Closing Bell - Closing Bell Overtime: Nvidia Facing Possible Antitrust Suits; Morgan Stanley’s Seth Carpenter On Latest Moves From Central Banks 6/6/24

Episode Date: June 6, 2024

Nvidia posted a down session after news of antitrust lawsuits against the chip giant being mulled by the government; the stock is splitting 10-1 after close tomorrow. Melius analyst Ben Reitzes breaks down what the flurry of headlines mean for investors. Earnings from Vail Resorts, Docusign and Samsara. Morgan Stanley Global Chief Economist Seth Carpenter on the major moves this week from central banks and what it means for the Fed next week. Plus, Procore CEO Tooey Courtemanche, who heads a construction management software company, on what he is seeing in the labor market and his fellow software sector. 

Well, markets broadly, NVIDIA specifically, taking a break from their record-setting push higher, just about bang on even as attention now turns to tomorrow's jobs report. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fork with Morgan Brennan. Well, ahead this hour, earnings from software companies DocuSign and Samsara, plus a read on high-end travel from Vail Resorts. We're going to bring you those numbers as soon as they cross. Plus, Morgan Stanley's global chief economist, South Carpenter, joins us with his prediction for the Fed after the ECB cut rates this morning ahead of tomorrow's labor data. And will government regulation put the brakes on NVIDIA's record run? We're going to talk to one expert about whether or not

reports of an AI crackdown are making him rethink his bullish thesis. First, though, let's get to today's action, such as it is, and pause in the rally ahead of tomorrow's jobs report. See there? I mean, the Dow's a bit higher, but the S&P and NASDAQ will have to, well, the NASDAQ settles immediately. So no record there. The S&P, we'll see. Like up a point-ish, down a point-ish. I don't know. Let's bring in our market panel. Barbara Duran of BD8 Capital Partners and Megan Hsu of Wilmington Trust.

Good afternoon. Barbara, we're above 5,300 on the S&P, but bumping around here, caught between excitement that inflation is cooling and fear that growth is cooling. Which matters more? Well, I think we saw Tuesday and Wednesday the action was really worries about, well, maybe growth is cooling too much. Because you had the manufacturing was weaker than expected on Monday. You've had the ADP report today. You've had all sorts of indications that things are softening, which is what the Fed has wanted. But then you saw the action yesterday and Wednesday, I meant Tuesday on the other.

And that was very positive. So I think that's really about the Fed is we'll probably have to do one to two cuts. Some people had come down to no cuts, but you saw instantly the probabilities go up on the Fed funds futures. And so that's looking very positive here. So and you've got earnings. You know, that's the question is, will this slow down hurt earnings? But we just went through a great quarterly earnings reports with very optimistic forecasts from a whole range of companies. And I think that's what's going to continue to drive the market here. I think a normal pause here since earnings have finished will be expected.

But as we've been talking about, the nonfarm payrolls are tomorrow. That's going to tell us a lot. And then next week, we still have another round of CPI and PPI, not to mention the Fed meeting. So I think there's some important data coming up right now. So we will get a lot of data, Megan, on wages as well as employment overall. Is good news good news in this report? And perhaps that we're going to get tomorrow morning on labor and perhaps more important is neutral news like the expected. Is that going to be good or bad? That's a good question. I do think we've had a little bit of a shifting back and forth between do we want to see weakening data because that suggests inflation will not reaccelerate or do we want to actually see

good data because we've had really strong economic data ultimately that has translated into really solid earnings from companies and ultimately higher stock prices i still think at the end of the day as much as we want fed cuts, I would prefer to see better economic data that translates into stronger revenue and stronger earnings growth from companies. We are expecting and hoping for a bit of a moderation in the labor market and job growth that is going to settle around 150 to 200 net new jobs. Importantly, wage growth, which is pretty tightly correlated to things like the quits rate, we expect to continue to moderate. So that really means that you can get good job growth and not worry so much about higher wage growth pushing through into higher inflation.

