Closing Bell - Closing Bell: The Battle for AI Domination 2/18/25

Episode Date: February 18, 2025

Several AI stocks surging today – from Oracle, to Dell, to Vistra and Vertiv - perhaps because of Elon Musk’s new AI model. We discuss with our panel of experts. Plus, Ferguson Wellman’s Mary Lago tells us how she is advising her high net worth clients right now. And, back-to-back Daytona 500 winner William Byron joins us at Post Nine. 

All right, guys, thanks so much. 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 battle for AI domination and new developments placing Elon Musk and Sam Altman at odds once again. We'll have those details straight ahead as several stocks in that space are moving today. Here is the scorecard with 60 to go in regulation. Not exactly the highest conviction one way or the other today, but the S&P is making another run at a new closing high. We will track it about four or five points below it right now. Sectors, they're pretty much split today. Energy is leading the way, and most of the banks are higher today, too.

Bank of America shares, however, there they are. They are lower by about 1%. A new filing from Berkshire Hathaway reveals that firm selling even more shares lately. Interesting news. Constellation Brands shares are sharply higher. Berkshire initiating a new position. So those stocks going in opposite directions. It does take us to our talk of the tape. Several AI stocks surging today from Oracle to Dell to Vistra and Vertiv, perhaps because of Elon Musk's new AI model. We have three reporters on the beat today. Steve Kovach, who covers tech.

Kate Rooney on all things AI. And Christina Partsinevelos on NVIDIA's March Hire. Steve Kovach, you first. What's this all about with this new version of this model today? It's Grok 3 day. Aren't you excited, Scott? This is what Elon Musk announced last night. It's the third version of the Grok AI model. This is what

you access either through X, the social media site, or XAI, the standalone chatbot app for Grok. And this is, they're making some big claims here that it outperforms OpenAI's chat GPTs, best and latest, greatest models, that it outperforms DeepSeek, and also some catch-up features here, Scott, including web search, AI-infused web search, and voice chat. All of these are features that we've seen from rival AI companies. So what we're really seeing here is a little bit of a catch-up, but also these claims that Grok 3 has surpassed OpenAI and others. At the same time, we see these two companies raising boatloads of money. And I guarantee you, this is not the last model we're going to hear that's the best and greatest and

fastest ever, Scott. More models equal more money, right? Yeah, exactly. But at the same time, I think what we really got to look here at, Scott, is since these models are coming out so quickly and advancing so rapidly, it comes down to the product. Which of these companies has the best product that you actually want to use? And right now, these chatbots are kind of filling the bill. If you look at the App Store rankings today, in part because of these moves that we saw from Grok last night, ChatGBT sitting pretty right there at the top of the App Store.

We have XAI's Grok moving up a little bit. DeepSeek is up there in the top 10 or 15. What you don't see is some of the big tech companies up there. You don't see Google's Gemini. You don't see some of the more incumbent players there. So this is really an interesting moment to watch how popular these startups are getting and really taking away at least a mind share away from the establishment players, Scott. Are we back to what we witnessed with the streaming services

and the number of different options that were out there and you were essentially forced to choose which ones you wanted to pay, whatever you were willing to pay for them? That's a really interesting analogy. I never thought of it that way. And the answer is kind of yes.

And then we'll see how it all shakes out. I will say these are a lot more expensive. This Grok 3 model, there have been some kind of confusing messaging around how much it's going to cost. It's going to be at least $30 a month, though. That's if you subscribe to it through the X social media site. And then it might be a little—I'm sorry, if you subscribe to it through the Grok app, it might be a little more expensive if you do it through the X social media site. You cannot have all of these.

They all basically do the same thing. So if you're picking and choosing which one you want, if you only have $20 to $50 a month to spend, you can't take them all. You can have Netflix and Peacock and all those others, Scott. Yeah, interesting, Steve. Thank you for that. To Kate Rooney, the threat to open AI here is, I guess, in the forefront, more in the battle between Musk and Altman. How should we think about this? Scott, one thing to think about is just the pressure that it adds to OpenAI that Steve alluded to. All of these models are becoming better. It costs a lot of money to run these and to make better versions.

It just ups the ante on what OpenAI has to do. But I would expect the velocity at which they've been launching products, I would expect OpenAI at some point in the next couple months to say, hold my beer, here's our newest model. You just see this every couple weeks where they try to one-up each other. I love this analogy. One of the CEOs out here was talking about the commoditization of these. They start to look the same.

