Closing Bell - Closing Bell: Reddit’s IPO Filing 2/22/24

Episode Date: February 22, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

All right, welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make-or-break hour begins with the stunning move in the NASDAQ and whether the euphoria around the AI trade is close to a peak or just beginning. One of our guests making the case today, it's not even close to over. He'll tell you why in just a moment. Your scorecard with 60 minutes to go in regulation looks like this. New highs for the S&P and the Dow today. It is the NASDAQ that is stealing the show. And look, we only need 20 something or so points here for a new closing high for the NASDAQ. We will watch it closely over the final stretch.

All of this following Nvidia's blowout earnings and guidance. That stock, obviously, you know by now, it is surging along with so many others, AMD and Broadcom. And how about Supermicrocomputer? Are you kidding me? The stock's up more than 30 percent. Meta and Amazon are also big winners in today's session, too.

All right. Takes us to our talk of the tape. This mega moment for the mega caps. How far these stocks can run from here. Let's ask Adam Parker. He's the founder and CEO of Trivariate Research, a CNBC contributor. And he is back with me at Post 9. Good to have you back. Great to be here. The person that I was alluding to in this opening read is you. You say that we're not even close, not even close to the end of this AI euphoria trade. I just think it's a 10-year kind of trend, and the idea that we, you know, it really started in my mind less than a year ago.

You know, it was really NVIDIA's first upward sales revision, you know, in May. So, you know, just thinking out loud, like, is that, is it less than a one-year trade for the stocks? I think it's going to follow that same curve all technology adoption does. And I think a lot of people just continue to believe, oh, I'm going to be, I'm going to follow that same curve all technology adoption does. And I think a lot of people just continue to believe, oh, I'm going to call the top of that first wave, and it's going to correct 20, 30, 40 percent, and then I'm going to get it right at the bottom, and then I'm going to ride it for the second wave. And you saw the note, we called it the NVIDIA God trade. You think you're God, you're going to call the top, call the bottom, and call the top again. In

the meantime, you haven't even deployed most of this stuff, and it's a 10-year trend. So my view is, like, I'm not that smart. I'm not going to get it right in three directions in a row. And, you know, for the last year, we're just staying long, and we want exposure to AI semis. Like, that's the call. Jensen Wong of NVIDIA would have us believe that this is the dawning of a new industrial revolution.

He speaks of it that way. We're at a tipping point, he says, for what's happening in AI. It sounds like you're on that same page. Yeah, I mean, I might multiply it by 0.8 or whatever, but I might hit a couple of things. He's doing his job and promoting it, and I used to be a chip analyst,

so I remember these companies when it didn't look like they were going to survive 25 years ago, and I was joking around with a bunch of my old semiconductor buy-side analysts today saying, if you had told 20 years ago, if you told Intel that NVIDIA would have added an Intel market cap pre-market in one day, they would have thought you were on drugs. So a lot's changed and evolved. But I tend to agree it's a multi-multi-year trend.

That second wave is many years off when you really implement cost-cutting. And the first wave is sort of implementing the infrastructure. When I hear Sam Altman say we don't even have enough power, forget compute, I think it's very early on. Was the rally in the market at large, was this a moment of truth for that? I mean, if this came in negative, was that in danger of wrecking the whole show? And now we are enabled to take another leg up because of what NVIDIA delivered? I mean, you know, I hate, you know, being sort of aggrandizing the one data point. But for sure, it carries with a lot of other hopes and dreams.

For sure, the day they tell you they can meet demand, the stock and the market are going to go down a lot. But I do believe that same basket of 10 companies, plus or minus, that will participate, that you need to own and have exposure to, they're going to outperform 2, 3, 5, 10 years from now. And I don't, you know, you saw in our work, like, I don't want to be a PM and say, oh, I didn't own any AI stuff because I couldn't make the valuation work or I thought it was late or any of that. It's a huge trend. You need to be there. Because as we talked to Stacey Raskin, who I think is one of the best in the business yesterday going into the number, he's like, it's not expensive.

In fact, it's cheap. It's cheaper than this one, and it's cheaper than that one, and it's cheaper than the other one because of what their earnings and the guidance have done. The valuation has come down. So if you don't want to own it, don't own it. Just don't tell me it's not cheap. Right. Don't tell me it's too expensive.

I know Stacey well because, you know, he replaced me at Bernstein Wells. I've known him for a long time. He's super smart, and I agree with him. If you look at all the big tech companies that have had big upward sales revisions, you know, this one, the sales estimates have come up just as much as the stock. If you go back, like like in sort of Q4 2022, maybe Gen 1, 23, and said, what did the analysts think they were going to earn in 2024? Remember, they're off by one month on their fiscal calendar year. It was $8 billion for this quarter.

They did $22. Like the magnitude of the quarter up in the sales revision is unprecedented. And the stock's up basically the same amount. So it hasn't gotten more expensive. Can it keep going like that? Not at this rate. It's not going to go up 200% every year. But I think they can grow, and they can grow for a long time, and they're growing at a high margin. And it might be fair to look at an EV to gross profit, and I don't think it's that expensive versus other things. Let's just say either you're in it or you're not.