Barbara, we've seen Treasury yields move meaningfully lower here in recent weeks. And I wonder how much that is signaling about this slowdown in growth, A, and B, the fact that we do see yields moving lower. How much that's also potentially pushing people off the sidelines out of things like money market funds and back into equities? Well, I think it's all of the above. You know, I think that was why people were a little bit worried in the beginning of the week because yields were coming down, yet stocks weren't responding. So it's like, oh, gosh, maybe there's more weakness than we realize. But I think as money market funds get less attractive, we've said over and over,

there's $6 trillion in cash sitting there. There's been $40 trillion in wealth created since 2020. And the retail investor is starting to come in. So I think, and you've seen a record inflows into ETFs, equity ETFs in particular. And I think you've seen all the publicity that Roaring Kitty is getting, turning a $53,000 stake five years ago into nearly $300 million. And with NVIDIA, you know, and the action there and this 10 for 1 split coming up, I think the retail investor has the cash to invest. And I think they're coming back in. I think that's been important support. So, yeah. Megan, I do want to get your thoughts on some of these mega cap tech stocks like NVIDIA, for example, because they have been powering equities higher. And yes, it looks like

we're finishing the day lower for the major averages, but not before kissing a new intraday record earlier in the session. Do you continue to stay invested in those names or do you diversify and broaden out? Yeah, I think the second half of 2024 and beginning of 2025 will really be a story where when you're thinking about building a portfolio balancing exposures is what is going to work- and by that I mean continue to. Hold on to and own

that mega cap tech AI trade but also look to broaden into other parts of the market that. Just haven't participated quite as much with performance and certainly as a share. Of the S and P five hundreds earnings if into other parts of the market that just haven't participated quite as much with performance and certainly as a share of the S&P 500's earnings. If you look out over the next year, we expect that to be more balanced. I think you're going to continue to see AI play an important role. It's

just going to be maybe less about hardware and more moving into some of the other areas, software, cloud, which have lagged a bit, and then even some of the sort of second order effects of AI, whether it's power generation that we've been seeing moving utilities, or some of the smaller companies that might be the biggest beneficiaries of the productivity boost. So I think it's important to be really balanced as you're thinking about managing risk in what is probably going to be a really challenging environment, a good environment from an economic perspective in terms of continuing this cycle and getting that soft landing, but a much more differentiated stock market where active management should do well.

And it's going to be really important to find companies that are executing. All right. Let's get to Kate Rogers right now. We told you about earnings. DocuSign numbers are out. The stock is a little bit higher. Kate Rogers right now. We told you about earnings. DocuSign numbers are out. The stock is a little bit higher. Kate Rogers has the numbers. Kate. Hi there, John. This is a strong first quarter here for DocuSign. Q1 adjusted earnings of 82 cents. That's better than the 79 cents analysts were looking for. Revenues 710 million, also better than the 707 million analysts were looking for. The company's saying its board also approved an additional $1 billion buyback program.

And it also sees its Q2 revenues in the range of $725 to $729 million, that range a little bit higher than the $726 million that it had originally guided for. As you can see, the stock has been up and down. It's slightly higher at the moment. Back over to you. Indeed it is. Let's see. Barbara Duran, I want to go to you on DocuSign.

And I guess some of these relatively smaller stocks in general, I also wonder, you're talking about cash on the sidelines. What if with these yields, that cash on the sidelines is just waiting to buy the dip in the overall market? Well, I think that there is a lot of money waiting. And there are different names that I think people can look at, whether it's an Uber that's traded off. And you mentioned DocuSign. I think DocuSign is not probably a name to buy. We want to see growth reaccelerate there. And it looks like, you know, we've got to hear what's going on, but probably has not. So, yeah, I think you stay, you know, as Megan said, you stay along these mega cap AI plays and the derivatives that will flow. People are doing a lot of work on who

are the beneficiaries beyond those who are adopting AI tools, you know, for their own productivity. But I think you can look, you know, in some of the secular names, secular growers in industrials, whether that's the energy transition plays. We're talking a lot about the power needs that are coming along with AI over the next three to five and 10 years. Aerospace and industrials, that's going to be a secular play, it looks like, with all the geopolitical events. So, yeah, I think you can wait for some pullbacks. But I think it's also dangerous not to have some positions established if you've just got, you know, a ton of new cash. OK, Barbara Duran and Megan Shue, thanks for kicking off the hour with us. With all the major averages down slightly, except for the Dow, which finished up about two tenths of one percent.