They're all really high level. It's like taking the top men's or women's tennis players and putting them together on any given day. One of them could win. It could be Nadal, Federer. You don't know who's going to win on any certain day, but they're both extremely high level. So I think that's one way to sort of visualize how good, how competitive these are. Open AI is still sort of considered in pole position, but it is a threat. And that's something I hear all the time in Silicon Valley, at least in the last couple of weeks. People must have known this was coming because

I had a lot of people to say to me, Grok here is the dark horse. This is the one to watch. Yes, the others are in pole position and leading. Anthropics, another one we should mention. But Grok has made a lot of progress. They've got the talent, they've got the money, and they've got the data, which are sort of the three factors that you need to compete here. So they are seen as a challenger, not to mention, as you said, the competition between Musk and Altman. That is the backdrop here, the elephant in the room room that at the same time they've got these competing products

one of the things that really that the clap back from sam allman last week was that he wished you know i must would compete on the technology on the products here's a lot less cancer he's coming out with one of these newer versions so i think that this is really an area to watch the technological back and forth

and they've also got the lawsuits. The funding competition, too, right? You need to continually raise more money. Everybody does. These guys are prolific fundraisers. If you think about Elon Musk and Sam Altman and sort of in that category, too, these are three people who have shown this just ridiculous ability to raise money. And that's one advantage that they have here. You know, venture capital has been eager to get in on some of these deals. But those three, I mean, those three, Lupin and Masasan here, who's backed OpenAI, that is a huge advantage in AI. As I said, it's money, it's data, and it's talent.

I would say the talent piece of it is up in the air. We had some news today. Actually, some of the former OpenAI folks have gone off and raised money for their own startups. But as long as they can raise the most money, so far that has been a huge advantage and one way to stay ahead. Yeah. Kate, thank you for that. That's Kate Rooney. Christina Partsenevelos and Vidya looks at all this and says, yeah, keep coming.

Keep coming with your new models because we need to just sell even more chips. Exactly. If I'm going to thread a theme, you had Steve that say basically they all do the same thing. You had Kate mention commoditization. But the commonality between all of this is the foundation is NVIDIA. And that means that NVIDIA is going to continue to do well when it comes to demand. Well, we know from the Grok 3 that it was trained on 200,000 H100s. That's double the original 100,000 they talked about last year, which shows,

hey, we need even more chips to compete at the top level, which would further drive CapEx for a lot of other companies. The second major point, too, is that all of Grok 3 was trained on Hopper chips, which is, I guess, the current iteration, the one that people could actually get their hands on. It's not trained on Blackwell, which could further drive upgrades in the near future.

And we're going to hear about that next week with NVIDIA's earnings. And then the third point is just, this was all built in 92 days, right? So Elon Musk said it was the largest liquid cooling cluster of GPUs out there. If they're able to do that, get their hands on all the chips in 92 days,

that bodes well for NVIDIA demand to remain consistent and not have these air pockets or moments of transition between quarters that some people are worried about. Yeah, we'll see what they deliver. But a week from today, expectations, I guess, are going to be high again, right? Because the stock has been ramping into the print yet again. Yeah, it's actually above, well, it was above that 140 level when you had deep seek. I'm calling it the freak out in January. But the major concern also for NVIDIA that we have to mention is these export controls, any incoming restrictions coming from the Trump administration.

If there's any retaliation on China's side, that could impact NVIDIA. So that's an overhang. And then it's the supply issues with Blackwell. There's so much demand, but there's still some issues. There have been rumors of issues of the advanced packaging that goes onto those chips. And so perhaps that's delayed the increase in revenues to the following quarter. But demand's still there. That theory, that thesis, that story for NVIDIA hasn't changed.

Guys, good stuff. Covered a lot. Helped us better understand what's happening today, why. Perhaps a lot of these AI stocks are in the forefront of the market price action today. Appreciate that, Steve, Kate, and Christina. We'll see you soon. Let's broaden the conversation now and bring in Liz Young-Thomas of SoFi and Chris Heisey of Maryland Bank of America Private Bank. It's great to have you both with us. It does highlight, Liz, the reemergence of tech, which has put the S&P on the doorstep here again of a new closing high.

Yeah, I mean, it's such a big sector, such a big influence in the market overall, not just on sentiment, but just on market direction. So we were already in a pretty solid place fundamentally. I mean, we've got earnings growth for the fourth quarter of 2024. Most sectors, I think nine of 11 sectors have beat growth expectations. And then you bring tech back into this and it's a further tailwind to just continue to drive things higher. So I think this is a good sign for investors. But don't forget that there are a lot of other places in the index and just in the market overall where you can make money and probably pay a little bit less. So don't take your eye off the ball. I think people are still concentrating so much on what got us here. And we have to make sure that we're broadening it out to other sectors. Pretty resilient market, right? Very resilient.