You don't want to buy it here, whatever. You say you've got to own a lot of these players, whether it's Micron or AMD or Broadcom, at least. And I think the equipment makers make a lot of sense, too. So if you're telling me I'm investing, yeah, LAM, AMAT, KLA. Look at Synopsys and Cadence. You can't make chips without them. Stocks are up a ton. There are 95 billion market companies. These are the lists we've been talking about for a year that you have to own. And if you're a value person, you want to own TSMC or you want to own a Micron because you need the optical valuation, okay. Value person on TSMC, a market cap is like,

you know, way up there too. But if it were domiciled in Arizona, it would trade at 40 times earnings. It's an incredible business, right? So I think it's, you're just discounting how much of the risk it is for being domiciled where it is. So I think this is a big trend and we're early, early days. And I think there's a little bit of like an unintentional arrogance people have when they don't own it. I remember you and I talked about this off the air a year ago. There was a guy on, I don't remember who it was, so I can't disparage him, but good. He was sort of bragging that he didn't own Amazon ever and it was down 10% and he was kind of victory lapping it and it was down 10%.

And I said to you off the air, he shouldn't do that. He missed the first trillion and he's bragging. He missed 100 billion on the way down. Like you can't do it. If NVIDIA is down 5 percent, 10 percent and you say, well, I never owned it. You're happy you missed it. You're still wrong. You missed the first two trillion. Right. This is a multi-year trend. And the stock's going to be, of course, it's going to be three, four trillion eventually. Does it only underscore then that we're going to have a more top-heavy market for the foreseeable future? Because of everything that you just said, if you're putting new money to work in the market, why would you go broad? The reason I like U.S. equities over non-U.S.

equities, why I like U.S. equities over bonds, find me anything that gets exposure to the biggest 20 U.S. companies. We track their net income growth. We look at the estimates. On Jan 1, we did our year-ahead outlook. The 2025 net income growth. We look at the estimates. On Jan 1, we did our year-ahead outlook. The 2025 net income for the biggest 20 companies was supposed to be $796 billion. It's now $852 billion. These are the biggest companies that are growing their net income dollars at 15% per year, and you're raising your numbers. So yeah, I want exposure to the best, awesome companies. How about this? Goldman's Tony Pasquarello, I love his work. He put out a note today, and this stat, to me, says everything.

All right, and I want your reaction to it. In Q4, the Magnificent Seven grew sales by 15% year-on, while margins contracted by 59 basis points, such that earnings fell by 2%. Doesn't that just underscore everything as to why this trade has done what it has? Yeah, pretty much. And I think their lead technologically has gotten better. I don't know him. I've read his stuff on and off for years, and I kind of have a one direction bromance with him. So I agree a lot with his views and on this topic and that you've heard me say it a hundred times, you have to own

at least a market weight in the mag set. Well, you said 25% at least. At least, right? And you got, and that's a big... You feel like it needs to be above that? Well, the market was whatever, 27%, whatever the weight is. You got to own a big position in a long way. Fine. And most people can't. And so I continue to, you know, a day like today, sure, I feel good about myself. But at the end of the day, it's about here for the next 2, 3, 5, 10 years. How can you run a fund of U.S. equities and not have exposure to this? Well, let's ask the person who's joining the conversation. That's a great segue because Joe Terranova of Virtus.

He disagrees? No. Are you kidding? He's got the equally-weighted Joe T T based on momentum, and he's loaded up. Smart and handsome. He's loaded up on these names. What do you make of this? And doing pretty well today, equally weighted.

The strategy is actually outperforming the S&P today. And the reason why, and I'll tell you why I disagree with you on the point of the MAG-7. Okay. I think the mistake that we're making right now is that we continue to focus on the MAG-7, and we're really not focusing on what is powering the earnings growth in the market, which is the AI halo. Wait, what, you said you disagree with him on the MAG-7? I disagree. At what point?

I disagree that the MAG-7 are the focal point. I think you could actually own— Well, they have been. Okay. So today, let's go back again. Let's start the segment over. Today. You disagree with the fact that the Chiefs won the Super Bowl?

I am not. Well, why don't you pull up with the performance today? They won the Super Bowl. Am I equally weighted? Yes, I am. Am I outperforming the S&P today? Yes, I am. That's market cap weighted.

No, not everything's up. What's important to understand is what Adam said before. It's the AI halo. And that's where I think Adam is spot on. He mentioned names we don't talk about on the show. Application software, cadence, synopsis. We don't talk about those companies much. They are so incredibly important to creating the chips. That's where the mobility of this whole generative AI begins. KLA Corp, AMAT, LAM Research. So anything that has something to do with AI is the place to be, not something to do with AI. Anything that's curating the AI. What did Adam say before? Application software designs the semiconductors. Agreed, right? Okay. Now you have the semiconductors that are benefiting.