Let's get to senior markets commentator Mike Santoli for a look at market concentration. Everyone's so obsessed with it. But is it really that bad, Mike? You know, Morgan, I feel like it just is. And so it helps to figure out exactly what we're objecting to when it is a very selective market. Let's first take a look at the NASDAQ 100, which is the major index that has been the clear leader. You know, NVIDIA is something like eight and a half percent of it up 30 percent over the past year. This year is equal weighted technology. So yeah technology has been really strong. But if you just account for size and you count all the stocks equally it is not quite kept pace with the Nasdaq 100. There on the far right is the Nasdaq 100 equally

weighted. So you see how that is really struggling. It actually done almost nothing here for the better part of four or five months. It shows you that there is obviously a lot of preference for the larger names. Now, take a look at this very long term. This is from Michael Mauboussin, who is now at Morgan Stanley, a longtime investment researcher, finance academic in some ways. And so this shows you the concentration of the stock market going all the way back to 1950. So right now, by the way, this is at the end of 2023. It's even higher right now. The top three in the market at the moment are even 20 percent of the S&P 500. But you see precedent here. In the early 60s in particular, you had a much more top-heavy market than we had for most of history. And what he finds is that in bull markets, there is going to be a tendency of kind of gathering strength

at the upper part of the index. He also tests for the possibility that in here, the market wasn't concentrated enough to account for the better profitability of the biggest stocks and their eventual very good return. So essentially, we can observe it. We can say it makes stock picking really hard, or at least it makes it harder to beat the index. But what you can't say necessarily is it makes it unhealthy or unwieldy or inherently unstable.

Everyone does like to point that out. That's like the very end of the 90s, right before the tech bubble did crash. But that was also, you know, 99 was also a year when we had 500 or hundred IPOs and they all doubled on day one. I don't think we see that today, Morgan. When you see this type of market concentration looking back over the last, I don't know, call it 60 plus years here. Is there any correlation with rates and a higher rate environment versus a lower one or no? It's sort of it has nothing to do with that. Yeah. I wouldn't say that there's a correlation to where you would actually say that's causal at this point. You know, the very early 60s rates were really, really low throughout the 60s. They did rise. And then in the 90s,

I mean, longer term yields were mostly in a downtrend, but the absolute levels were higher than they are right now. You know, we're talking five and six and seven percent 10 year treasury yield. So I'm not sure it's rate specific. It seems to be kind of economic regime specific at this point. In other words, a kind of a winner take most economy back then, by the way, it would have been, you know, G.E. IBM, AT&T as mostly the larger ones. That's literally what I was about to ask you, Mike. Thank you, Mike Santoli. All right. Thanks, Mike. Vail earnings are out.

Meanwhile, Sima Modi has the number. Sima. John, Vail Resorts reporting earnings that came in below street expectations, $9.54. Wall Street was looking for $9.97. Sales a bit light as well. Past product sales through May for the upcoming 2024-2025 North American ski season decreased approximately 5%. The CEO citing unfavorable conditions across their North American resorts. That's really in reference to weak snowfall across its portfolio of mountains. The company also pointing out that Lyft ticket visitation did not return to typical historical

guest behavior for the spring, primarily at Whistler, which was down significantly relative to the prior year. Despite these challenges, they say that they were able to grow resort net revenue. You'll see the stock is down another 6%. And this has been an underperformer across this travel sector. Analysts talking that up to bad weather, not enough snow, but also just the inflation that we're seeing across the travel landscape. Back to you. Not enough snow falling.

That means the stock falls. Thank you. Sima Modi. Samsara earnings are out. Kate Rogers has the numbers. Kate. Hey there, Morgan. Yes, another better than expected Q1 for Samsara.

EPS adjusted coming in at $0.03 per share. That is better than the analyst's estimate of $0.01 per share. Revenue is also a beat here, $281 million for the quarter, better than the $272 million that analysts were looking for. It also gave some guidance here for Q2 revenues in the range of $288 million to $290 million. That's a little better than the $287 million that analysts had expected. Also sees EPS in the range of flat to one penny versus the one penny estimates here. And full year revenues in a range of $1.2 billion to $1.21 billion versus the $1.19 billion

estimated by the street here. And also EPS in a range of 13 to 15 cents, a little better than the 12 cents estimated there. But as you can see, the stock is lower by more than 7 percent now, guys. Back over to you. All right. Kate, thank you. The street used to a little bit more of a beat on the guide than expected. And Samsara just about bang on here. The CEO, Sanjay Biswas, is going to join us exclusively tomorrow on Overtime to break down these results. After the break, we're going to talk to an expert who says NVIDIA deserves this rich valuation. But could today's reports of a government crackdown on

NVIDIA and other AI leaders, or at least an examination of them, going to change the thesis? We're going to discuss next. And Netflix kicking off its annual meeting in under two hours, where shareholders will vote on a proposal for the company to report on its use of AI. We will tell you what to expect from that meeting. Overtime is back in two. Welcome back. Shares of NVIDIA fell today amid news that the FTC and DOJ are set to open antitrust probes into NVIDIA, Microsoft, and OpenAI to investigate their dominance in the artificial intelligence industry. This happening as NVIDIA surpassed $3 trillion in market cap yesterday and ahead of the company's 10 for 1 forward stock split that's going into effect tomorrow after the close. Joining us now to discuss is Ben Reitzis from Melius Research.

