Closing Bell - Closing Bell: Ride the Rip? 11/21/24

Episode Date: November 21, 2024

Where is the post-election rally headed from here? Nuveen’s Saira Malik breaks down her forecast and tells us where she is seeing opportunity right now. Plus, Notable Capital’s Jeff Richards tells us how he is playing the tech space and where he’s putting money to work right now. And, we explain what’s at stake when Gap and Ross report results in Overtime. 

Welcome to Closing Bell. I'm Scott Wapner, live from One Market out in San Francisco. Today, this make or break hour begins with this big day in the markets. Let's take you right to the scorecard here with 60 minutes to go in regulation. Dow up more than 500 at its high, and it is up nearly 550 right now. The Russell's ripping as well. NASDAQ also higher, even as NVIDIA taking a bit of a breather today following its earnings report. May still close positive, though, and we will keep a close eye on it as it is now green we're watching uber as well today altimeter capital's brad gerstner revealing on halftime earlier that he sold that stock on concerns over tesla's robo

taxi it's an interesting move stock was down traversed as well snowflake no reversal needed it is soaring after its own earnings we'll watch watch that stock today. One of the best days for it in years. Bitcoin surging to towards one hundred thousand dollars. Word now that SEC chair Gary Gensler will leave come January. We'll watch that into the close today. See if we get one hundred thousand dollars. It does take us to our talk of the tape, the post-election rally and where these markets might go from here. Let's ask Sarah Malik. She's the head of equities and fixed income, the CIO as well at Nuveen. Welcome. It's good to see you out here. Good to see you. So how do these markets feel to you? You know, we had this burst post-election and we took a little bit of a breather and now maybe we're in the midst of something else. What

do you see? I think markets are finally finding their footing for two reasons. One is recovery from that post-election hangover after the first week and reaction to NVIDIA's earnings. Now, NVIDIA's guidance wasn't as much as investors had hoped for, but it is continuing this underlying trend of a shift to software stocks. So those are what's outperforming from here, I think, first of all, because budgets that have been spent so much on AI are starting to be pulled back and shifting back to spending on software. And expectations for lower interest rates, good for software stocks. You're back to the election taxes, tariffs and regulations and how those are going to impact the markets going forward is what we're looking at. Do you like NVIDIA here? I mean, if anything, this just shows how high the expectations are. Right. I mean, when you're doing, you know, your revenue growth is so enormous year on year, but it fails to meet what are, I mean, almost unbelievably impossible expectations at this point.

Well, stock is up almost about 200 percent year to date. So a lot of expectations in this stock to constantly beat and raise guidance. And we did not get the guidance raise that investors wanted today. Long term, NVIDIA is very strong. Blackwell is going to be huge for them. Spending on AI is going to be big. But you're going to see these periods of consolidation. People are waiting now to say, how are we going to monetize AI? How are we going to see that in clients and corporations, business models? So I think that lull could happen. And now you see software taking the lead here going forward. You mentioned three things on your mind, that the themes for the new year, if you will, lower taxes, higher tariffs, easier regulations, that against backed up yields. I mean, what do I do with that? And at what point

is that a problem? Well, the concern is that those three things are going to cause two problems, which is stickier inflation and an economy that could overheat. I think the jury's still out there, which is why you are going to see this volatility around the Trump trade. It'll work for a while. It'll take a break as people worry about it. It probably depends on what's going to happen with budget cuts. Will regulations cause more M&A? Will they cause, will taxes cause higher inflation in the U.S.? I think those are real risks that investors need to consider. S&P right now trading at about 22 or so times forward earnings. Last time we saw it higher was in March of 2000, where it traded at 24 times. We know how that ended.

But is this ending going to be different because of the power of a new administration, the lowering of regulations, the lowering and re-upping of the tax cuts? And all that's going to be more important than whatever higher tariffs do. And by the way, if you look at performance of stocks with higher tariffs, it's not like the stock market did terribly the first time that Donald Trump was president. So why should it do terribly the second time? I say Trump 2.0 is different in terms of the environment than Trump 1.0. Interest rates and inflation were not at these levels the first time around. So I think that does give us a different ending.

I don't think we're going to have the same ending as March 2000, where we have this dot-com bubble, because tech stocks are much more fundamentally strong this time around. So the ending, I mean, challenging to say. It's really going to depend on can this economy continue to perform strongly without overheating? And can we manage inflation? We'll see PCE data next week. Can we manage inflation down to about the target without it reaccelerating again like it did earlier this year? Are you are you dialing back your own expectations of rate cuts? I mean, I feel like now we're debating in real time whether December is going to happen or not.