Everyone's saying, well, on a day like today, why is Alphabet, why is Microsoft relatively underperforming? How about Apple? I don't think about those companies as the AI names of today. Those companies are throwing billions of dollars at NVIDIA, at AMD, at AMAT, right? You don't think of Microsoft as one of the AI plays of today? I think of it as a future AI player. And in that group of MAG-7, it's by far the leader to where it's going to get to the goal line quickest, for sure. That I don't disagree with. Meta may have a dog in that fight. I think they're all massive AI players.

But I don't know what he disagrees with me on. I think he just wanted to say that. It sounds like he agreed. I was surprised because I think you guys... You said you have to have a 25% weighting to the Mag7. No, but you... I don't have a 25% weighting to the Mag7. Personally,

you probably do. No, I don't. Personally, my largest ownership is in the strategy and the ETF that tracks the strategy. But that's only because you happen to run an equal weight strategy. That's because I put my money where my mouth is.

Do you own Microsoft? Yes. You own Apple? Personally, yes. You own Apple? No. You own Meta? Personally, no.

I own Microsoft. Personally. That's the only one you own? Correct. So two interesting things on this. One is, the thing that's interesting to me about cadence and synopsis, as an example, is if the pitch on Microsoft is you're going to pay $30 a month for them, you'll get more efficient, right? And they'll watch you in Outlook, and they'll watch you in Excel, and

you'll just get more efficient, and it's worth that. And that's really... If you think about it, I don't know how many minutes a day you're in Microsoft products. Maybe it's 90 minutes a day, and they can learn from you 90 a day. But if you're a circuit designer, you're in Microsoft products, maybe it's 90 minutes a day and they can learn from you 90 a day. But if you're a circuit designer, you're designing circuits for 10 hours a day. So the amount of time that they can observe you and help you get more efficiency, even greater at cadence and synopsis. I mean, there's definitely a lot of ways to play it. I agree with all those names, and we've talked about them for a long time on the show. I do think that my point on the Mag 7 is slightly different.

And so what I would say on Joe's point is, look, I don't think the stocks are very idiosyncratic. MAG7, if the market's up and growth speeds value and large speeds small, I can explain a lot of Microsoft's returns from that alone. Two, they're covered by 60 sell-side analysts and 400 buy-side analysts. I honestly don't think I could know something about Google that nobody else does that's not in the price. I mean, I'm arrogant, but I'm not that arrogant. And then the third thing is I can't replicate them with another basket of securities and mirror their performance. They're just not kind of statistically replicable.

So I look at it and think, macro stocks, I don't know anything anyone else does, and I can't replicate them. I want to be market weight, not equal weight. It's a risk management view I have. I understand that, but your strategy, irrespective of your ETF strategy, your advisement of the viewer is to be less than market weight, the MAG7, because his point is to be market weight, the MAG7, and that is 25%. Well, I think Adam's speaking towards a passive investor. I'm I don't I'm speaking about anybody who's watching this program.

No, they're not. You got to make my class. So. So I'm anybody. What I'm saying is you've underperformed. You'll underperform when the mag seven rip and then you'll outperform when they don't. Of course. And what I'm saying is how much of that underperformance came from your equal weight versus market. I bet you last year or whatever the last two years, most or all or more than all of it was from that underweight. And if you'd just been market weight, the rest of your stock picking probably would have helped you. I don't know. I'd have to analyze it. That's a nine-month period.

That's a momentary nine-month period. But the Mag 7 has been better for nine months. Let me answer your question. Just the most simple question for this conversation. People watching this show, should they be underweight? The Mag 7. Okay. If they are active investors, they should not be carrying a 25% exposure market weight to the Mag 7. If they are passive, yeah, then they're going to automatically. They have to. If you're a passive investor, you have to.

We know each other well, so we can disagree with each other. It's fine. I disagree with that. All my clients are active investors. I mean, passive investors don't pay, right? So they're all active investors. And the advice I give them to beat the S&P long only is to be market weight that group for the reasons I articulated.

I think you can make your alphabets elsewhere on top of that. To me, it's too much risk. If I'm running a long-only fund and I say I own no Apple, there's no weight I can have in any security that will offset the risk of me owning no Apple. It's a huge, huge bet against me. Hang on two seconds. I'll come back to both of you in a minute.

I get what you mean. I got some breaking news. I have to get to Steve Leisman. Steve, what do we have? Philadelphia Fed President Mr. Harker saying that the Fed may be in a position, Scott, to decrease rates this year. Not all that affirmative about it. Said it may be in a position to do it. He says he cautions against all those folks out there looking for rate cuts to happen right away.