Part of which is because tech is coming back again. But the rest of the marketplace was kind of hanging in there and actually starting to show some signs of leading to a certain degree. Liz mentioned financials. Financials are still leading on that well. But everybody was just waiting for tech to kind of go into that phase three, which is a race for dominance right now. This previous segment talked about a race for dominance right now. This previous

segment talk about a race for dominance. That's where we're at. And now that winds will start to blow again. And there's still the welcome mat of the house. You feel confident enough in the direction of the market to say that we're really going to have a lasting broadening that, you know, these what we had when tech sort of took a backseat, you did have a pickup. And if you look at the breakdown year to date of the sectors, I mean, you did have a pickup. And if you look at the breakdown year to date of the sectors, I mean, you had so many sectors that had performed pretty well. Is that a lasting trend, do you think? What's interesting now is you're starting to see the cyclicals perk up, you know, materials, energy, but not just that. Within tech, semis are coming

back a little bit. I don't think all the cyclicals will blow at the same time, but if you're going to see nominal GDP growth of 5% to 6%, which is what we've been told, and it's pretty much in the cards, you do get that broadening out. It's going to be sneaky quiet, though. It's not all of a sudden we press a button and we wake up and like, wow, look at the rotation. It's going to catch us by surprise for those that haven't been watching it. But I mean, it's already kind of happened to the points that have already been made. I mean, financials year financials year-to-date are up 7.5%. Utilities are up 5%. I mean, you can go down the list.

There are a handful of sectors that are up 4%, almost 5%, in some cases 6% or 7%. We've already witnessed this. Yeah. And look, if you add the weight of financials and communications together, that's about the same weight as what tech is in the index. And if you look at earnings growth from the fourth quarter, financials and communications are actually the top two sectors in earnings growth. So there is a possibility. The question has been for a long time, can the market still go up without tech? Well, absolutely,

if some of these sectors do it together and if the fundamental story stays intact. And right now, it has. You make a good point. I mean, earnings, right? We had we had been told coming into earnings season, you know, the market's rich, richly priced valuations, you know, 22 times, whatever it is. You're not going to get any more multiple expansion. You got to have earnings deliver 15 percent earnings growth. Yeah, that's what you needed to see. Right. That's the foundation. At the end of the day, you have to grab onto a narrative that is going to take something to eat into that

multiple. If you didn't get that, the multiple would be rich. But since you're getting that and there's probably even more momentum than that, we'll get some manufacturing numbers out at the end of the at the end of the week. You're seeing Europe perk up, China stimulus in place. So you can actually see higher earnings growth than that. And then that 22 multiple won't be so scary to a lot of folks. I mean, the other big development today that I want to talk to you guys about is what Eamon Jabbers is covering for us today. The Justice Department issuing a memo today confirming it will keep the strict Biden era merger guidelines intact, at least for now. Eamon Jabbers is here with those details. And what is a

pretty surprising story to many today, Eamon? It's surprising to many, Scott. That's right. The Trump Department of Justice issued a memo today confirming that it will keep these strict Biden-era merger guidelines that were largely disliked by big business. That will surprise a lot of people on Wall Street who have assumed that the second Trump administration will open up the M&A market and dial back antitrust enforcement, although we've been explaining this dynamic for a couple of months now on CNBC, that's not necessarily the case. In the memo dated today, the acting assistant attorney general for the antitrust division, Omid Assefi, writes that the antitrust division will continue to use the 2023 merger guidelines until further notice.

And over at the FTC, Chair Andrew Ferguson posted on social media earlier today that the 2023 merger guidelines will serve as the framework for our agency's merger review analysis. Now, the Trump DOJ has already signaled a continuing skepticism of big mergers, with its suit in late January to block HP's proposed $14 billion acquisition of Juniper Networks. That decision now viewed as something of a bellwether for the Trump era approach to M&A. The question is, why is that? And the answer is conservative populists in the Trump administration largely agree with the Biden consensus that big corporate mergers can kill American jobs. And they're more skeptical of corporate elites than traditional Republicans. So if you thought

that Trump, too, meant, you know, this huge M&A boom, dial those expectations back significantly. What they're signaling here at both the DOJ and FTC is that they are going to enforce antitrust on these big mergers. And they're going to look skeptically at any big merger that hurts American jobs, Scott. Certainly goes against much of the narrative that was there since the election and as this new market year began. Eamon, thank you very much for that. That's Eamon Jarvis. Is this an issue? I think it's an issue in the sense of set your expectations logically, right?

So some of the sectors, and I would put myself in this camp too, I expected energy to be, for example, a big beneficiary of M&A activity this year. So maybe lower those expectations a bit. But this is still really applicable to very big businesses. I still think that there can be a healthy amount of M&A activity

in the mid to small cap range, and particularly in financials. And I think there's still an opportunity for that. The other thing that we have to set expectations for is that some of the bull case behind financials was that there's going to be all this capital markets activity, some of which was M&A and all the underwriting that needed to go on. That was thought to be like a layup coming into this year.