It seemed like a formality at one point, but now I hear doubts. Yeah, we've been worried about the degree of rate cuts that the market expects for quite a long time. We weren't in the six to seven cut camp at the beginning of this year. December is about a coin toss now, 50-50 chance of a rate cut. And I think the four rate cuts next year are in question. If the economy remains at the strength that it is and inflation picks up, I think the Fed's going to have to cut back on rate cuts. That volatility could be dependent now more on the Fed. How will the markets handle this lower degree of rate cuts? Can they handle

it as well as they did this year? I mean, the Fed speak lately has been a little bit mixed. You know, Fed Governor Bowman yesterday was pretty hawkish. Now she's been hawkish, so that's not a big surprise. Goolsbee today was more dovish, I guess. As long as we get some degree of cuts, is that all that really matters? The size of those cuts, the speed at which the Fed cuts is not that important? I think it depends how does the economy and the consumer react with those rate cuts. What's been the driver of this economic cycle has been consumer spending, particularly on the high end. If that can continue, even with higher interest rates and inflation, then I think all of this soft landing narrative will remain intact. If the high end consumer starts to fall apart and crack, and we're not seeing that yet, I think we would be more at risk. But another important number is going to be employment numbers coming out at the

end of this month, because you saw that last month's payrolls were only up 12,000. We blamed it on strikes and storms. But September payrolls up a quarter million. Where are we really in the labor markets is going to be an important factor to watch. What about the broadening trade that we've seen? I'm looking at the Russell. Today's up near 2 percent. Dow's up, as I said, 550. But the sectors that are leading are classic cyclical plays, whether it's industri you know, industrials or financials, materials and things like that. Do you expect that those trades are going to continue to work into 2025? Small caps and financials particularly are part of the Trump trade. I don't think there's any reason for those to slow down within those two. We particularly like small caps because they

have the valuation argument. They're still trading at about a two-decade record discount to large caps. The small caps, I think, with regulations, that could open up M&A markets. Tariffs could bring more consumption back to the U.S. And tax cuts, that's all better for small caps, which tend to be more domestically oriented than large caps. Even with higher rates? I think even with rates that are stable to declining, it's good for small caps. And we do expect that. We're not going from four rate cuts expected to rate hikes, I don't think, at this point. But it probably is less than four rate cuts for 2025. And that's still positive for small caps. And remember, you do have that valuation argument.

Best area for credit right now is what, do you think? Well, given that we don't expect rate cuts to the degree that the market does, I'd say leverage loans. Those areas of credit that are less dependent on rate cuts are going to perform the best. What about high yield? High yield is higher quality than it used to be. And that is where you can reach for yield and get stronger returns. So I think as long as the economy remains strong, the fundamentals for high yield, especially high yield munis, is a favorite asset class. Are higher rates a threat, if you want to use that word, to high yield? And also maybe some are still projecting a possible deterioration of the labor market and an eventual slowdown in the economy.

Maybe you don't see that. We do. We are worried that eventually the economy will finally get hit by this degree of inflation and interest rates. But we're not seeing that at this point. With fixed income, given that rates have backed up, you can lean more into generating income with fixed income at this point and then look for those areas which are fundamentally strong. So municipal bonds are a great area because of the strength of this economy, strength of the state, strength of their coffers

and rainy day funds. They're very fundamentally strong and they have already been somewhat hurt because of the election and the expectations for less tax hikes going forward. Good to see you out here at One Market. Great to see you too. Sarah Malik of Nuveen joining us right here. Let's bring in Adam Parker now of Trivariate Research and Joe Terranova of Virtus Investment Partners. Both are CNBC contributors. You know, Joe, I want to start with you and I want to start with a moment that happened earlier today on CNBC on our halftime report where Brad Gerstner of Altimeter said that he sold Uber shares. I want you to listen to his reasoning. Leading up to the election, right, we had been taking down our position size and we've been rotating into Tesla. Why? Because I said before we had a chat GPT moment around full self-driving

in 2024. I think the year of 2025 is going to be about RoboTaxi. We were present at the RoboTaxi day. You know, we were impressed by the RoboTaxi. And so for Uber, they have to get past this moment, right, where, you know, they have a hugely disruptive force coming in the case of Tesla. And now we know that the Trump administration is going to push, right, for a national regulatory change so that we'll be good for Waymo and good for Tesla. Now, Uber has a solution to this, right? They have Waymos on their platform,

but we just want to see it play out. Joe, you own the stock. I play this because I was very surprised to hear that Brad had sold it, given how bullish he has been on the company, on its leadership. Adarak Hasrashahi, obviously, as CEO. What's your take? And are you moved to make your own move in this name?

Well, I already made my move in the name. I sold it personally at $73.50 on a lot of the concerns that Brad is citing. Let's keep something in mind as it relates to Uber. Year to date, the stock is underperformed for the entirety of 2024, the S&P 500 and certainly the Nasdaq. It's only up 13 percent. This quarter, it's down 6.8 percent. In the ETF, ownership is still maintained. I think that's the right position when you look at this company long term. It's one of the better industrial names you're going to find. It's quality in its nature, for sure. But I respect, understand, and agree with the premise which Brad presented to you on the Halftime Report today. I do think when we turn the calendar into 2025, the conversation about robo-taxis is going to intensify.