Ben, it's great to have you on. OK, stock came under pressure today. We saw some selling. However, we did see an incredible run up post earnings last month ahead of this. So I do want to get your thoughts first on these antitrust headlines, these reports, whether there is any concern to be had or any risk to be had to the stock, especially as it trades at these levels right now. You know, I'm still trying to get my head around this antitrust thing. You know, these are hard for an analyst to opine on, but I'm just wondering what they're thinking here.

I mean, are they mad at NVIDIA for figuring out the world was going in this direction before anyone else, inventing the best chips, innovating, changing the world? You know, we'll just have to see what happens here. But the DOJ under this administration is probably investigating all my mega caps that are in the Mag 7 in some way, shape, or form. And we're focusing on the fundamentals. We have to deal with this with Google. We have to deal with this with Apple, now Microsoft and NVIDIA, which are all under my coverage. And I think by focusing on the fundamentals, we're going to be in the right place. I'm not really sure with NVIDIA what they can really say, because, you know, you're going to maybe you got to blame some of the competitors for just not

seeing the GPU market like Jensen did, you know, several decades ago. And I just focus on the fundamentals, guys. OK, so stocks down 1 percent today. It's up 10 percent just since the start of this week. Do you buy on the dip, especially as we do look ahead to the stock split? Well, we you know, we really feel that this is obviously the closest. This is the next Apple. We were lucky enough to be an analyst covering Apple and watching them create an ecosystem where they did a full stack solution basically and allowed you to monetize a whole app ecosystem. This is the AI version of that and that's

what they're doing. They are creating a solution that's turnkey to allow you to monetize AI and that hopefully is ahead of us and we just feel if you believe in AI and you believe it's going to be monetized by the world's largest custom companies and then filter down, this is the way to play it. We've been pretty vocal about forty five dollars and earnings power should be demonstrated within an investable time frame. It's well below 30 times that even at today's valuation. So we have some faith, Jensen, here in the crew. Ben, a year ago, it was tempting to say, hey, NVIDIA's had a nice run. It looks like maybe it's expensive. Microsoft has had a nice run.

Maybe we should look for other names that are going to benefit from AI that haven't, like Intel, like IBM. Now, you continued to like NVIDIA, but you've also liked Intel and IBM. Intel really hasn't done well. IBM hasn't done great. What's the lesson in that? And what are the kinds of catalysts that would cause some of these second or third tier players to do better or might they just not? Well, you know, Intel and IBM did great last year. Both have had a pullback. Intel was up 93 percent last year. I'm not apologizing for that. I think that IBM also had a really good run. I think that what we need to do is as we move to more of the inferencing phase and we need to enjoy AI, more folks can benefit. That's been our call this year. So in the PC market, another name that we've been talking

about quite a bit is Dell, which has recently pulled back. That's one way to play it, who also sells the servers. But we think that a whole, you know, we haven't even gotten started here yet. I mean, we're just getting co-pilot plus PCs. We're just seeing AI get into industry. So once we get going and models go into production and we actually have more apps, then a lot more folks can benefit. Right now, these guys are taking all the oxygen out of the room. Finally, if the economy overall continues to slow, it seems like if the AI spend is going to continue, there are going to have to be more and more pockets that companies within themselves are going to have to pick to pay for that. Does that cause you to be less bullish about some other area because you expect AI to continue to be strong? Well, a couple of months ago, we wrote a piece called AI is eating software.