Exactly. Is that different now? Less of a layup, but still I think there can be activity in that mid to small cap range. And there's plenty of other stuff that the banks can still benefit from. There's still IPO activity. There's still trading activity. There's a lot of market stuff that I think a lot of people are taking part in.

So it's not as if the story is dead, but you do have to kind of step back, sharpen the pencil, and rethink where the opportunities lie. What about that? I mean, you do have some big pending deals that are still hanging out there. Two words you heard coming into this year, animal spirits. Right. Do we need to dial it back in thinking about, you know, some of these ideas that we're going to be a boon for the stock market? Certainly for the larger potential mergers itself.

I think Liz absolutely nailed it. The small and mid-cap space, I in particular, we in particular have been looking for reasons to get a little bit more excited. We've been excited and waiting, particularly in the mid-cap space for an M&A cycle, but Liz said it right. That's the area that will receive the seed capital from monetizations from the big sponsors. And at the same time, if you do get financial deregulation, that's where the hunting ground is first. So the large space, sharpen the pencil. I think that's a great way to put it. And then the small and mid-cap space still has that tailwind. The other thing not so maybe specifically related to the administration and what they've done thus far and what they hope to do is a view that outside the U.S. is now a better bang for your buck than inside the U.S.

Josh Brown on Halftime mentioned the chart of Europe last week as standing out to him. Bank of America, their global fund manager survey, peak in investor conviction of U.S. exceptionalism. Tony Pasquarello, Goldman Sachs today, U.S. market not the best game in town, that we're witnessing a collective rally in global equities. Jeff DeGraff of Renaissance Macro, Europe's breaking out as well. Do we need to really look elsewhere? I mean, it's about time, right? It's been over a decade. And I remember having these conversations for a long time about Europe and some of Asia, too, and just saying, well, it's cheap and shouldn't we buy it because it's cheap? And then it always got to the point where it was like, well, it's cheap for a reason.

It still is cheaper, and it probably will stay cheaper than the U.S. if we're looking just at broad multiples, because you have to pay up for quality, and you have to pay up for growth. But I do think it's time to be considering some of these other regions. I prefer China over Europe right now, but I think you have to have a presence in both. I think it's important to look at everything. And we've had two years, two straight years of plus 20 percent returns in the S&P. You don't usually see that three years in a row. So find the opportunities elsewhere. It's just that everybody is stuck in this comfort zone of U.S. stocks, particularly U.S. consumer discretionary, tech, and communications,

that it's tough to consider putting money somewhere else. And it feels risky in a geopolitical environment like this. But I think you can get more bang for your buck if you're worried about valuations, especially at a time when yields are high and are likely to stay high. How do you see it? Just about every global investor is underweight, everything but, you know, outside the United States. Yeah, that's right. You just hit it, right? I mean, these stocks were, you'd say, oh, they're cheap. I mean, yeah, they're cheap for a reason.

Yeah, 10, 15 years. And you had some bright spots over there. The window would open and the window would close. But you still need a second reason. The first reason is valuation, technical readings perhaps, a little bit of a breakout. The second reason would have to be earnings growth. We would have to see the earnings growth follow through to rival what's going on in other parts of the United States market. Otherwise, you get a little bit of a

so-called longer relief rally, but it doesn't carry itself into a year or two years or three years. So we're still skeptical. Guys, good to catch up with you. Thanks for coming by, both of you, Chris Heisey and Liz Young-Thomas. We're just getting started here. Up next, shares of GeneDX are soaring in today's session. We hear from the company's CEO exactly what's going on after the break. We're live at the New York Stock Exchange and you're watching Closing Bell on CNBC. Shares of the biotech company GeneDx are surging to a new high today on the back of its latest earnings report. The company's CEO is Catherine Stooland, and she joins us once again here on set. Welcome back.

