoft here because we've been hearing Satya Nadella talk about co-pilots. And what's interesting to me is that you're getting different approaches to AI now combining for the enterprise and for the customer.

Talk to me about this Now Assist and co-pilot tie-up. First, it's wonderful to be endorsed by Satya and a great company in Microsoft. They're wonderful friends of me personally and our company, and it's really delightful. And Microsoft Copilot is really a standard today in the enterprise. They've done such a great job with Azure and Copilot

and really lifting up companies to a new level of productivity and to have them partner with Now Assist. So just think about a person literally in an enterprise today having an integration between Copilot and Now Assist. So for example, you're a person that wants to order a new computer and you're operating in Microsoft, you're seamlessly integrated into ServiceNow where we have all the IT data and information on the employee. You get

your computer, everything is seamless. You don't even know you're in a Microsoft or ServiceNow. The engineering is that tight. And better yet, a lot of people know ServiceNow from, okay, I've ordered something. Maybe I need a new phone, maybe I need a new laptop. Right. I think you're saying you can ask Copilot, where's my laptop? And Copilot checks with Now Assist on where it is in the process. So how much of those integrations of different data sets within the enterprise is what's going to drive where AI goes? You're 100% right.

John, AI is only, again, as good as the platform that it is built on. And we're putting AI to work for people. So from every corner of the enterprise, from IT to the employee experience to how you care for your customers and how your innovators build net new software, we're going to every corner of the office. This is the AI platform for business transformation. And this is not a moment to think incrementally. This is an exponential shift in the enterprise, and we intend to redefine it. What I'm not used to is an enterprise software transformation that's getting this much, I'll say hype, right? Because

normally we see that with consumer. We saw it with smartphone, you know, we saw it with the internet and some of the web stuff, but normally with enterprise, even with cloud, Amazon was pushing for a long time before people started to say, oh, same with software as a service. We're at this inflection moment. To what degree, what might some people be going too far in their near-term excitement about it? Well, you're on a good point. We have in service now 250 tools from different companies right now pitching some AI product. We've actually created a new product we're about to launch, which is a control tower to study the productivity, not only of what our system is doing, but what all the other tools are doing. And what we're finding, John, is some of them are pretenders and we're not.

And the reason we're not is we've been working on this for well over five years now, building models with Jensen and NVIDIA, and we have first mover advantage in the enterprise. And the enterprise is going to be completely rethought with generative AI. So the reason you're feeling that hype cycle right now is it's real. You're seeing a $7 trillion industrial complex in the data center and in cloud computing and the enterprise be completely reinvented by Gen AI. So it's really nice to have the first mover advantage. I don't know how you catch up.

Well, here's what I'm checking on is industry by industry, right? Who is it that really focuses in on what are the right AI models to build? Which enterprises already have their data organized in the right ways, right? They've done the transformation work that they can accelerate with the AI models. Is that the right way to think about it? Absolutely. If you're Novartis and you're

rethinking a 6.6 year clinical trial process and you want to bring that down to a year and a half, you're thinking Gen AI as an answer. If you're Neon in the kingdom of Saudi Arabia and you want to build a smart city, you're starting with generative AI. You're starting with, how do I get the citizens what they need to live a better life and a more productive life? There are so many scenarios. IBM is really thinking about not only how do I reinvent IT operations, but how do I give a great employee experience to my people? That's very similar to Microsoft. Jensen and NVIDIA, they're really running the company on ServiceNow. So you're literally seeing a world where you can move from the chip right to workflow automation. But companies that are listening to this have

been building a fortress of disparate systems for half a century. We are that one clean pane of glass that resides above it all. So once you get the data into the ServiceNow platform, and we've done all that integration work, now you can reinvent the business process. And as I said, John, every workflow in every business process in every company around the world is going to be completely rethought with GenAI. Last question. As you look through those clusters of apps, some living up to their AI claims, some not, what differentiates, what distinguishes in the core work that they've done, one from the other?

The fact is, John, most of them are tools. And they are tool companies with a Gen AI spin on it. But it's a tool. What companies need to know and CEOs that are watching you program and executives, there's only a few platforms in the enterprise that matters. You mentioned Microsoft, obviously. NVIDIA is a sensation, you know, right from the chip all the way through to their software and training the models. These large language models are a fascination.