And you can't dismiss the fact that Elon Musk has the ear of the incoming president of the United States. And that is a very powerful position to sit in. It's a very powerful position for Tesla to be in. And obviously the market is recognizing that. But I mean, what you're talking about is the potential moving of the goalposts, that because of that position, it's going to more benefit the companies that, you know, Musk is in or cares about or that matter. And in this battle over robo taxis, I'm not saying it's a you know,

it's a two part, a two position battle, but it sure feels like that. It does. But the premise has always been a wish and a hope. Now you're at the moment where if this cannot become reality and you can't advance the technology at this moment with this administration, then I'm not sure you'll ever be able to do it. So I think understanding what risk is, reshaping risk and taking risk in markets is what we all do. And Brad does phenomenally well. And I think this is the moment where you step forward and you lean into the risk and you say to yourself, okay, this is the opportunity that potentially we've been waiting for. Adam, let's spin to NVIDIA then with you. You know the stock well. You know the space well. What's your read and what do you think it means for where this market goes from here, if anything?

You know, I'm a little bit on the other side of what Sarah was saying earlier in the call. You know, software has beaten semis by a lot in the last few months. I think in the medium to long term, semis are just going to be more enduring. I'm more confident that I need them. I thought NVIDIA's numbers were, in absolute terms, pretty good. And I think they kind of told you that other semis are going to participate. So I kind of like selling some of the software that's worked and buying some semis in here. I think that trade could be good.

It's hard to only recommend things that are straight up, and I like semis and I like NVIDIA, and I think they'll be higher in a three-month, six-month, 12-month view. And so I'm positive. i think there's a lot to look forward to and i don't think there's any doubts that in 2025 you talked about the year of robot i think there's also going to be the year of proof cases for ai working that drive productivity and earnings uh for companies and i want to i want to own um companies that are exposed to that so i i like semis it seems like when you talk about you know enterprise though

enterprise software that that that's where the the action is. And that's where the money is going to flow outside, Adam, of course, of the videos of the world and the broadcoms and maybe a couple of other names that, you know, easily come to mind for investors. But it's an enterprise software story. And that's why the money has predominantly gone there. If you look over the last, I don't know, five months or whatever, there's no competition. Right. But I mean, I'm just I'm not sure three years from now or five years from now what new companies are going to form that are going to be 100, 200, 300 billion market cap. We're going to all be accessing on our phone. But I am sure I need Taiwan Semi and I am sure I need NVIDIA. And I think ultimately

that means their multiples will stay at higher levels. I could create and poke some holes in some of the large-cap software companies about what they're really going to do, and so sure, I can get this argument that there's a little bit of a near-term spend on enterprise. I get I want cyber. I think there's some pockets at work, but I think in any medium to long-term view, you want to own semis over software. They might both work, but I certainly think semis will be better.

And I see a big dislocation where software's really outperformed like the last few months, and it makes me want to lean the other way, not chase this even more, just my personal view. Joe, you own NVIDIA. I mean, what's your read on the way that the stock is trading today on the back of earnings, which everybody could agree were great, right? You know, whether the guidance lives up to whatever hype was necessary, I don't know. You'll have to determine that. But what about the price action today?

Does that tell you anything? I'm somewhat surprised because I thought in the revenue guidance we needed a forehandle. We needed to see $40 billion. We didn't get that. And the stock is obviously higher today. I think what NVIDIA did is it basically didn't dent the optimism that's currently embedded in the financial services industry that we could have this end of year runoff. I also think based on what we're seeing in the price action in NVIDIA, you're getting a little bit of a jumpstart in what has been

dormant momentum for some of the AI and Halo adjacent names. So take a look today at a name like Synopsys. Take a look at KLA Corp. Take a look at Applied Material. These are names that have not been working that now, after NVIDIA's report, they're finally beginning to work once again. I agree with what Adam said on software, but let's keep something in mind with software. You're finally seeing some of the emerging software names participate.

Twilio, a name that I bought recently, that's at $102 today. You've got Datadog. You've got DocuSign. So the enthusiasm is not just in the large cap and mid cap software names. You're finally seeing now the emerging software is where investors are turning to. Scott, I thought on that is you can't love all the M&A companies because there's going to be M&A and then not like some small cap software. I kind of agree with that. I'd probably sell some of the large cap software, buy some small cap and then buy semis.

That's my I like that positioning because if you believe there's going to be deals, you're going to see some in software. What about Sarah Malk's call here that she likes small caps? If you're going to have a boost to the economy, then she says that's a place to look. You disagree? No, I mean, I think that's an obvious trade from the Trump trade. We've seen it. I think the question is how much is left. I mean, the things she pitched you are all stuff that's up a lot very recently.