Thanks for having me. Good day for you to be here. What has the market so excited today? You know, we've been able to drive tremendous growth. Both in 2024, we delivered 56% year-over-year revenue growth. And that's really been in large part because we've been able to focus on solving a really important problem in health care. For children who have a genetic disease, it can take on average five years to get a diagnosis, it can take 16 ineffective tests and three misdiagnoses, all because we're not using genomic testing upfront to be able to

rule in or rule out whether or not there's an underlying genetic condition. So we're in a position where we're delivering better clinical care, we're saving the healthcare system valuable dollars, and we're in a position where we're delivering better clinical care, we're saving the healthcare system valuable dollars, and we're creating a good business out of it. Do you have a sense of what your total addressable market could be? Absolutely. So when we think more broadly, we think about the pediatric market, which in total can be up to $25 billion. Today as we think about the pediatric market, we've really started focusing on conditions like epilepsy, autism, missed milestones. So when you're going in to see your pediatrician,

these are some of the most common symptoms that parents are coming in to talk about. And what's not happening in that general pediatrician setting is they're not getting a genetic test up front. So that's what we're seeking to change is intervening and making sure that every child who has one of these symptoms has access to a test. How difficult is it for a physician to prescribe a genetic test upfront as you say and get an insurance company to pay for it as that issue in and of itself has really taken the forefront over the last handful of months? So insurance companies do pay for it. So insurance and Medicaid both pay for this testing. And the reason why they pay for it

is because it can actually help them save dollars as well. So they're spending a lot of money on those 16 inefficient tests. They can just spend on our test up front. And we continue to drive down the cost of our tests. We continue to make them faster. So it's actually quite easy for a clinician to order the test today. What we think is going to unlock the market, though, in the future is when guidelines come out from the American Academy of Pediatrics that will better direct a general pediatrician to start using our testing. So today, a parent will go into a pediatrician. They get referred out to a specialist.

So think about a pediatric neurologist or a behavioral specialist. And that's where we've been able to drive most of the growth last year. And this year, we're going to continue to drive growth with even more indications coming. You're evolving, too, or this whole industry, I guess, is evolving from a single genetic test to a whole gene sequencing, correct? Absolutely. So about a decade ago, we were testing BRCA1 and BRCA2. And each one of those genes a decade ago was about $3,500. Today, we can take an entire genome and sequence it cost-effectively, and we're able to do it quicker.

We just announced that we will be offering an ultra-rapid genome, which we can deliver to babies in the NICU as soon as 48 hours. How long did it used to take? A few years ago, it took about six months. But last year, it was about two weeks. We were able to improve that turnaround time. So by the end of last year, we were at five days. But now we can do it in 48 hours.

That's incredible. Last question. How do you view what's happening in Washington around health care? Possible cuts, Medicare, Medicaid, obviously changes in health and human services department. How are you thinking about it as the CEO of a company like this? It's something that I care deeply about. I'm sure you do. And I happen to think that we sit in the intersection that really beautifully overlaps with the priorities of the administration.

They want to make sure that there's more efficiency in terms of health care. And that's something that our testing squarely does. We save the health care system dollars by utilizing this testing up front. And they want to make sure that kids remain healthy and are getting diagnosed with disease as early as possible. We are a unifying issue in Washington, so we are continuing to have amazing conversations with policymakers on both sides who absolutely support the work that we're doing. To those who say, and I'm sure you've heard this as well, criticism that some are anti-science. You couldn't be more science. How do you respond to that?

So we were actually born at the NIH. I think we are a shining example of what government-funded and founded science can do in terms of changing the standard of care, being able to provide better clinical care, and save the government and save private insurers valuable dollars. Interesting. Good to catch up with you. And congrats on the quarter and the stock move. Catherine Stillen, we'll talk to you soon. Thanks so much. All right. Up next, your ultra high net worth playbook. Top wealth strategist Mary Lago is here to tell us how she's advising her clients right now.

That's right. After this, we're back on the bell. Welcome back. Getting some news at this moment from Bill Ackman. Mike Santoli following this for us today. Mike? Yeah, Scott. So Bill Ackman posting just a little while ago that at 4 p.m. he'd have an announcement, perhaps making the analogy of forming his version of a Berkshire Hathaway, which presumably would mean kind of a publicly traded vehicle with which he would make further investments and try to build value down the road. Now, immediately, one of the ways that the market started to connect the dots here was to buy shares in Howard Hughes, Triple H. Now, this is a company, remember, that Bill Ackman's firm owns about 37.6 percent of. And last month, he offered to purchase more shares so that he would have a majority stake by merging it in with a subsidiary

of Pershing Square, maybe cashing out some existing shareholders at $85 a share. So you see there the stock popped up to around 80 bucks right after that announcement. We obviously don't have any more detail in terms of what is going to be announced. Howard Hughes created a special committee of the board to review possible options back when that unsolicited bid did hit. I think it was January 13th. And at that time, Mike, when when, you know, he announced the intention to increase their stake in Howard Hughes to what was thought to be between 61 and 69 percent. You talked about a majority stake. He said in the time at the time, excuse me, in a letter to the board of Howard Hughes, quote,

it would create a modern day Berkshire Hathaway that would acquire controlling interest in operating companies. So he sort of put his hand on the, you know, revealed his hand maybe before he actually holds this event at four. Not that we know it's Howard Hughes, but I mean, if you connect the dots, as you said. Well, not that, you know, presumably he's alluding to Howard Hughes. What we don't know is whether there's an actual deal or that, you know, it's kind of just a reiteration of an intention to to do what he wants to do. But obviously, Mark, I'm not waiting for the details. Yeah. All right. Mike, thank you very much for that. That's Mike Santoli with the very latest there. Well, the U.S. is best. That's the take today from our next guest who advises ultra high net worth clients. Mary Lago is with Ferguson Wellman and joins me here at Post 9. It's good to see you.