And we didn't realize that it would all come together within two months. And, you know, you really are seeing a once in a lifetime, in my opinion, and we're really in the early innings, shift towards the picks and shovels, not just semis, but also good old-fashioned hardware. If we're indeed moving to AI factories where software is produced on the fly, a lot of the equipment that we've left for dead is going to have a new life, not only in the cloud, but even trickle on to on-prem. And so that's been our big call, probably our seminal moment as an analyst, again, in this second leg of my career. And we're really feeling like we're really you know feeling like we're really just on the precipice of what's going to take place if we are standing up factories for software a lot of things are going to change uh and nvidia of course is is is the horse and

we're going to keep on the story ben writes us thank you thank you thanks john well ecb cutting rates this morning following the bank of Canada's move yesterday. Will the Fed take any cues from its international peers? We're going to ask Morgan Stanley's global chief economist, Seth Carpenter, next. Welcome back to Overtime. The European Central Bank cutting its interest rates today, the first time since 2019. The move comes after the Bank of Canada cut rates yesterday. Will the Fed follow its peers sometime soon? Well, joining us now is Seth Carpenter.

He is Morgan Stanley's global chief economist. Seth, it's great to have you on the show. I'm going to start right there because I realize ECB cuts today, but they're also very, very cautious in the language they used to couch that 25 basis point move. We we know it's baked into the market. The Fed's made it pretty clear with the meeting next week. We're not going to get cuts. But how high is the bar, especially as other central banks start to move for the Fed to actually begin to do the same? I think it all comes down to inflation and how the inflation data come out over the next several months. So we actually have a baseline forecast of three cuts this year. So that's more than what the market's pricing. And we think what's going to happen is

we'll get CPI next week. We think that's going to show further disinflation. It's going to reinforce the idea that the first quarter high inflation data were noise and not signal. And then that's going to get the Fed more comfortable. And then as we get another couple of months, by the time we get to the September meeting, we think the Fed will be ready to cut. I think what we saw from the ECB today, the cut that was already baked in, but then that very cautious tone where they want to wait and see how the data turn out, that's where central banks are right now. We went through an explosion in inflation,

an episode very few people have seen. We haven't seen it in DM economies in decades. And so they think they know where they're going, but they really want to make sure they get this right. So on the one hand, we know labor tends to be a lagging indicator. We also know that some of the data we've gotten even just this week shows signs of softening the labor market, which perhaps makes tomorrow's jobs report that much more important. On the other hand, we had Paul Hickey from Bespoke on yesterday, and he looked at the data over the last 30 years, and he said there's only been one time, one time that the Fed has cut between May and November in an election year. And that was October of 2008. So where does that leave us?

So I think you can probably pick out all sorts of facts in different ways. I will say from personal experience, I was at the Fed for 15 years. The 2000 election that was there there 2004, 2008, 2012. That place actually really does hew to their dicta of being nonpolitical. And the fact that it's an election year, I really, really, really don't believe for a minute has anything to do with what they're going to do with policy. They're looking at the data. They're looking at their forecast for how the economy is turning out. They're going to try to make the best decision they can based on the available information. So I wonder what three cuts where you're still targeting right now

means in the sense that two months ago, I think the market would have taken the idea of three cuts as, yay, stocks can go higher because, you know, conditions will be. But today, the idea of three cuts, when you just had this hawkish cut by the ECB and concerns that the working class consumer is really slowing, it could actually signal, well, maybe stocks can't go higher because maybe the economy overall is struggling. And that's the only reason you would get to three. What do you say? I mean, I take your point that the driver of the three cuts, what causes interest rates to come down is every bit as important as the fact of interest rates coming down. So in that regard, I completely agree with you. I would, however,

take a different view here. We think the nonfarm payrolls report that we're going to get tomorrow is actually going to be a little bit stronger than what we saw last month. We think some of last month was overdone and we'll get a little bit of a payback. The main reason why we see the Fed cutting this year three times and not what the market's pricing is because we think inflation will actually come down more than what other people are thinking. And I have to suspect that that's just a good thing overall for the economy. For the lower part of the income distribution, where we're starting to see people struggle, lower interest rates will make their interest expense lower as well. So it'll

end up supporting things a bit. So tomorrow, what's more important, the overall headline number or wages? I think they're both right in there. It's interesting, though, because we're looking at just a little bit over 200 for the headline number, 180 something for the private number. So like I said, a bit better than consensus, a bit more, a bit of a payback from last month. But there was a time when consistently strong jobs data like that would have caused you to think, well, gosh, is the Fed going to be able to cut it all? And now we're in a place, because we know the labor supply has been boosted by this immigration boost surge. Chair Powell's been saying we've got a bigger economy, not a tighter economy. And so I think the jobs report is actually only important

if it shows a lot of weakness. I don't think at this point either wages or stronger job growth is going to be the thing that moves the Fed. All right. Maybe good news is good news. Seth Carpenter, thank you. Thank you. Time for a CNBC News update with Pippa Stevens. Pippa. Hey, John. The U.S. pier off Gaza's coast suffered at least $22 million in damages. That's according to two Pentagon officials who spoke with The Washington Post. The pier, which broke apart in rough seas last month, could be operational within days, with aid deliveries to follow almost immediately.