And so when I think about the note I write every Sunday, I know you get it. The level said, like, what am I going to say? It's not going to be just buy everything that's ripped straight the last two weeks. It's going to be a little bit more what I think is overly run up on the Trump trade, what maybe is lagged. So I kind of think the small cap part she pitch that I disagree with would be the banks. To me, I'd rather own large cap, big financials that are going to benefit from the M&A cycle. If we're going to get a position

where we get a strong jobs report December 6th and people say maybe the Fed's not going to be doing as much, there's no way the small cap banks are going to work as well. Even if her point's right that there's more coming, if there's less accommodation, I'm going to be short the small cap banks are going to work as well. Even if her point's right that there's more coming, if there's less accommodation, I'm going to be short the small cap banks, but I'm still going to believe in Apollo and PJT and Morgan Stanley and KKR, et cetera. So I think the pair trade would be long the guys who benefit from the M&A, short the small cap banks if we're going to pump the brakes on the Fed.

Scott, if I feel like Joe— Well, I feel like we're already kind of pumping the brakes, right? This isn't it doesn't feel like a maybe any anymore. I feel like we're we're going to be facing the reality that the Fed's not going to be cutting anywhere to the degree or speed at which we thought even a month ago. Oh, I think that's I think that's clear. You know, yesterday, the remarks from Fed Governor Bowman, it's obvious to me Fed independence is in place. Remember, she was appointed in 2018. She's a Republican appointed by President Trump. So they're keeping their independence.

They're observing the economic environment. And I have to tell you, candidly, I'm OK if they go slow. As long as what they're doing is through the course of 2025, they're lowering rates. I'm OK with that. And by the way, that goes back to the point on small caps. what they're doing is through the course of 2025, they're lowering rates. I'm OK with that. And by the way, that goes back to the point on small caps. I don't think you need to go directly to small caps if you really like the financial sector. The financial sector is the top performing sector in the S&P year to date. It's up 33 percent. I could do the work that I need to do right there with USB, with Goldman Sachs, with JP Morgan. I could trade down to

some of the private equity names that Adam mentioned. And I can even look at some mid-cap regional banks, pull up Regions Financial, look at M&T Bank. These banks are all doing incredibly well right now. So I think with the expectation of where Fed policy is going to go, which I think you and I agree is a little bit slower than maybe the street anticipated, you want to stay high up in that equity size class, mid cap and large cap, because the broadening out's happening there. All things equal, Adam. I mean, do you feel like the post-election rally is intact? That after the burst and then the rest, that we've got now some, you know,

a clearing event of getting NVIDIA out of the way. We're going to take bets on December and we're going to do it right up until they make their decision and Chair Powell meets the media. But do we think it's still intact? I could see, you know, I think we talked about it last week. You know, I could see the Selden inauguration call. Like, we could rally until then, and then we may get a bit of a dead spot until we see some of the benefits of what people are discounting. The biggest negatives are the big firms that were negative last year are more bullish this year.

I think the consensus optimism is up. The big positives are we have an incoming administration that values the stock market, wants it to go higher, uses that as one of the metrics of success, and is going to shake things up. And if something happens and it doesn't work, they'll stop doing it because they want the market to go up. So I think the bull market probability is still higher than the bear, and I think you're going higher. But I don't think it's quite as easy as it's been, you know, the last couple of weeks going forward. Joe, last word, same topic. Yeah, I think, you know, it's interesting, Scott, month to date, I think most viewers would be surprised with what I'm about to say.

The best performing sector is energy. Energy is up 9%. So energy is rallying right now. Natural gas is at $3.40. Oil is at $70. I think if that continues, there's an effect on the other side of the year. But I think for now, what it does is it provides multiple avenues for investors that are chasing this tape to find investment vehicles. And I agree with Adam. I think that's why we're in a good place through year end. All right, gents, we'll leave it there. Adam and Joe, thanks. I'll see you soon.

And I'll see you back on the East Coast. All right. Let's send it to Courtney Reagan now for a look at the biggest names moving into the close. Hey, Court. Hi there, Scott. So shares of Deere, those are soaring after posting fourth quarter revenue and profit that beat Wall Street estimates. The tractor maker, though, issuing a weaker than expected forecast for 2025. Still, CEO John May said the company is in a strong position to handle any potential tariffs under the incoming Trump administration. Shares of Deere are higher here by more than 8%. And MongoDB is also higher today, with data software stocks rallying across the board, really, after Snowflake released a strong

earnings report and optimistic guidance. MongoDB also recently announced that the company is expanding its partnership with Microsoft to advance AI applications and data guidance. MongoDB also recently announced that the company is expanding its partnership with Microsoft to advance AI applications and data analytics shares in MongoDB of more than 12%, almost 13%, in fact. Scott, back over to you. All right, Court, thank you. Courtney Reagan, we're just getting started out here

at OneMarket. Up next, notable capitals. Jeff Richards is here with us live. We'll find out how he's playing the tech space right now, where he is putting his money to work. We're live at OneMarket. We're back right after this. The great news for technology, Scott, is this. I look at massive tailwinds over the course of the next five years. I think they're going to be incredible winners. I think 2025 is going to be about picking winners and losers.