Great to be here. How do you feel about these markets? What are you telling your ultra high net worth clients? You're trying to, you know, preserve their capital, but everybody wants a good return on it, too. Preserve and grow. And the U.S. has done a great job of that. We think the U.S. economy is in really solid shape. And as we look forward, we expect those key economic indicators to move in a fairly tight range over the next 12

months. And that's a really supportive economic environment for domestic earnings growth, as well as returns. And the market has shown so far this year, it's rewarding. What about what I mentioned earlier to some of our guests, these calls that the best opportunity is now outside the U.S., that we came into this year thinking U.S. exceptionalism for obvious reasons, but now there may be better, less volatile opportunities elsewhere. We follow the earnings. So fundamentally, Ferguson-Willman pays a lot of attention to the earnings. And if you look at earnings growth for out the international markets,

it's at about 8.8%. Whereas if you look at U.S. markets, despite the fact that Q4 earnings came in higher than expected, so those forward-looking earning projections have come down just a little bit at about 12.5 times. We still like 12.5 times better than 8.8,

and we believe we have a more solid environment here. Where do you want to stay in terms of the cap space, market cap-wise? Big? Big? Big. We remain overweight large cap and overweight domestic. We still have some small cap holdings. We still have some international holdings, but slight tilts to the underweight.

We like some of the names that are well regarded in the market space already, like technology, Mag7, not in all of them, but overweight in a number of them. And like industrials, communication services. So we still see some good growth opportunities. And the earnings projections are looking really strong. Do you think there's going to be a prolonged broadening out of the market? Absolutely. So if we look back a couple of years, you know, we were seeing contraction in the earnings growth of the other 493 stocks.

They were really concentrated within the MAG7. We saw that broaden last year. We expect that to continue to broaden this year. Even so, if you look at earnings, the earning growth potential still looks better in the MAG7 than it does across the rest of the market. What kind of risks do you see? I did the story early in the show today about M&A guidelines staying in place from the Biden administration, a surprise, at least now, to many who figured, you know, we're going to get animal spirits. Deregulation is going to lead to a lot of big deals. Well, maybe not so much. And maybe there's going to be some other volatility around tariffs and other parts of the policy. What do you think?

Volatility is a given. Volatility is the price of admission, but we still look longer term in the markets. If you think about even with all of the policy conversations that have happened so far this year, U.S. markets have seen through it. If we could take January's return of 2.8 percent and multiply it by 12, I think most investors would be pretty happy for the year. What don't you like within this market? What's a sector you would avoid? Real estate is one we've been underweight. We've been thinking about adding to, but it's proving to be very interest rate sensitive. And especially with fears of potential inflationary pressures, we're remaining on and rate

sensitivity. We're remaining a slight underweight there, remaining underweight consumer discretionary. So I know that's a little unpopular at the moment. But we think that we're not going to get any big lift from moves in interest rates or inflation there. And consumers have spent a lot of their excess reserves. And so that's another one we're sitting on the sidelines. Does that mean your base case is higher for longer? You think these rates are going to remain elevated for longer than some people think? We won't be surprised at all if we don't see another Fed rate cut this year. All right.

We'll see. And we'll talk to you again. All right. All right. Thanks. Thanks so much. Great to be here. All right. Up next, William Byron.

He is the winner of the Daytona 500 for the second year in a row. That doesn't happen all that often. He joins me next at Post 9. First, we're tracking the biggest movers as we head into the close. Christina Partinellos is standing by with that. Christina. Well, we have a major pharmacies. Chain shares are surging right now.

And a popular trading platform is facing its worst day in months. We'll tell you who and why next. We're less than 20 from the closing bell. Back to Christina now for the stocks that she is watching. Tell us what you see. Walgreens. They're jumping right now, shares, after CNBC's David Faber reported that a take private deal with Sycamore Partners is still a possibility despite earlier doubts. The deal seemed dead but is now showing signs of life. Analysts are cautious, though, pointing to

Walgreens' financial challenges and heavy debt, which could complicate a buyout. Shares up 13%. Robinhood stock, though, is set for its worst day since December after Wolf Research Analysts downgraded their outlook. They say recent growth is already priced into this stock, which shares fully reflecting higher earnings and crypto trends. They also warn that competition from giants like Fidelity and Schwab could hurt Robinhood's crypto edge. Shares down 7%, Scott.