A U.S. appeals court will hear a series of challenges that seek to block the Biden administration's reinstatementcast are challenging the rules which allow the FCC to regulate broadband Internet and reinstate open Internet rules. And the Supreme Court sided with Native American tribes today in a health care funding dispute with the federal government. The decision means the government will cover millions in overhead costs the two tribes faced when they took over the management of running their own health care programs. John, back to you. All right, Pippa, thank you. After the break, the latest twist in the GameStop roaring kitty saga. We're going to talk about the streaming news that sent shares sharply higher mid-session when Overtime returns. Welcome back to Overtime. Here we go again with GameStop.

Won't stop. Shares jumping mid-session after Keith Gill, a.k.a. Roaring Kitty, posted this image on YouTube saying he would be holding a live stream tomorrow at noon Eastern. GameStop was halted for volatility at one point in the session and it finished higher by about 47 and a half percent today. And that update from Keith Gill follows a report earlier in the week that E-Trade is weighing whether to boot him from its trading platform. And that is the topic of this week's On the Other Hand newsletter. There's your QR code. Should E-Trade tame Roaring Kitty? You can scan that over there.

Type in cnbc.com slash O-T-O-H to read two arguments that are completely different on that. Well, back to the broader market. Tomorrow, we're going to get that jobs report, and this morning we got an economic indicator that might be good news for the disinflationary story. Mike Santoli is back to explain. Mike. Yeah, John, that would be unit labor costs. This is a quarterly number, so it's not particularly fresh. But the trend is pretty important, as you can see here, related to core PCE inflation, which is essentially what the Fed is trying to get under control right here. So it seems to be a somewhat coincidence to leading indicator of lower core PCE inflation.

It's really a productivity measure. So it's not outright compensation. It's compensation kind of per output, per unit of output. So that obviously is a big part of the story. We want productivity to go higher. You can keep full employment, not have an inflation problem. So a decent lead up. We'll see how the wage numbers come in tomorrow in the monthly report. What's that happened?

Do you happen to know in the early 80s that caused, you know, the reaction not to be as strong? There's a big dip in the blue line and the orange line is just kind of. I think it's just the the extreme volatility of inflation at those high levels. In fact, we saw something like that in, you know, in certain inflation measures and certain wage measures back during the pandemic. So my guess is it's just that it's bucking around so much that they just can't necessarily move together that easily because the core PCE is actually, you know, going to be a smooth number, probably complicated. But anyway, that was that's what was going on. If we were ever doing a history competition or a trivia night, I think I'd want you to be my partner, Mike Santoli, because you just trot this stuff out. Morgan, I just have more history to work with at my disposal. I live through more. So I'm cheating. All right. Mike Santoli, thank you.

Up next, the CEO of Procore joins us with a look at software spend and the labor picture in the construction sector. And we are on IPO pricing watch. Health care payments company Waystar is expected to price this afternoon, targeting a valuation of nearly $4 billion. We'll be right back. Shares of Samsara under pressure right now, down about 6% after guidance was in line or better than expected, but perhaps not as strong as the whisper numbers. And that fits with a theme we've been keeping an eye on, where software names have met more skeptical reactions than their hardware counterparts on earnings. Meantime, the tech software ETF IGV higher for the week, but coming off its third consecutive down month.

Joining us now with another look at software is Procore Technologies founder and CEO, Thuy Kortemache. The software that the company sells is focused on construction management. Thuy, good to see you. It's been a while, and I'm sort of like, I'm looking at what's happening in software, and I happen to be very interested in the industry software work that's being done, kind of enterprise-grade tools

made available to specific industries. What do you see happening demand-wise, not just in data center, which has been particularly strong, even feeding off of this AI stuff we've been talking about, but more broadly? Well, John, first, great to see you, as always. Yeah, no, I had this privilege of being able to see the entire construction sector in the U.S. because that's the industry that we serve. And so what we're seeing, though, very tough economic environment, as I'm sure you all can imagine. But what we're seeing is that even from the largest