Software clearly in the back half of this year was one of those winners. And I think we're just getting started. We're still trading under that 10 year average. Well, that was Altimeter's Brad Gerstner earlier today, making the bull case for software in the months ahead. Joining me now is Jeff Richards. He's managing partner at Notable Capital. It's good to see you. Thanks for having me. In a minute. Are you as bullish on tech and software as Gerstner? I saw your segment with Brad, and he certainly came across as bullish. He did. I would give you the backdrop of it's been a rough few years. 23 was particularly challenging for software.

A lot of companies de-selled growth. If you wind back the clock two or three years ago, we had quite a few public companies that were growing at north of 50, including Snowflake, who you guys talked quite a bit about. The fastest growing companies in software today are just ticking over 30 percent, and most of them are mid-20s. Snowflake's one of those. But all the really good ones, the CrowdStrikes, the Snowflakes are in the mid-20s. So we've seen a decel in growth. And I think a little bit of what Brad was alluding to is we're now seeing that pick back up. I mean, as you saw the decel, I guess the multiples had to come down.

And now are they going to be expanding once again and those stocks are going to be attractive? Well, if you look back, the peak multiple for software back in, I believe it was November of 21 or December of 21, was 20x forward revenue. That was the average for software. Today, we're at about six, which is the 10-year historical average. So to Brad's point, if you were looking at software five or six months ago, trading at 5x forward, it looks pretty attractive. The question is, are we going to see that growth tick back up? It's kind of been the unknown. I'd say the one thing that we're seeing is a tailwind.

We're certainly seeing it in the private companies we're invested in is AI. Everybody's talking about when is AI going to kick in for software. It's happening now. It's not a future thing. It's now. It has to be. That's why these stocks have picked up. You know, we played the sound from when Brad was with us in June where he said software had bottomed and the outperformance software to semis

has been stark. I mean, it's been pretty amazing. Yeah. And I'll tell you, I've got private companies. Last two quarters have been their best bookings for quarters and years. 60 to 70 percent of bookings are AI or AI related. So, you know, chat GPT came out two and a half years ago. It's taken a couple of years for those companies to build into their product roadmap. But the scale, I mean, you guys also talked about the infrastructure build out that's happening. That's unprecedented. One hundred eighty billion is spending in CapEx by the mag seven this year. Three hundred billion next year. I mean, to put it in context, the entire federal and state government spending on infrastructure, bridges, roads, airports is $300 billion a year. These seven companies are

spending that on this AI build-out. So it's now setting the table for the software applications. Think about it as an evolution from the chips. So semis and chips start first. Then you've got the hyperscalers and the infrastructure. And then on top of that comes the applications. And we're talking mostly about enterprise software, but also consumer. We have yet to see the Airbnb, the Uber, the DoorDash of AI. That's coming. That's getting funded by VCs right now. Obviously, as you know, we invest over a very long time horizon. So we've been funding these things for two to three years. And you're going to start to see those companies hit the mainstream in a couple of years now. Feels like what was bridges, roads, airports, what in yesteryear were railways, railroads, are now data centers. I mean, how do you see the evolution of that where it feels like a lot of

the dollars are now going there? Well, the other thing that's amazing about this build-out is it's global, right? So in our firm, we have a very global perspective. We call it US+. You think about the Amazons, the Metas, the Apples, the Googles. They're not just serving U.S.-based customers. They're serving people in Europe and eventually India and Africa and other countries around the world. So those bridges, roads, and airports serve the U.S. predominantly. But I think what's interesting is think about the tail of this, what the impact to global GDP is going to be. We're very fortunate in the U.S. to have these companies, that they have the cash flow to invest in this. If you look back 20 or 30 years ago, the origins of the internet was built by the government. The government can't afford to spend an extra $300

billion on infrastructure build out for AI today. So thankfully, we have these amazing companies who are building it out, greasing the skids for all this innovation that's going to come on top of it. I thought that was a pretty interesting headline from the journal, AI investments are booming, but venture firm profits are at historic lows. They talked about how venture firms have returned $26 billion worth of shares back to their investors. That's the lowest amount since 2011. When does that change? Well, you guys haven't had very many days here talking about IPOs. Yeah, was that going to change anytime soon? It's been a chilly market. You know what's amazing about it is we had an IPO earlier this year on Reddit.