He says, quote, we have time to get this right. The greatest risk, he says, comes from lowering rates too early, not from being too late. He says he's ready to cut when the data, quote, give me that signal. He calls the fight against inflation in the final mile of a marathon, but says that final mile can, in fact, be the hardest. He goes on to say he has confidence that monetary policy is working and he's looking for disinflation in order to get that signal to spread more widely to the goods and services throughout the goods and services sectors. He said the Fed will start discussing

slowing the balance sheet reduction in March and that the economy continues to hum along. He calls the U.S. economy the strongest in the developed world. He is concerned, though, among the risk about credit card delinquencies. Just a quick look at these probabilities on Fed rate cuts. Scott, they have been declining almost all day and declining in the past several weeks. We're now down just a 28% probability of that May rate cut. Nothing or four and a half percent for March. And the amount of cuts expected this year continues to come down. But as you have been talking about, all of that appears to pale

in the face of earnings like from companies like NVIDIA. Because I think, Steve, that most people in the market believe that rates are happening this year, that these speakers can sort of couch it around as much as they want when they make these public comments. But I'll use, you know, Vice Chair Jefferson as an example. It will likely be appropriate to begin dialing back our policy restraint later this year. That's what he said earlier today. I think the market's gotten a little bit beyond, hey, as long as we know it's coming, we're good. Now, it doesn't have to be March. It may not be May. Maybe it's a summer. But they seem to be letting on that it's coming and we're OK

with waiting. Yeah, you know, Scott, there's an old folk song where I know it's called One Cool Remove. And that's the way the Fed officials seem to be treating this later this year, sometime this year kind of thing. It's all very much out there. I do think you're right. You can have some confidence that rates are going down, but it is rather extraordinary, Scott, the amount of easing that's been dialed out of the market. Eighty three basis points, three and a third quarter point rate cuts, if you want to do the math specifically. And the market has continued to do quite well. And the reason I think we'll talk more about this tomorrow and show you some charts on this

is what's happened to the earnings. It has really been like rate cuts. We don't need no stinking rate cuts. I just drew something. You can't see it because my pen's bad. Adam Parker can see it. AI greater than cuts, right? Because that's what the market is hitting on.

AI earnings in general. Right, exactly. Steve, thanks. Our senior economics reporter, Steve Leesman. I'm better than get my pen. Ruined my prop. The S&P has always been a superior asset class to the economy. So you can get the market working when the economy doesn't. But I didn't think there was anything that surprising about that report. I don't know if you agree. No, look, as I said, I mean, the market is confident. The economy is good.

The cuts are coming at some point. You've got this boom from AI. It's lifting the entire market. The question is, is it time? We can get beyond the 25% market conversation, but about the broadening. Is the broadening going to, Joe, is that going to happen? Is it going to happen? I don't know. Not to the extent that I think people anticipated.

And this is actually a compliment. If I asked Adam, where's the 10-year right now? It's probably not even on his mind. And I think that's the right thing, right? Well, 435, 432. Right. But again, so it's 4.35. It's at the high for the year. Think about how fixated everyone was on where a 10-year was in the last three months. Right. Overfocused on it. And I think we're in a place, I agree with you, we're in a place where stocks are overwhelming what that expectation on rates ultimately might be.

It's a good point. It's a good point. If you'd said three months ago that delay cutting and the bond yields are going to rise, you wouldn't have thought the market would be a rip-fest through it.

But you know my view, which is bond yields rise and the market goes up at the same time is pretty normal. It means the economy is better than people thought and earnings growth

is pretty good. But I thought we had moved beyond the concentration of the MAG-7, but then you make a comment like you don't think the broadening is going to work, but then you want to be underway with the MAG-7? No, but here's the answer. Here's the answer.

The answer is the average company's gross margins go up and it broadens. That's what you need to believe. And I think there's some, I think that could happen. I think the average company could see gross margin expansion. I think input costs are down, labor productivity is up, and maybe that's what this AI thing ultimately is going to be about. The second wave of it is going to be better productivity and efficiency for companies. So what you really maybe are saying is the market's worth more in years 2026 through 2030 than it was a year or two ago because of all the earnings and margin

that's going to come. Yeah, I mean, when I hear is the market going to broaden out, I think it would have been a very universal sense. To mean, when I hear, is the market going to broaden out? I think it would have been a very universal sense. To me, that means our small caps going to begin to outperform. That's the first thing I look at. It's kind of like, OK, is Russell for real or not? OK. So, you know, you look at the small caps and you say to yourselves, are you going to get the type of earnings growth that would warrant that? And then you begin to get the multiple expansion. We talked about this last week on the show. I think there are very few areas of the market where you're going to get significant multiple expansion. You can get multiple expansion in small caps.

But show me that you're actually going to get some of the earnings growth. They're still in an earnings recession. And that's what I think of when I think about, OK, universally, can we get the broadening out? You're getting the broadening out in large caps. There are companies in the industrial sector, the insurance companies and financials. Those companies are working. But I think it from an equity size class. And I think you could even make an argument. Do you look at it geographically and say, OK, does the emerging markets begin to catch up?

Does Europe begin to catch up? I mean, ex-Japan, to Adam's point at the top of the show, what economy rivals the U.S. right now? What stock market rivals the U.S.? I've got to leave it there. We'll do it again. We'll see. It won't be our last time at the rodeo. We disagreed. It's all love.