Christina, thank you very much. Christina Partinello. Well, winning you very much. Christina Partsenevelos. Well, winning the Daytona 500 once is hard enough. Capturing the Great American Race two years in a row is almost unheard of. Well, William Byron is only the fifth person to do just that. After his come-from-behind victory on Sunday, he joins me here at Post 9, as you can see, with a very large trophy. That's what they give you for winning, huh? That's right, yeah.

Could you ever imagine winning this race back-to-back, only, as I said, the fifth person to ever do that? Yeah, it's crazy. Honestly, no. I thought that winning this race can be a career-long achievement. So just for us to win it back-to-back is really special, and credit to our whole team and all of our preparation. You're only 27. So when you reach an achievement like this, especially twice in a row,

at this stage of your life and career, which is obviously young, and I read today that people say there's no ceiling for you at all. I mean, how do you keep it going if you reach the pinnacle at 27? Yeah, just try to continue to win races. And we have the really our booking of our season is the biggest races, the Daytona 500 and the championship. So still trying to chase the championship each year and continue to try to win more big races as well, like the Daytona 500. What I didn't realize first, I mean, you race for Hendrick, right? One of the biggest names in the sport. You drive the 24. Yeah, I think of that. I think of Jeff Gordon. I didn't realize that you could drive the same number as a legend of the sport

could. That's got to be incredible. Yeah. Yeah. He's actually my boss. So he, uh, he took over at Hendrick Motorsports on the competition side after I, or after he retired and, uh, he's been a big supporter of mine. So it's, it's nice to work with him and yeah, we don't really retire numbers in, in racing, but, uh, he handed off the 24 car to me. So it's been an honor. But that has to come with a pretty big responsibility, I would think, too. I mean, to live up to a legend like him. It does. Yeah, it does. No pressure at all. But it started when I was a rookie. So he's been a big supporter, like I said. And I think that we have a lot of fans of the 24 car and Jeff Gordon, and it's nice to hopefully make them proud.

Ratings are up modestly after struggling for a bit. I mean, how do you keep this sport growing in what is a more crowded landscape for all sports? Well, I think it's just telling the story of the drivers and the teams and the technical side. I mean, it's a very technical sport, and I feel like the entertainment aspect of the drivers and the teams and the technical side. I mean, it's a very technical sport, and I feel like the entertainment aspect of the sport has continued to grow. The racing is really exciting right now. The cars are super close together. So it's just putting on good races, and hopefully that grows the sport too.

The youth, I mean, I'm wondering how the drivers think about the economics behind the sport and the sponsorships and such. I mean, I'm trying to educate myself as best I could. And I saw that Sunoco, which has been the long, long time official fuel provider, ends their sponsorship deal after this year. And it's not renewed yet. Yeah. Obviously, that could be a huge gap in revenues if that doesn't happen. I mean, are drivers talking about that? No, I think there's a lot of different sponsors coming in. You know, like having Michael Jordan come in as an owner

shows that the sport has a lot of promise to it. And just having different partners come along, like Exalta, who's our biggest sponsor. So I think it just kind of goes in waves. You know, different companies come in and out of the sport, but hopefully we can continue to grow it. Enjoy it. Thank you. Continued success, and thanks for spending hopefully we can continue to grow it. Enjoy it. Thank you.

Continued success, and thanks for spending time with us. I appreciate it. Thank you. It's William Byron. He is the back-to-back winner of the Great American Race, otherwise known as the Daytona 500. Still ahead, what to watch for when Toll Brothers reports in overtime. We're back on the bell just after this break. All right, we're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli is here to break down these crucial moments of the trading day.

Diana Olick on what to expect from Toll Brothers earnings in OT plus two energy earnings also out after the bell. Pippa Stevens on Oxy and Devin. What do you want to talk about? What's on your mind today in this trading session so market is continues to be very split not in a particular hurry to get anywhere even though we've been hanging around the

highs for a while. But I find pretty pronounced rotation today growth into value how do you keep the S. and P. five hundred flat- growth index down thirty basis points value in that. Up forty. So so far the the index has managed, the market has managed to continue to kind of surf whatever wave comes in and not necessarily kind of get washed out in the process. That's been positive.