Stock's up, I think, 3 or 4x from the IPO. Company's growing at 60 plus percent. So clearly there's demand for these companies. Public shareholders, investors, you know, would love more of those names. We've got one that just announced a filing this week called Service Titan. So hopefully testing the waters there. It's a good software company that sells to the SMB space. I think a lot of the bankers, I was with folks from Goldman and Morgan last week.

They're expecting a pretty robust pipeline next year. It may not be the names that we think of, the stripes and the data bricks. It'll be a bunch of names that people haven't necessarily heard of, hopefully with an AI bent to them. But there's a whole bunch. There's probably 100 companies that are well over 100 million in revenue that are private, mostly funded by venture capital firms that will hopefully get out in 2025 and 2026. You know, we only have 4,300 public companies. I heard a great interview with Mark Rowan the other day from Apollo, and he said, you know, 80% of the companies in the world, over $100 million, are private.

So I think it's good for our economy to have those companies go public. Hopefully we'll see a return to the IPO market in 2025. Well, I mean, the other part of that issue is that companies are just simply choosing to stay private. They don't need to access the capital markets for, certainly the public markets, for their funding. Why is that going to change? I mean, there are firms who are lending money hand over fist to these firms who are just remaining private. They don't need the headache of the public markets. Yeah, I think it's a great question. And you certainly have seen Stripe following that path for a while. Now, Stripe's a 15-year-old company.

It's not a startup. Valued at over $60 billion. The secondary market for them, for liquidity for employee shares, for example, is very liquid. Plenty of demand. I think that the argument that I would make is it's good for the economy, it's good for your employees, and it's good for company discipline. And you look at the performance of companies like Snowflake, CrowdStrike, HubSpot, Shopify. If you ask those CEOs, they love being public, right? It helps for branding. It's great for their employee base. It gives them tons of access to capital in the debt markets and the public markets. So hopefully we'll see. And of course,

a company like OpenAI, which is spending a lot of money, eventually there may not be enough private appetite for that and they'll need to tap the public markets. Lastly, are you being pitched anything that's not AI related? And if so, do you pass immediately? We do. We're investing in fintech. We're investing in consumer. And there's some companies in those spaces that are doing incredibly well. We have a private company called Quince.

I don't know if you ever shopped on Quince, but it's sort of affordable luxury, multi hundred million dollar company that's on a tear. So, yeah, we're doing a lot outside of cyber and software and cloud infrastructure. There's still pockets of innovation and those categories are going to be impacted by AI as well. All right. We'll follow those. I appreciate you spending some time with us. Good to see you again. Thanks for having me. That's Jeff Richards joining us right here on Closing Bell at One Market. Up next, the CIO of AI-driven software company LogicMonitor is with us here after a fresh funding round. Find out what she has to say about demand for one critical piece of the AI story.

We are live in San Francisco. As you know, the bell is back after this. Welcome back. Investing around data centers has been one of the hottest and fastest growing parts of the AI story. Our next guest company just raised $800 million and has seen its valuation surge in recent years. Christina Kosmowski is LogicMonitor's CEO, joins us here at OneMark. It's nice to see you. You as well, Scott.

Data center monitoring is exactly what? How do you describe that to people? Yeah, so LogicMonitor, we're a hybrid observability platform. So what that means is we monitor both on-premise, your traditional on-premise data centers, as well as those in the cloud, like AWS and Microsoft Azure. And so we monitor to ensure that those systems stay up and running and resilient. We're really at this epicenter right now between AI and the data center optimization. And so we are able to ensure that these data centers stay up and running, they're resilient, while also looking for insights around cost optimization

and sustainability. And so, as we say, AI needs data centers and data centers need logic monitor. I mean, like we wrote in the intro here, it does feel like all roads, literally and figuratively, lead to these data centers. Peak data center, are we anywhere close to that? Or is this build-out just going to be infinite almost because we're still at the nascent stages of what Gen AI is really going to be and do? Definitely. I think we're in the early innings for sure, and we're seeing this incredible demand and tailwinds as our customers are really looking at, how do they power this AI innovation and how do they ensure that this innovation can stay up and running? And you need those data centers to be resilient.

But then they're also balancing how do we do this in an optimal cost way and how do we ensure that we're meeting sustainability requirements and we're able to derive those insights for them and really be this advisor for them as they think through all of those things. I mean, your own growth and the valuation that you now raise capital is pretty astounding. You're owned by Vista Equity Partners. According to PitchBook, they acquired you for about $400 million in 2018. So it sells the stake at a $2.4 billion valuation. I mean, OK, Robert Smith, I get it. He understands buy low and sell part very high. They're going to remain the majority shareholder. They are. They're remaining in control. And so we are so excited about this

$800 million investment at this incredible valuation of $2.4 billion. And it's just a huge testament to the demand we're seeing in the marketplace and the need for the systems to stay up and running. And so we're excited for this investment and to continue to partner with Vista. And there's three things we want to do. The first is we want to continue to expand our platform innovation. And we may do that through M&A as well. The second is we want to accelerate to expand our platform innovation. And we may do that through M&A as well. The second is we want to accelerate our AI products. So we just launched our IT assistant, Edwin. Edwin AI, right? Edwin AI in mid-July. And we're seeing tremendous impact with our customers

as well as on our own business. And then we want to continue to expand to additional geographies and markets. I just had the conversation. I'm not sure if you had a chance to hear it with Jeff Richards. I did. Yeah, he teed us up. Well-known venture capitalist. And we talked about the idea of companies going public or staying private longer. I mean, what are your own views as that sort of scenario evolves?