It's all good. Joe, thanks. Adam, thank you as well. Christina Partsenevelis has a look at the biggest names moving into the close. I guess you I mean, you can't talk about NVIDIA, right? Well, you guys were doing it the whole 21st, 20 minutes. So I guess I'll leave it there and switch over to Moderna. But I could talk about NVIDIA all day. But let's talk about Moderna, because look at the stock price. It's up 15 percent. It's best day since December 2022.

After posting a surprise profit and revenue beat, The vaccine makers saw a big drop in COVID shots compared to the year ago period, but said those declines were partially offset by a higher average selling price per vaccine. And that's why you're seeing the stock pop 15 percent. Etsy, though, under pressure as a big miss on earnings overshadows a revenue beat. The online marketplace company also warned that its gross merchandise sales are expected to fall during the quarter as consumer demand for discretionary items remains tepid. So down 8 percent. I didn't mention NVIDIA, Scott. You didn't, but I think you have probably coming up again before the show's over. So there's always a chance. I'm betting on you. OK. All right. Christina Parts and Evelis, thank you. We're just getting started.

Up next, more on today's reignited rally. Top tech investor Glenn Kacher of Lightstreet is back. NVIDIA, one of his top holdings, which is why we'll get his first reaction to the quarter, his other top ideas with markets now at record highs. We're live from the New York Stock Exchange, and you're watching Closing Bell on CNBC. nvidia's post-earning surge giving the entire ai space a big lift today for more on what to do with tech stocks at these levels let's bring in light street capital founder and cio glenn kacher welcome back what a day to have you thank you sc, Scott. Appreciate it. Fifteen percent holding or waiting in NVIDIA. Just give me your first take here on this quarter that they just blow people away yet again. Yeah, I mean, it's a company that is really on top of their game.

They have the product that everyone in the industry needs to change the way computing works. The way I think about it is this is almost over the last, it's similar to the last 20 years in automobiles where we saw this massive shift to SUVs and the lowly sedan has sort of trailed away. This is a fundamental shift in computing architecture from a CPU-centric computing industry to GPU-centric. And it changes everything. It changes how software is written. It changes how software is written. It changes how software operates and how data centers are built. And they are square, you know, right on that road and dominating the space. Bear with me for just a second, Glenn. I have to get to Julia Borsten. We do have some breaking

news on Reddit's IPO. Julia, you have details for us? Yes. Reddit has filed its S1 with the SEC. The company is saying it intends to have its shares listed on the New York Stock Exchange under the symbol RDDT. The company's net income for the three months ended December 31st was $18.5 million. The company says its revenues for those three months were about $250 million, announcing 73 million daily active unique users, 267.5 million weekly active unique users, and saying that Morgan Stanley, Goldman Sachs, J.P. Morgan, B of A, Citigroup are among its underwriters. So they do say they do not anticipate paying any cash dividends in the foreseeable future. We're going to continue to dig through this S-1 and come back to you with more. Scott?

All right. I appreciate that very much. Thanks for the update. Julia Borson back with LightStreet's Glenn Kacher. You guys investors in this? Any interest in it? In Reddit? Yeah. We're not direct investors in it, no, but certainly interested in the space and the Internet category. I think Reddit is playing a role in AI as one of those content libraries that's been used to train these large language models.

I used the words, you know, earlier, speaking of AI and the kinds of things that Jensen Huang at NVIDIA is talking about is sort of this dawn of a new industrial revolution. It sounds like you very much buy into that story, too, in the way you see the runway expanding for a lot of the companies that have a big part to play. For sure. And then we're seeing, you know, cash from operations and earnings surprising by 10%. We're seeing, you know, that continuing for many years to come. And we're seeing a stock that is, you know, probably going to be close to a double over the next year and a half or two years. Big weightings you have also in the likes of AMD and Taiwan Semi, Amazon, Salesforce, Broadcom, Microsoft Meta, GitLab. For the other semi-stocks that you, let's just take an AMD, a Taiwan Semi, Broadcom, for example. How do you view those relative to NVIDIA and the competitive landscape that's only going to get hotter?

Well, there certainly will be competition. And the first company I think that's going to have a real competitive chip will be AMD. But I think it's going to take quite a period of time for any other companies to really challenge NVIDIA and then AMD. Over time, I think we'll see AI splinter. There will be different types of jobs and different types of processes and smaller models and as that happens though there'll be more opportunity for kind of lower power chips for instance and custom ASICs to eat into the overall market but at the same time the GPU is so powerful it's kind of like an earth mover or an SUV that can do 10 different jobs really well and be very powerful at the same time.