What's great about ServiceNow and why I believe we are that defining platform of this generation is because we integrate with all of the other ones. And the most important thing is to recognize that 85% of the projects that go on in companies today around digital transformation don't even deliver a positive ROI. And the reason they don't is they're not integrated. So we are bringing the whole enterprise together. It was unbelievable watching JP Morgan today talking about the magic of the ServiceNow platform with all these disparate systems integrated onto one to completely reinvent the employee experience. So this is what's going to change everything, John. One platform that can

do it all. And it really does respect all the other investments because no CEO wants to slow down to speed up. Let's go get it. We see your growth. And that's a big part of why we're here. Bill McDermott, CEO of ServiceNow. Thank you so much. Thanks for sitting down with me. Appreciate it. John, great stuff. And our thanks to Bill McDermott as well. Seven trillion dollar industrial complex. Still wrapping my mind around what that looks like and that opportunity. We have some news from Costco just crossing in the meantime, giving another window into the consumer April sale, into the consumer, I should say. April sales were up 5.6 percent versus the previous four weeks, coming in at $19.8 billion for the month. That was up 7.1% from the same period last year. E-commerce sales rose 14.6% month over month. You can see, though, shares of Costco right now

unchanged. Coming up next, another big interview you do not want to miss. NVIDIA CEO Jensen Huang joins us with his predictions for the future of AI and what he calls the renaissance happening in the tech industry. Stay with us. Welcome back to Overtime. I'm John Fort here at Knowledge 2024 in Las Vegas at ServiceNow's conference. Now, since the last time I was here, about a year ago, sitting down with ServiceNow CEO Bill McDermott and NVIDIA CEO Jensen Wang, NVIDIA stock has just about tripled. So I sat down with them again today to talk about how much farther this AI run can go. Here's what he said. There's a full stack transformation that's happening. Bill said that, said very, very

appropriately and truthfully that we were the first company to hook up together in the world of enterprise to reinvent the full stack. That was five years ago. Recognizing that every layer of computing was going through its transformation. Accelerated computing from general purpose computing, the acceleration libraries, pre-trained models, generative AI, and then recognizing that the enterprise ecosystem, enterprise IT is sitting on a goldmine. They're sitting on a goldmine because they have access to data, customer experiences. They already create tools that are used by the world's enterprises. ServiceNow is used just by every company in the world. NVIDIA is built on ServiceNow. They have the tools. Could you imagine if on top of that, you created suites of digital intelligent agents that help you use the ServiceNow tools, that help you interact, pick tools from other platforms, interact with the ServiceNow platform, we've been able to, through the use of AI,

be able to reduce our service of our customers, of our employees, from tens of minutes to seconds. And so that ability to help self-serve customers reduces a lot of costs for us, of course, but it enhances the customer experience, our employee experience for all of us. How long is this business process retooling going to take to really get escape velocity? Well, you know, one thing, John, this is not going to be helpful to people that decide to have second mover advantage. Jensen was very clear today. I am also very clear. Customers have to start planting the flags now. Jensen gave the example on how fast the train is moving when you watch it go by, but if you're on it doesn't feel so fast. So we already

see with our Gen AI suite of offerings the fastest growing product in the history of ServiceNow and our net new customers that are joining the ServiceNow family here are growing faster than ever. So this is going to be an exponential, not an incremental moment. And when you look at this show floor year over year, it's nearly doubled. And these are developers. These are people that actually are building software, building dreams, driving performance in their companies. And if you see the floor, people are pumped up and ready to go.

We had travelers today talking about reinventing claims management and the underwriting process. Yesterday, we had the Schwartz Group from Germany reinventing retail through AI and real-time experiences for customers. So this isn't like anything else we've ever seen. And when you see text to code in natural language, that's cool. But when you start going multimodal and now you're seeing objects and soon videos and avatars that we're building within video, this is a renaissance, John. This is a once in a generation moment. Yeah. And speaking of multimodal, Jensen, I can't help but notice a

sort of irony in you got these avatars, this presentation showing the future of business, and then at the same time, you've got these cuts happening in the video game industry, right, which was core to sort of NVIDIA 1.0. It's like that gaming technology, maybe developer experience is getting broader, but those who develop it are going through a period of upheaval. What's your perspective on sort of the displacement that's happening at the developer level, even at the same time? Well, AI is, of course, and you mentioned earlier also that 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 engage people. There's a whole lot of different ways you can engage, present artificial intelligence to the market and to customers. You could either have the customer come into the digital system, if you will. That's basically what's happening when you're interacting with a chat bot. Or you could have the artificial intelligence system reach out to you, rendering the 3D digital human, being able to express itself in a much more human way.