Yeah, definitely. I mean, as CEO, I'm focused on building a long-enduring company and ensuring that we're deriving great value for our customers. So squarely focused on this, this investment round allows us to accelerate and expand that mission. And then, of course, we'll continue to watch the markets and see what happens. I mean, when you watch the valuations of AI-related companies just explode? You know, what goes through your mind? Yeah, I mean, I think we're at the ground floor of this incredible revolution. I was at Salesforce. I started there in 2002, where we were on the ground floor of the cloud computing and really how that was changing

the way companies, you know, deploy their software. And then now we're in this AI revolution where we're really driving data insights. And so I think we're just in the early innings. And at LogicMonitor, we're proud to be at the pinnacle of this, where we, first and foremost, we monitor these data centers that are fueling the AI revolution. But then we also, you know, ingest over a trillion metrics a day. So we have all this incredible data that we can drive insights and predictions around this management of their data centers. You mentioned the quote-unquote teammate that you have in Edwin AI, as we said,

and you just talked about the trillion-plus records a day. I mean, you have 100,000-plus customers, and this was only launched in June, and it's already contributing to revenue growth? It absolutely is. We just launched it in mid-June, and so Edwin is your IT employee who basically never sleeps, doesn't go on vacation, and can really help elevate and optimize performance for these IT teams. They're under enormous amount of pressure because their environments are not getting simpler. They're getting more complex, especially as they're continuing to build out these data centers. And they're under increasing demand to be more efficient and do more with less. Good having you here. It was great. Appreciate the conversation. All right, Christina, thank you. Christina Kosmowski again. Logic Monitor CEO up next. We're tracking the biggest movers as we head into the close. Christina

Partsenevelos is standing by with that. Christina? Popular name. The impact of Chinese stimulus plans should take longer than anticipated, and that's hurting one tech giant. All of the details next. We're 15 from the closing bell. Let's get back now to Christina Partsenevalos for a look at the key stocks she's watching. Christina?

Thanks, Scott. Well, e-commerce giant PDD, Pinduoduo Holdings, is sliding today after the Timu parent company missed revenue estimates. The company is the latest Chinese tech giant to be hit by increased competition, as well as slowing growth in the country as Chinese consumers are pulling back on spending. Online ad spending also from businesses in China are weaker in the third quarter. This according to Chinese internet giant Baidu.

And that's why their quarterly revenue fell 3% year over year. And they forecast China's stimulus plan is actually going to take longer to take effect. And that's why the stock is down about 6 percent right now. Scott. All right. Thank you very much, Christina Partinova. Still ahead, Alphabet shares are sinking in today's session. We'll tell you what's behind that big drop. We'll be back on the bell out here in San Francisco after the break. Reporting in overtime tonight, we'll tell you what to watch for when those reports hit the tape

it's ross stores and the gap inside the market zone next we're now in the closing bell market zone cbc senior markets commentator mike santoli here to break down these crucial moments of the trading day plus dear jabosa on the big swing lower for alphabet shares today and courtney reagan looking ahead to gap and ross those earnings coming after the bell mike you first um i meanVIDIA is now positive and the market's gotten a pretty good day out of this. It has, although NVIDIA, my read on it is the report passed. It didn't do any damage in the long term fundamental case. No real incremental reason to get particularly excited freshly. But the catalyst steps aside.

The rest of the market is released to do its rotational thing. Actually, very sturdy rally, especially below the surface. S&P being suppressed by selling in the other NASDAQ 100-type names. But you've got the equal weight up 1.4 percent. Banks very strong. Small caps up almost 2 percent. The one thing that I keep having to come back to though is the split nature of this market where the majority of the market's been kind of going sideways and cooling off hanging around the net waiting for you know the for another upside attempt where the two month two week high for the S&P but the wild smaller cap crypto linked stuff has been really erratic and you get big downside reversals today in micro strategy Coinbase, even with Bitcoin going higher. So you have to be alert for that as a potential source of a little bit of turbulence in this tape. I'm not sure you can get a perfectly seamless

rotation out of the hot money stuff into the rest of the market. I guess now we're going to be focusing on data, you know, on the economy and what we think it means for cuts going forward. I mean, now that NVIDIA is the clearing event out of the way, there really isn't that much for the market to focus on. I suppose we're still waiting for a Trump treasury secretary, which the market's going to weigh in on one way or the other, I guess. Outside of that, what are we left with? No, that's basically it. I mean, you have this sort of holiday week upside drift dynamics that are just in the background. We are still overtrading every appointment announcement and every hint about policy, I think. But that's just what we have to work with.