And that's really hard for some of these other smaller companies to compete with. So we still love NVIDIA from here and AMD is next up in that group. Last time I was on, I talked about our AI5, the stocks that we are most focused on. NVIDIA, AMD, Microsoft, Avago, or sorry, Broadcom, the old ticker, Avago ticker, and then TSMC. And those are still the companies that we think are first up

in really benefiting from this build out of infrastructure. So that's where we're concentrating our exposure. I understand. What else is exciting? I mean, AI sucked all the air out of the room. You guys are doing enough bottoms up work on a lot of other companies. What else is exciting to you outside of AI or is literally that everything? I think AI underlies almost every stock that we're involved in in one way or another. You know, it's that dramatic of a development in terms of the way computing is done. So it's going to influence everything. I think that it's a question of timeframe and, you know, it's hardest to predict how it's going to benefit software companies.

I think the next big moves, though, will be those hyperscaler companies that today are part of the Magnificent Seven. And if you think about it, if you look at the other names in the Magnificent Seven, which are Apple, Microsoft, and Amazon, Meta, Tesla, Google, six out of seven of those, everyone except for Nvidia is a massive customer of Nvidia. They're all putting tons of capital into buying Nvidia chips and building out AI infrastructure. So that's, right now, that's costing them a lot of money,

which I think is part of the reason why they may underperform Nvidia. But ultimately, that also means that they're going to be delivering value on top of that capital that's being deployed over the next really decade. But big build out early here, early on. I'll come back to you in another moment because I have even more breaking news. Bear with me. Kate Rooney has something for us on FTX. What do we know here, Kate? Hey, Scott. Yeah. So a judge in Delaware, this is according to Reuters, by the way, but a judge in Delaware ruling that FTX is able to sell its 8% stake in the buzzy AI startup Anthropic. That stake, based on its recent valuation,

is worth about $1.4 billion. This had been up in the air in terms of whether they were going to be able to sell it. There had been some customers that pushed back on this. But this is a startup that a lot of tech investors have been clamoring to get into. So that 8% stake, highly coveted by some of the big tech companies, some of the investors out here. The next step is who is going to be able to get that stake. But again, the judge ruling that it can't officially be sold in the bankruptcy documents. They said they do expect to sell those shares at a profit. They say they're going to retain flexibility to sell those shares at the most optimal and appropriate time. So it may not happen right away. But Sam Beckman-Fried, the now convicted

CEO of FTX, had invested in the startup back in 2020-2022 before it had really hit the fever pitch of AI funding. But again, that stake has roughly tripled since Sam Beckman Freed invested in it. But now the bankruptcy estate will be able to offload it. And that AI stake in Anthropic is now up for grabs, Scott. Okay. Okay, Rooney, thank you very much for that. You see, Glenn Kacher, all roads do lead back to AI. Even when you do an FTX story, it all goes back to the same place. And Kate's talking about Anthropic, which makes me think, of course, of Amazon, not to be forgotten

in where this whole thing is going to. It's one of your top holdings. Yeah, absolutely. I mean, in our view, the AWS business is the most valuable part of Amazon vis-a-vis e-commerce segment in the company. And they are investing heavily in AI and will be driving tons of AI workloads onto their AWS infrastructure. So they're a big beneficiary from this. Without a doubt, I predict that that anthropic stake ends up with one of the magnificent seven. Oh, is that right? For sure. Interesting. What about the idea also,

if you take a broader market view of, we touched on it earlier with the breaking news from, you know, the feds Harker and Philip Jefferson and how they're talking about, you know, rate cuts later this year, sometime this year. Rates have been higher. We talked about the 10 year at, you know, 432, 435 in that range. Is there a danger zone for the growth trade if rates continue to back up? Sure. I mean, if rates back up because inflation picks up for sure, then that becomes a macro problem. But, you know, as Adam said in the segment before, you know, if you see if you know if you see rates going up because the economy is doing well and inflation stays in check, then, you know, I think that is generally a Goldilocks kind of scenario.

Let me lastly ask you before I let you go about the EV trade. You know, we touched a lot about, you know, Rivian getting a hammer today. Tesla has not traded well. You know, you know that it's green now, but it certainly hasn't traded well of late. It's down 20 percent as I'm looking at it here year to date. Are we are we at the point where we need to rethink this trade? Well, I think we're at the point where the entire auto industry is slowing down and becoming more competitive. We're coming off of the sort of easy comp, easy growth period post covid.

And so that we're seeing slowdown across the board. And I think we're also seeing some reality check on EVs as the charging infrastructure isn't built out to the level that it needs to be to make it a great experience for consumers. And so there's a little bit of a demand air pocket right here. But I think ultimately, as we look out several years, Tesla is certainly going to be the U.S. leader in EVs. And as they drive, their software advantage, whether it's self-driving or just a car that works a heck of a lot better than anyone else's. Look at what's happening with GM right now with their new models. And then you've got to look over in China at BYD as being a global powerhouse in the auto industry. So I expect it to kind of be a replay of what we saw as kids as the Japanese took share back in the 70s and 80s.

I think you're certainly going to see some of that happen as the Chinese start exporting cars to the U.S. It's good to see you again. Thanks for being with us. And of course, thanks for your patience, too. We've had a busy, busy hour. We'll see you soon. No problem.