It's leaning into you to try to engage you, make it easier for you to engage. We're gonna see a lot more of these digital twinning systems and the future of artificial intelligence is going to require a lot of digital twin systems. So the ability to understand and how to use these multimodal technologies, including 3D graphics, is going to be really essential to just about every enterprise platform. Do you see anybody in particular industry-wise jumping ahead in that? Well, we started working with ServiceNow first. And this was, in fact, the very first enterprise company that we announced

a deep partnership with. In a very short period of time, we built a ServiceNow accelerated computing GPU infrastructure. I think ServiceNow is now the world's first enterprise company with its own super computing infrastructure for their developers, where we collaborate and build pre-trained models. Second, pre-training these AI models,

developing new revolutionary models for coding and otherwise. And then lastly, taking these AIs, packaging them into microservices that can run in every cloud, on-prem, anywhere. We've been working together to basically reinvent every single layer of enterprise computing. And so this is where it's starting first. I also talked to Jensen about ARM, right? Some people might forget, months before this chat GPT open AI thing burst onto the scene,

ignited demand for NVIDIA's technology, they got blocked from buying ARM, which just reported earnings today. So he has a little bit to say about that. Mike, Morgan, it's a time when investors are trying to figure out how much more potential there is in the near term. And so this is some signal on what the enterprise is actually getting out of some of this software right now.

Well, I'll tell you, John, as Jensen Huang was talking about that relationship with ServiceNow, you saw the stock. ServiceNow right here in overtime start to move higher. It's up about, well, now it's up about eight-tenths of a percent, but it jumped up about one and a half percent as he was making those comments in real time. I find it very fascinating what he had to say about digital twins, what he had to say about human-like AI that's reaching out and sort of what this next stage is going to look like. And to your point, I know you've talked about this so many times, John, on the show, how integral NVIDIA is not just to the picks and shovels and the semiconductor piece of this, but also to the inferencing layer and to all of this software and these partnerships with the likes of ServiceNow

that really create this incredible moat around the company. Yeah. And Mike, there's reinvestment happening, even as Microsoft is majorly investing in AI. You see them making these cuts in the Xbox division. Yeah, right. Everybody seems to be sort of calling for the benefit of the thing that seems like they don't want to let it go by. These alliances are fascinating to me, too. And really just the big picture understanding that these CEOs have that, you know, every single technology wave, at first it seems like the hardware is really the way to play

it. And ultimately, the hardware kind of gets commoditized and it's really about software, whether PCs or fiber or phones or whatever it is. And, you know, you're seeing that again right here and obviously NVIDIA trying to maneuver for it. And then, you know, from an investing perspective or a thematic perspective, I am also fascinated by NVIDIA's role in the market ecosystem for all this, because this stock, I talk about all the time, it's the third biggest in the world. It trades $40 billion worth of shares every day, whether anything's going on or not. It moves a couple percent a day. You know, it's one of these sort of play things and these focal points of everybody's excitement and energy on both sides of it. And you need a

charismatic leader to kind of say, here's what's next, here's what's next. And so far, that's working. It's totally taken the place long ago of Tesla in terms of that role in the market. Agreed. John, great stuff, as always. We'll see you again a little bit later. Mike Santoli, our thanks to you, too. Time now for a CNBC News Update with Bertha Coombs. Bertha.

Hey, Morgan. President Biden is set to restrict asylum access at the U.S.-Mexico border, according to a Reuters report, which says the new regulations could be announced as soon as tomorrow. Under the new rules, immigrants and migrants would be assessed in an initial screening to determine whether they should be barred from asylum and deported.

Among the assessments, they would include criminality and security threats. Nearly 90 percent of adults over age 20 in the U.S. are at risk of developing heart disease. That's according to a new report in the medical journal JAMA, which is warning about the risk of so-called cardiovascular kidney metabolic syndrome, which is less severe than full-blown heart disease, but affects the brain, heart, liver, and kidneys. A lot of the reason, obesity. And indie rock icon Steve Albini has died.