firms to the smallest firms, folks are looking for ways to drive more productivity into their organization. And that's exactly what our company, Procore, does. And so we're seeing a lot of enthusiasm around how our customers are able to use data in order to drive that efficiencies into their organization. So, you know, pretty interesting times in the construction industry. Tui, one of the notable characteristics of the construction industry is that it's still been kind of paper heavy and not a lot has been digitized. But in order for AI to really take hold to make better decisions, make better designs, the digitization is going to have to happen. So how do you see Procore and the

capability that you're building up for the industry digitally feeding into what eventually might happen with AI? Well, and I wouldn't even say eventually, John. It's happening today. So Procore is a platform. We were born in the cloud. We collect a tremendous amount of data for our customers, and then we reflect that back to them in the form of insights. And now with AI, we are just so well positioned to help our customers do so much more with the data that we can serve them up. So the era of AI right now is upon us, and our customers are really excited about how they can actually leverage that to run better

businesses. Tui, it's Morgan. It's great to have you on, and we're getting this jobs report tomorrow. We know construction has been a source of demand for some of the job growth, and yet there's probably still not enough people out there, at least stateside, to keep up with that demand. So how does that factor in here? And when we talk about digitization and the role that technology and software are going to increasingly play, can that help offset some of that? Morgan, you got it right, by the way. Great to see you. That is the biggest challenge. I talk to customers every single day. And and frankly there's just not enough people out there to do these jobs that need to get done. In fact, one

of the biggest challenges to getting the job built is finding the people that can build it. Though it's exciting when the job reports come out and they show all these additional jobs, but there's approximately 500,000 jobs that need to be filled in order to meet the needs of the industry today. So what we're seeing in those jobs reports is a mere drop in the bucket

compared to what actually needs to happen. And we just have a chronic labor shortage that needs to be solved. Where are you seeing the greatest areas of growth and demand right now for construction projects and for jobs? And I ask that knowing that we have high interest rates, higher for longer, that's putting a damper on some parts of real estate, some parts of infrastructure. And on the other hand, you have all this fiscal

spending that's happening as well. And by the way, not just here in the U.S., in other parts of the world, too, which are driving big projects. Yeah, so we are a global company. So we are seeing globally the government stimulus that are going into these giant infrastructure projects. Now, in the U.S., we're all aware there are many that are very, very impactful that are happening right now. The interesting thing about interest rates are most or not all construction is financed through debt. So to the point around all these stimulus packages are that's not interest rate really impacted. So we're seeing a lot of demand on the infrastructure, civil and infrastructure in particular. But also, as you mentioned, John had mentioned earlier,

data centers, distribution or warehousing and manufacturing. Those areas are actually doing really well where multifamily is not doing well. But the interesting thing about construction is most of our customers run a diversified portfolio. So they'll do some civil and infrastructure, they'll do some data centers, and then they'll slow down in areas like office where there really isn't much work happening. So the diversification actually helps them weather these storms. Okay. Tui Manch, thanks for joining us, CEO of Procore. After the break, dueling launches. SpaceX blasting off with its Starship rocket in a new test flight one day after Boeing successfully sent a crew to space as well. There were no people on board. Starship, I should note. But we're going to have fresh updates on both as these two companies do continue to duke it out when it comes to spaceflight

well spacex completing a test flight of starship successfully for the first time with both the super heavy booster and Starship upper stage, making it back from space intact. The most powerful rocket ever built and designed to be fully reusable. Starship is what NASA will use to land Artemis astronauts on the moon and what Elon Musk will use to take people and cargo to Mars. After lifting off at 8.50 a.m. Eastern from Texas, the booster returned to Earth for a controlled landing in the Gulf of Mexico. That was a new milestone. Starship continued on its journey halfway across the globe, reaching a peak altitude of about 130 miles before re-entering the atmosphere after about an hour and splashing down in the Indian Ocean, but not without some external damage. Starlink transmitted images and data for this fourth test flight, which was

streamed live on what else X, where Elon Musk later wrote, quote, Despite loss of many tiles and a damaged flap, Starship made it all the way to a soft landing in the ocean. Meantime, as another test flight progresses, NASA astronauts Butch Wilmore and Sonny Williams have come on board the International Space Station. This happened just last hour. That after a delayed docking by the Boeing Starliner capsule this afternoon. That was a rendezvous achieved despite an issue with some thrusters that was tied to more helium propulsion leaks, which officials do say should not compromise the mission. Starliner's first ever crew will stay there for about a week before heading back to Earth.