Thank you very much. All right, Glenn Kacher, Light Street. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is standing by with that. Christina. Well, we're seeing several gold mines up for sale to help one struggling miner. And an analyst says don't fret about DoorDash's dismal earnings report. I'll tell you why after this short break. So we have less than 20 minutes before we get the closing bell. We're going to get back to Christina Parts and Nevelos for the look at the key stocks she's watching. Before you do that, let me just tell people that right now we are above a closing high on the Nasdaq by a couple of points. So we're

going to watch it over the final 15, 20 or so as I send it to you, Christina. And we know who has a large weight on that index. But let's talk about Newmont right now, because the stock is actually lowered down about 7 percent as a flurry of announcements overshadowed its earnings and revenue beats. So this is a copper and gold miner. They're slashing their dividend. They're laying off workers, and they're selling off some of their assets as they look to cut costs following their acquisition of Newcrest.

Those moves have the stock at its lowest level since May 2019. DoorDash, though, is higher as Morgan Stanley upgrades the stock to overweight. Price target, $145. The stock is trading at 121.87 right now. Analysts cite the delivery giant's push for gap profitability and its growing grocery business,

along with the stock's weakness since reporting earnings last week. That's the reason why they say buy-in shares are up about 6%. Christina, thank you. Christina Partsenevelos. All right, straight ahead, star VC investor Rick Heitzman. He is back with us. We're going to get his take on that breaking Reddit news officially filing now to go public. Plus, we'll find out how he's navigating the tech sector surge and what else is hot besides AI.

We're back right after this. All right, welcome back. Reddit, as you know from a report earlier by us, filing to go public. After a years-long run-up, the company planning to trade right here at the New York Stock Exchange under the ticker RDDT. Let's bring in first marks Rick Heisman to discuss. Well, that's nice news to break before you come on. That's great. Man, I told you the IPO market's going to open sometime first or second quarter. Does this make you feel even better about that? It kind of does because this is an old trend, right? This is social media.

This is advertising-based content. And this is not the greatest content, right? This is real user-generated content, which a lot of it's not safe for advertisers. And this will really be a litmus test on testing public market investor appetite for maybe non-AI things. How are you feeling about that whole thing, just the prospects of these markets opening back up? I feel great. I feel great that people are so attracted to the heat and obviously people attracted to the Mag7. Are people going to open up the aperture and be able to buy public financing? So they're going to buy non-hot things that are appropriately priced. Somebody like you, you look at NVIDIA and all of these other stocks that are just going bananas, right? We're talking about the NASDAQ going for a new closing record high.

What's your reaction to all of that? Well, it's so driven by the top handful of companies. If you look at the median company in the NASDAQ, it hasn't really moved that much this year. And I thought this year, I was wrong. I thought this year was gonna be a stock picker's market where there was gonna be differentiation between the NASDAQ and the NASDAQ. It is, just you have to pick the right seven.

Yes, yes. You have to just be an Nvidia. Be an Nvidia, sit at home. I'm working too hard for this. Yeah. Are you still getting a lot of looks at things that are overwhelmingly AI plays? Everything has an AI component.

I mean, it's very funny. We can play a game and we hear our pitches at first mark. How long do we have to wait until someone says AI? You mean how many seconds before somebody says AI? Yeah, it's probably over or under about 15 seconds. Well, you said you're traveling around. You're starting to travel a little bit more for work. Does that correspond with what you think is a reopening, if you will, of activity?

There's a reopening of activity. People were very much in sort of the last two years. People were fixing their broken companies, dealing with the sick puppies. And now people are more open to new ideas, what's going on, and even beyond AI. What are the next interest or trends that people are seeing, whether that's Vision Pro as a platform or the digitization of healthcare. Are we fully done, you think, with the valuation reset that had to take place over the last couple of two, three years? Not yet. Not yet. Because I think as you think about the differentiation in the NASDAQ,

I don't think some of the companies which weren't providing value really have gotten punished the way they should, nor are the good companies doing well. So it's been a general reset, but I think you're still going to see a couple bombs go off of companies that are still wildly overvalued. You sit in, I think, a pretty unique seat in that you obviously have views on what's happening in AI, which is overwhelmingly the hottest trend of the year in tech. The second, I don't even think it's a debate, GLP-1. Of course. What's going on in healthcare? You guys were the first investors in Rho, the digital health company.

So how should we view this? Because Novo, Lilly, those types of stocks are in their own ways as incredible as NVIDIA. Well, it's a mega trend in and of itself. I mean, everyone's very obsessed with AI and what that's doing. But if you look at the digitization of health and what that means, especially wrapping around a really breakthrough drug, and this is a generational set of drugs in GLP-1s. It's now being productized with different delivery mechanisms. Are there shots?

Are there pills? Is it daily? Is it monthly? Is it weekly? And I think that most people will be on this for one reason or another in a couple years. Right now there's a shortage. You can't get it. And it really hasn't even gotten international yet.