Albini was known as the frontman for the group Big Black, which was set to tour later this year, and for his work on the Pixies' 1998 album, Surfer Rosa, and Nirvana's second album. He was just 61 years old. Morgan? May he rest in peace. Bertha Coombs, thank you.

Up next, a check on the names making big moves on earnings in this busy after-hours session. And later, J.P JP Morgan's global chair of investment banking tells us how AI is driving the next wave of dealmaking. Welcome back to Overtime. Duolingo falling despite beating estimates on earnings and raising its full-year revenue guidance. The likely culprit, monthly active users coming in below fact-set estimates. Those shares are down about 11.5%. Different story for Bumble, though.

Those shares climbing in overtime after Q1 revenue topped analyst expectations. The dating app parent company also reporting total paying users and total net ads above estimates. Those shares are up 6%. Up next, JP Morgan Global Chairman of of Investment Banking Jennifer Nason gives us her outlook for the IPO market and which sectors are most ripe for dealmaking. Stay with us. Welcome back. Meta, Alphabet, Amazon all launching their first ever dividends recently.

Amazon did not. Apple announcing the largest corporate buyback in history last week. And as expensive investments in AI ramp up, tech companies are facing challenges creating the right cocktail mix for capital allocation. Joining us now is Jennifer Nason, Global Chairman of Investment Banking at J.P. Morgan. J.P. Morgan was the lead underwriter of recent IPOs, Viking Holdings and Astera Labs. She joins me here on set. It's so great to have you back. Thanks for being here. Thank you for having me back. There's a lot to talk about, but let's start with what you're seeing in the IPO market, given the fact that we have seen some more names go public. We've got another one, a Chinese company that's going to price tomorrow. And even just today, I'm not going to get into the earnings specifically with you,

but some of the class of 2023 reporting results today and sort of casting a light on that opening that we did see last fall with Arm, Klaviyo and Instacart. Yeah. And I was watching in the green room as all the earnings broke. So, yes, in fact, I think you and I sat down together in the fall just as those IPOs had happened. And I was very hopeful that we'd see an opening of the IPO market. So we are seeing an opening. It's a little slower than I would have liked to have seen. But the good news is that first class of IPOs has traded pretty well and Klaviyo is now up today on those earnings. So as an asset class, IPOs have done pretty well. So that's good. Investors will feel very good about that. But now I feel

we're in this second wave where we had the big names, well telegraphed, a lot of investor education, priced well. They had cornerstone investors. It was all very sort of staged for success last year. Now we've opened the aperture a bit. So now we're seeing some mid-cap names, not as familiar names to a lot of people. Investors are now willing to consider a broader mix. Do I still need profitability? Sure. But am I willing to wait or see it on the horizon? Maybe. Do I want a little more growth? Maybe. Do I need a cornerstone investor? Probably not. So we're just seeing that aperture widen and we're hopeful that during the course of 24 that aperture will just open and open and hopefully by 25 we're seeing an ipo market that feels more back to normal what is

back to what does back to normal actually look like and i ask that because we've been comparing what we've been seeing in the ipo market for the past two years to 2021 that was not normal no that was crazy that was not normal so my definition of normal is that the market is willing to consider really any company in the IPO market that's priced correctly. So you can be a slower growth or no growth, but a returning capital story. You can be a high growth, you know, highly revenue generative company willing to think of everything, but it's just got to be priced correctly. Last year, for a big part of last year, investors only wanted to see one type of company. Had to be big, at scale, profitable. So they weren't willing to listen to other stories. So my definition of a normal market is a willingness to consider pretty much all stories, but drive at

pricing. OK. And we're talking about exit strategies. Obviously, we've started to see this pickup in dealmaking as well. That's something you and I talked about last fall to M&A activity starting to increase. What are you seeing in terms of that right now as we have seen some larger deals start to get announced, even as the regulatory backdrop is arguably a little uncertain here. Yeah. And some of those deals like HPE and Juniper, IBM did a deal recently, really by the names to some extent taking advantage of the big tech names being off the field for regulatory. They're searching for assets. So M&A right now is a slog. Every deal is difficult. Things take a very long time.