Arguably, the market took an upleg midday just as the Matt Gaetz withdrawing headlines came out, which also was when the Austin Goolsbee Chicago Fed president headlines came out. It's hard to know, but it's clear the market would like to see somewhat of a more, maybe less fringe, less contentious process here. But that's just conjecture. Yeah. Speaking of headlines, we got some today, Dee, relative to Alphabet. And it's not often you see that stock off by more than 4 percent. That's not even as bad as it was earlier. Right. Usually investors have been kind of complacent when it comes to antitrust stuff.

Not today. There's the proposed sale of Chrome, ending the exclusive deals with the likes of Apple and Samsung. But the DOJ went even further than that, also raising the prospect of separating Android, requirements on data sharing, and asking the judge to force Google to shed its stakes in AI companies

that control technology that could compete with search engines, like Anthropic, which is important for Google's AI chip ambitions. And all of this, Scott, leads to the most important point here for investors, and that is in leveling Google's search position, the DOJ is going to hurt Google's position

in the generative AI race at a critical moment. Now, this will take months, maybe years to settle. But January, that's when President-elect Trump takes office. That could be the next most important event for Google's antitrust battles. Trump has recently suggested that Google should not be broken up. But as we know, he is prone to flip-flopping on his big tech opinions. Plus, he's now got Elon Musk in his ear who stands to benefit from a weakened Google on a number of fronts, from self-driving technology to AI to videos. Be interesting to watch. D, thanks. Dear Jabosa. All right, Court, Gap, Ross, after the bell, what do we need to know?

Yeah, such a busy time for retail, Scott. So investors are going to want to see if Gap, Ross, after the bell, what do we need to know? Yeah, such a busy time for retail, Scott. So investors are going to want to see if Gap Inc.'s CEO, Richard Dixon, changes are really taking root for more than one quarter like we saw last time around. He's talked about shoring up the retailer's financial rigor, which he thinks will enable the brands to grow and be reinvigorated themselves. So last quarter was solid. Shareholders looking for continuation of that, especially with this most important holiday quarter underway here. The street expects Gap Inc.'s third quarter earnings will be 58 cents on revenues of $3.81 billion, with total comparable sales up a little bit more than 1%. Now, last quarter, Old Navy was the driver. Has that trend continued? We'll have to see. Ross Storrs also

reporting the street looking for comparable sales growth stronger there, 2.5%, with earnings of $1.40 per share on revenues of $5.15 billion. Now, competitor TJX had a decent quarter. The soft holiday guidance and a softer Marmax division, that one more closely compares to TJX than its HomeGood division when you're talking about the comparison between Ross and TJX. Now, TD Cowan is maintaining its buy recommendation for Ross, but cutting its price target to 177 from 185. Shares of both Ross and Gap are higher going into those prints. Scott. You'll let us know what happens as well. Thanks, Court. Appreciate it. Courtney Reagan. All right, Mike. Yields up today. Russell outperforming today. What's that tell you? You know, it's an interesting combo. And my read on it is,

first of all, yields started lower and that we did get a little bit of data out there. You know, initial claims were certainly positive. I don't think, you know, weekly leading economic indicators was a mover. But there's just been a real value over growth tone. I think that's where the rustle is coming from. Banks are up 2%. So I think as long as we don't go blasting to new highs in yield, maybe those things can coexist. But it's pretty delicate because you look at the chart of the 10-year yield, you look at the chart of the U.S. dollar index, they're both bumping up against these recent range ceilings that maybe would be a little bit of a test. But so far, not really upending a lot of the underlying story today.

What's going to be on your mind for tomorrow, the final trading day of the week? Is Bitcoin going to be at the top? I mean, we're pushing up against 100K. You mentioned some of the trades around the crypto universe as we assess what's going to happen in the new year with a new administration. There it is. Getting ever closer, Mike. 98.2.

Right. Look, absolutely. Mostly because it is this incredibly concentrated risk appetite tail. And also, you have to be aware of, you know, when do markets finally get to this crescendo peak? It's on the pile up of good news when it gets discounted and maybe when the angle of ascent has gotten too steep. That might not be the case with Bitcoin. It's definitely the case with some of the related

stocks. So watching that and just watching how the overall market continues to react to its own field position, as I mentioned, the S&P at about a two week high, trying to regain some more of that post-election bounce that we gave up. Yeah, appreciate it. Mike, I'll see you back there. Thank you, Mike Santoli. We'll go out green across the board. Dow and the Russell, of course, leading the games today, but it's green across the board.

Most sectors that way as well.