For more, scan the QR code right here to catch my podcast, Manifest Space, wherever you get your podcasts for all things space. All right. And sticking with the world of Elon Musk, Tesla's board chair, Robin Denholm, was on Squawk Box this morning talking about Musk's controversial pay package and the upcoming shareholder vote to ratify it. The ratification of the pay package is really about fairness, fairness to our CEO. If you look at what's happened at the company over the last six years, tremendous value creation, and he's led that. The pay package vote will take place a week from today at the shareholder meeting,

which kicks off during overtime at 4.30 p.m. Eastern. So, of course, we'll be monitoring that and bringing you any headlines. In the meantime, it is worth noting, when that pay package was first proposed, it was seen as so outlandish, something that would never be achieved. And yet, here we are having this debate about that, even as as I should note, Tesla stock is down double digits this year.

It's like that half court shot. You know, you make it insurance. Are they going to pay? Well, Netflix kicks off its annual shareholder meeting in just about an hour after a huge run over the past year. And of course, there's an AI angle to this year's meeting. We're going to explain that next. Welcome back. Let's get a check on today's overtime movers. Vail Resorts is lower by about 6.5% after missing on both lines. Samsara dropping as well a little more than 6% on guidance that was essentially in line.

DocuSign also pulling back about 6%, that appears to be the number, after beating on both lines and announcing a billion-dollar buyback. Meantime, Netflix's annual shareholder meeting is coming up in just about an hour after a big run, big changes to the company in the past year. Julia Borosin joins us now with a look at what to expect.

Julia. Yeah, that's right. Netflix is going to stream its shareholder meeting coming up at 6 p.m. Eastern. And perhaps most interesting is a vote on a shareholder proposal calling for a report on the use of AI. Glass Lewis and ISS both recommending that shareholders vote in favor of the company, preparing a report on its use of AI and also disclose its ethical guidelines around AI. We may also hear from co-CEOs Ted Sarandos and Greg Peters. They could talk about the company's transformation with the growth of its new ad business, the success of its crackdown on password sharing, the new bundle of Netflix with Peacock and Apple for Comcast

customers, as well as Netflix's growing investment in sports rights with its first NFL games coming to the platform for Christmas. We'll also have to see if they say anything about Netflix's biggest TV app redesign in a decade, which the company tells us it's beginning a test of today. Netflix saying that this redesign aims to help people find what they want to watch and start watching it more quickly. And also to make sure they're finding the kind of content they're going to keep on watching and stay engaged. Guys, Julia, I guess my question is, can we expect should we expect to hear Netflix executives make an argument for why they can pull away from the media pack at a time when the stock certainly is? You know, these shareholder meetings tend to be pretty straightforward. They don't do a lot of talking. They pretty much give the results of the shareholder vote on the various issues. And I think the fact that there is this AI issue up for vote will be very interesting as a shareholder proposal.

But I don't think they're going to be getting into it that much. They tend to save that kind of thing for their earnings calls, which lately have been a lot of conversation about their better than expected growth. And frankly, the success of the crackdown on password sharing. Yeah. And to be quite frank, this is a proxy contest afoot, like really a big one. These tend to be not so spicy. But I am curious, though, about this AI proposal, Julia. I mean, you cover so many companies that are using AI in these new and societally impactful ways. Have we seen similar proposals with others? Well, look, I think there's going to be more proposals like this because every company, regardless of what type of company we're talking about, they're going to be using AI to

become more efficient, more streamlined, to use their data in better ways. And I think that the question here is, does a company like Netflix want to be transparent about how it's using AI? Or is this part of the special algorithm, their secret sauce, in the same way that TikTok doesn't want to be sharing the algorithm. So I think this question about proprietary information about how AI is being used, I think that's going to be a tough one. Companies are going to prefer to keep that to themselves. Okay. Julia Boorstin, thank you. And of course, we've got jobs report tomorrow morning. We've got NVIDIA stock split. And oh, by the way, on Monday, we've got the Apple Developers Conference as those two names duke it out in terms of market cap. Samsara here tomorrow gets to make the pitch for efficiency in software in small companies.

Yeah, we did reach intraday highs for the S&P and the NASDAQ today, but we finished slightly lower. That does it for us at Overtime. Fast Money starts now.