Things are often highly structured. A lot of things are dying at the finish line over diligence issues or, you know, concern about price that's been struck. So it is really hard. But a lot of things are happening. And I'm hoping that as the market continues to sort of settle down, that we'll see less things failing at the finish line, which is really what we're seeing a lot of right now. We just heard from Bill McDermott of ServiceNow, Jensen Huang of NVIDIA, really talking about kind of the first mover advantage in this new era of AI. How much is AI spurring dealmaking? How much of it is encompassing the conversations you are having with your clients right now?

So it's everything right now. So this is the dilemma for a lot of companies as they look at assets. So AI is happening at a pace that I think most people don't appreciate. So you can't afford to stand still. So you might be nervous about the price you're paying for assets

or nervous about the investment, just the organic investment you have to make. But the risk is if you're too cautious, you're going to miss the wave or fail to build that sustainable comparative advantage. So that is a big challenge. And you mentioned at the beginning here about capital allocation. So that's really, to me, one of the big stories right now. So if you're Google announcing a dividend, Meta announcing a dividend, part of this is to educate your shareholders that they can't just view the value prop as sort of one dimensional. They need to understand that there's a lot of investment going on. It's going to be choppy as we see the early stages of this AI revolution.

And so they're offering investors a variety of ways in which to make their return. It can't be one-dimensional anymore. And if you're a company that has been very formulaic about capital allocation, so you know how much they're going to spend on dividends, buybacks, organic investment, and so forth, and M&A, then you want to create some degrees of freedom to adjust that formula. Nobody wants to be trapped with investors thinking everything's the same quarter after quarter and I know how I get my return. Everybody needs degrees of freedom in which to operate right now. So capital allocation has become a big story and we're spending a lot of time with clients on that subject. It's good old corporate finance 101 in my book.

Corporate finance in the age of AI. Yes. And a story not going anywhere. Thank you for bringing it to us, Jennifer Nason of JP Morgan. Great to see you. Thanks to have you here on set. Thank you. Well, up next, John has much more of his exclusive interview with NVIDIA CEO Jensen Huang.

John. Yeah, fascinating conversation you had there with Jennifer Nason. Well, coming up, NVIDIA had more to say about ARM, which just reported after the bell today. It's down in overtime, but that doesn't mean it's down in Jensen Huang's heart. We'll be right back welcome back another check on uk-based chip designer arm holdings in overtime it's down about seven percent um before this latest ai revolution took off nvidia ceo jensen huang tried to buy arm back in 2020 was shut down by regulators about two years ago they said the 40 billion dollar merger would hurt competition drive up chip prices i talked to

jensen about how the advent of ai has shaped the world since then. Look, we're going through the single greatest platform shift in the computer history. Computing hasn't really changed since the IBM System 360 invented central processing units. And now we're going through two at the same time, accelerated computing from central processing units to generative AI, completely revolutionizing how software is done and what software can do.

And so we're going through that incredible platform shift. Lots and lots of opportunities, of course. But I got to tell you, I love ARM then. I love ARM to this day. And everybody now realize what a great franchise it is. And so anyways, hey, look, it would still be a great franchise it is. And so anyways, hey, look, it would still be a great franchise inside NVIDIA. I'm still putting a pitch out there.

I'm just kidding. It's a great company. I love working with them, and they're great for the world. They're really not going to let them buy it now. Okay, more on AI tomorrow, Morgan. Get this, the creative side. Idris Elba, I had sat down and talked to him about how AI is changing creativity.

He's connected to service now. You'll see what that's about. But he's thinking a lot about this because he's creative across more than just movies and TV, also in music. Check that out tomorrow. Oh, I'm looking forward to that. Talk about a tease. John, great stuff in Vegas today. Thank you.

Up next, the key names on tomorrow's earnings calendar that you need to keep your eye on. We will be right back. More earnings are coming your way tomorrow, including Warner Brothers Discovery, Roblox and Dropbox. And tomorrow is Norfolk Southern's annual shareholder meeting. Investors will vote on a proposal by activist investor Ancora on whether to replace board members and senior management, including a CEO. Alan Shaw will be watching that one closely.

In the meantime, S&P finishing the day literally unchanged. That's going to do it for us here at Overtime.