I still think you're looking at a little bit of fatigue in some of the winners. The red hot stuff. You hit Robin Hood. There's also hims and hers. There's Costco. There's Netflix. All down multiple percent today. So far, we're taking it meta naturally as well. And so we'll see if there's anything more to it. I've been talking for a while about how these expirations this week could sort of like let some of the that elegant rotation roll away and maybe

have the market kind of get a little more jumpy. But that remains to be seen. Yeah. I mean, just to let everybody know, Meta's down 3 percent. The 20 day win streak is going to be kaput, which is more than likely a good thing. It was otherwise start to get weird. Yeah. Yeah. It had to happen at some point. Diana Olick, tell us what to expect from Toll Brothers. Well, the expectation is for a revenue decline of just under 2% year over year for Toll's Q1, but Toll has a habit of beating expectations. Other builders like Taylor Morrison, which reported last week, have had strong beats, but Pulte talked about buyer pullback due to higher mortgage rates. Toll is, of course, the luxury builder. The average price of a Toll home, right around a million dollars. Its buyers, however, are not as mortgage dependent as the other builders. Toll had a record 2024 in revenue and in its Q4 release, CEO Doug Yearley said,

since the start of our fiscal 2025, six weeks ago, we have seen strong demand, which is encouraging as we approach the beginning of the spring selling season in mid-January. So we'll see how that panned out. We'll also be interested to hear any commentary on potential tariffs hitting builder costs. Builder sentiment, of course, this month tanked to a five-month low on those tariff concerns. Back to you. All right. We'll see the numbers. Thanks. That's Diane Oleg. I mean, hard to get that excited about housing, given where mortgage rates are. Very hard. And the market is definitely struggling with it at this point. The homebuilder stocks have really given up any kind of cyclical leadership type position. I think it's a big question for the overall macro data as well.

You know, we've been able to sort of make it work without housing being a real engine of GDP growth, 7 percent mortgage rates. I mean, 10 to 10 years is basically sideways to down year to date, but we're still kind of marinating in the higher rates and have to see if there's a knock-on effect. Employment and construction has not been that strong. So yeah, it's one of those things the market's going to have to hurdle. All right. We'll talk about some earnings, too, after the bell, Pippa. Devin and Oxy. Yeah, that's right, Scott. So Oxy and Devin report amid muted expectations after Giants, Exxon, and Chevron's quarters disappointed thexy. Yeah, that's right, Scott. So Oxy and Devin report amid muted expectations after Giants, Exxon and Chevron's quarters disappointed the street. Now for production, not expecting big upward moves from either company

since the group broadly has signaled low or no growth this year amid plans to keep spending in check. Now for Oxy, the stock is underperformed in part because it's running a higher debt to market cap versus peers, which increases the risk profile. Top of mind will be any plans to restart buybacks, which are paused as the company does try to get down its debt. On the other hand, Devin has low leverage,

and Morgan Stanley expects it to raise its fixed dividend early this year after the company said it expects to pay out up to 70% of free cash flow. Now, investors will be looking for commentary on the company's pivot from the Bakken to the Delaware Basin. See the stock up just a little bit here before earnings. Scott? All right, Pippa, thank you very much. That's Pippa Stevens.

Mike, we are above a closing high on the S&P right now, about 61.23. We have to get above 61.18 and change. So, you know, even with sort of the uneven trade, not much conviction, we still rung by rung. We're getting up the ladder. Yes. So far, it's definitely not the most vociferous, emphatic statement that we're blasting to new highs. So you do want to see a couple of successive closes with some room between where we are in the prior high. That being said, it's held in fine. The trend is OK. A couple of things people are flagging me. One would be Bitcoin's weak. The overall Nasdaq has managed to kind of hang in there better

than Bitcoin, but it's trading back to levels that it first got to in November. Yeah. What are we at? Ninety five around ninety five today. Ninety four, two or so. Oh, ninety three, eight now. Yeah. OK. And so, yeah, obviously it's one of those things where it doesn't mean it's predictive of anything else happening, but it does show, I think, a little bit of a stutter step in risk appetites around these levels. And, again, we've been able to kind of deal with it and kind of go sideways instead of down in the market. There's a feeling that, as you mentioned earlier, the market's been resilient, but mostly what the market's been able to do is tune out noise. Because resilience implies that there have really been some actual heavy kind of challenges to the bull case. And you know many many inflation scare yields went up to four point eight but then they came back down. To me it's much more about the markets had a sort of bit of equanimity about it in terms of not jumping to conclusions about what policy is going to be really good or bad. And it's so far been a good formula.

I mean, it's a good point you make, you know, with the news today of the M&A guidelines staying in place from the prior administration. Goldman's still up. I looked at Morgan Stanley, JPM. Private equity stocks are mostly green. so your point's very well made. Mike, thank you. There's the bell. That's Mike Santoli. New record close for the S&P 500. You can put that in the book because I send it in overtime.