So I think that we're still in the early innings of delivering what's going to be a life-saving drug for many in the coming years. Where are we in terms of early innings, mid, late of companies like that before they go public? Are we starting to think about that? I think we're starting to think about it. People that are riding that megatrend but might not have that drug the way that Nova or Lilly has, I think you're going to see that come out in the fundamentals. You're going to see the growth. You're going to see the value of those customers. And I think you're probably 12 to 18 months away from that as people are starting to recognize what a breakthrough trend this is.

Great catching up with you again. Thanks for being here. Rick Heitzman, First Mark, right here at Post 9. Up next, we'll have more on today's market rally. You take a look at stocks there. We had records today for the S&P, record for the Dow. We're trying to get a record close for the Nasdaq. We got a little bit of work to do. The good thing is we got eight minutes or so left. Closing bell's coming right back. All right, we're now in the Closing Bell market zone. Pippa Stevens is watching Booking Holdings ahead of earnings out in overtime. Bob Pizzani here to break down the crucial moments of this trading day as we head into the close. Pippa, you first. Tell us what to watch for. Well, Scott, booking holdings did hit an all-time high today ahead of reporting results in overtime,

and analysts are looking for gross bookings of $31 billion. Now, this report, of course, follows Expedia's update earlier this month with that company's bookings metric missing estimates. Today's guidance, though, will also be very important since it will shed light on the upcoming spring and summer demand trends. Commentary around geopolitical impact also key. The BMO estimating Israel is 1% of bookings with the Middle East broadly at 7%. Scott? All right, Pippa. Thank you. Pippa Stevens, I turn to Bob Pisani. The closing high on the NASDAQ is 16,057.44. We were just there, but it's moving around a bunch as we head the final three minutes here. So we're going to see if we can do that. But we did new highs today for the S&P. And by the way, the Dow was just up 500. So we're going out with a bang today.

It's a great rally. It's not a completely even rally. Eight stocks advancing, five declining. Equal weight S&P is up a little over 1%. The S&P itself is up 2%. But it's really all about tech. Just look what the semis are doing today. They're just the whole semiconductor sector is moving the S&P. Did you see AMD? It's up 11%. That's right.

NVIDIA is getting all the play. 16, AMD 11, Broadcom 6, Micron's up 5%. Applied materialsials is strong. These are among the biggest names in the S&P 500. So when you've got all those stocks up almost double digit, that's going to move the S&P 500 forward here. On top of that, you've got new highs on Amex, for example. There you see that move. And Visa, the card companies, have been doing spectacular releases recently.

You also have new highs on some of these other big names, some of the big software names that are out there. Intuit, ServiceNow, Oracle, also doing really well here. And yes, there's a Magnificent 7 ETF. We had them on just recently. There's Salesforce, Intuit. Look at these numbers here for some of the big services. Anything AI-related is just... And here's the ETF for the last six months. They laughed at this when they put it out a year ago. This is called the Magnificent Seven ETF. It's an equal weighted for all the Magnificent Seven here. That's another new high today.

You know why they laughed? Because they probably saw it come out, and they're like, oh, that marks the top. Yeah, exactly. That calls the top. One year ago, it was April, and they laughed at it. And this time, they were absolutely wrong on that. But I do want to point out, the Dow leadership is pretty good today overall. I mentioned Amex.

I mentioned Visa. Home Depot's at a new high. The banks are flattish, but some of the bigger names, J.P. Morgan's just been spectacular. That's a new high as well. And finally, Scott, I want to mention Japan. We mentioned the Nikkei hitting a new high today. Yeah, and if you're wondering, how did the Nikkei get there after 34 years of hitting a new high? It was 1989 when it hit a new high.

Weak yen and reconstructing the Japanese economy a little bit and help with the AI business. Remember, you've got SoftBank over there. They're the primary owner of Arm. That's doing really well. You've got some other big names over there, like Uniqlo, one of the big global retail names that have been doing really well. Remember the big Berkshire and Buffett bet on buying a bunch of brokerage stocks over there? That's right. Early, when no one was really talking about what was going on in Japan, they, of course, have their earnings in the annual this weekend.

So maybe that's topical and interesting that, as you say, it is hitting a new high. And Tokyo Electron, which doesn't trade here, but it's one of the big semiconductor capital equipment companies. They compete with Applied Materials all over the world. So the point is, weak yen, reconstruct your economy. 34 years, though, to get to a new high. Remember, the S&P is hitting new highs every single day. Better late than never. Imagine waiting 34 years for a new high in the S&P 500. I don't think we'd do that. Do you feel like what happened after the bell yesterday was one of those moments with NVIDIA where it was binary for maybe the market at large?

It was a transformative moment because that was the moment where everyone said, you know what? All the naysayers are right. And all the people worried about concentration risk, maybe there's a reason these stocks are so dominant. Maybe given the earnings and the cash flow of these stocks, they do deserve to be called the Magnificent Seven. A lot of the naysayers were put to rest last night. All right. So the SEC and the Dow, the record throws. Not so much for the NASDAQ, at least for this day. Well, I'll see you tomorrow.

We've got one more day to try into overtime with Morgan & Johnson.