Closing Bell - Closing Bell: The Messy Mag 7 2/27/25

Episode Date: February 27, 2025

The mega caps in retreat lately and the momentum that sent stocks to new record highs just over a week ago is fading. Alger’s Ankur Crawford and Virtus’ Joe Terranova break down their current strategies. Plus, Sara Naison-Tarajano from Goldman Sachs tells us how she is navigating tariff uncertainty. And, Saira Malik from Nuveen reveals where she is finding opportunities outside of tech. 

All right, guys, thanks so much. Welcome to Closing Bell. Scott Wapner live from the Post 9 here at the New York Stock Exchange. This make or break hour begins with the messy MAG7. Those stocks in retreat lately. NVIDIA's earnings not doing much at all to change that. In fact, most of the names are lower this hour. NVIDIA almost at the lows of the day. It was down more than 6% a few moments ago. We're going to ask our experts over this final stretch when that tech trade, especially from the mega caps, might get some traction back. In the meantime, we'll show you the scorecard here with 60 to go in regulation. Did have a spike in jobless claims today. A dismal read on housing, more tariff talk in Washington.

All of that hurting the markets today. Tech and discretionary among the worst sectors. Airline stocks, a pretty big drag there and something to keep an eye on. It does take us to our talk of the tape, whether the momentum that sent stocks to new record highs just over a week ago is fading and fading fast. Let's welcome our panel. Anker Crawford is with Alger, Joe Terranova with Virtus, a CNBC contributor. They're both here at Post 9. It's great to have you. All right, Anker, I mean, why is NVIDIA down 6% now? Well, it really shouldn't be. I think they reported and guided actually better than people's expectations.

The only nitpick would be the gross margins. And quite honestly, that had been telegraphed, you know, from almost three quarters ago. So I think it's down more so because the jitters in the market versus it being Nvidia specific. And there is a rolling off of the momentum trade. Nvidia is pulling back with it. Joe, are you surprised? No, I'm not surprised. We spoke yesterday on halftime about what was being reflected in the option market. It seemed as though there was more positioning towards the puts than the calls. Let's remember, this is the first earnings quarter that we have had since 2022, where NVIDIA, relative to the prior quarter, was down. It was down 9 percent since its last report in November.

So I'm not surprised by the price action at all. This is a moderation in revenue growth. That's clearly what it is. Now, the revenue growth is really strong. It's 78%. We like that. But one year ago, we were talking about 265% revenue growth. And if you look forward into the coming year,

the revenue growth continues to decelerate. So I often say you can't have it both ways. You can't get exuberant about the revenue growth accelerating. And then when the revenue growth begins to moderate, not understand that the market is effectively going to price that in. I don't think it leads to a massive deterioration. I think NVIDIA is in a sideways consolidation range, but I think you just have to understand it's just not what it was last year. Nor is the valuation. The valuation has come in as the stock has gone down. It's down at least 14% since it's high.

Yeah, but that doesn't give comfort to the overwhelming majority of managers who are overweight this name. They're not sitting there and saying, OK, it's a cheaper valuation, so I'm going to hold my footing here in the position. They're going to reduce the position marginally, and I think that's what's going on. I mean, you've got a portfolio manager sitting right next to you. Are you thinking about doing that? Actually, I do think valuation does matter. Everyone knows they're slowing growth. NVIDIA is the dominant compute center that is driving forward this AI revolution.

And so valuation does matter. And today, if you look at consensus numbers, it trades at about 20 times 26. The buy side numbers are higher than that. It trades at less than a market multiple on 26. And so, you know, we're waiting for the Blackwell launch. I will bet you two months from now, as Blackwell starts to launch, everyone's going to get so excited that Blackwell is launching and these big numbers are going to put up that all of a sudden that 20 goes to something higher. Don't disagree at all. And I agree with you. Valuation matters when you're thinking about investing for the long term, but trying to explain the dynamic of what we're seeing today.

Valuation is not in the equation of what's motivating price to move lower today. Why haven't the mega cap stocks traded all that well? Many are in correction territory. Alphabet is down 17% from its high on February 4th. Microsoft, 15, July 5th. Nvidia, down 14, as I said, at least. But, I mean, as the stock is selling off here a little bit more as we head towards the close, it may be even more than that. January 7th. I mean, Meta went up 20 straight days. It did. Escalator up, elevator down. That stock is down near 10% from its high on February 14th. Yes. Why? Why haven't these stocks traded well?

I think it's difficult to pinpoint a specific explanation as to why I do agree with Ankur. You've got a little bit of a risk-off environment. I think the three names in the MAG7 that I would focus on for opportunity is Meta, Amazon, and NVIDIA. When you're thinking about the long term, I think there's clearly some challenges as it relates to Apple and Microsoft, and even to a certain extent, Apple Alphabet, rather. But I think it's a risk off environment more than anything else that we're seeing here. And I think these names have been the names that over the last two years, the overwhelming majority of money managers have gravitated towards. Not only not just necessarily because they desire to be there, but they had to be there.

Otherwise, they're underperforming. Yeah. I mean, you own most of these names, right? Joe gave you a select few that he likes the best, Meta, Amazon, Vidya. What do you say? I mean, you've got Microsoft and Amazon and Apple, not to mention Tesla. Yeah. So, look, I think Joe's right in that there are different reasons why they're pulling back. I think some of it is market, that the market's pulling back, but Google has been a structural underperformer over the last year or so, and in part because

there are a lot of things that are kind of hurting their business in the long term, and the structural challenges are hard to overcome. You know, Amazon and Meta, I would say, is just kind of a market-related pullback. And Microsoft, you know, I think the narrative on Microsoft is changing just a little bit in that they walked away from the OpenAI deal. They don't want to chase AGI.

You have to wonder, well, what is the business reasons behind doing that? So, you know, we were all counting on them being the leader in whatever was to come with that open AI relationship. You know, how do they cross this chasm without that? So there are just some questions that are coming up around the Microsoft model. I mean, Microsoft's in the news again today because they're asking President Trump to overhaul curbs on AI chip exports. Steve Kovach, our tech reporter, joins us now with more. Steve? Yeah, let's answer Ankur's question here, Scott, because the answer is the cloud. And part of that play here is Microsoft asking Trump to open up

chip and AI model exports to ally countries. This includes countries like Israel, Greece, Poland, Saudi Arabia, and several more who we consider allies. And why Microsoft is doing this, it's because the data center business is actually a strong one here for AI. And they're building these data centers around the world. And the hope here is they'll be able to provide the best AI technology for their customers in those regions. Here, Brad Smith is the president of Microsoft. He's making the argument in a blog post that this is also good for American jobs, that some of the equipment might be made here in the United States and then exported overseas to use in those AI data centers. And right now, though, many countries are blocked from importing

those best chips from NVIDIA or other top chip makers and the best AI models. And this is all part of the diffusion rule put in place by the Biden administration in its final days last month that blocks exports on those advanced chips and AI models on national security grounds and creates this three-tier system on national security grounds. And many of our allies were stuck in that tier two, meaning they couldn't get that best technology. But it says it's going too far, pushing those allies into the second tier system, asking Trump to kind of reverse that and also asking that those allies just get the same best AI technology that we have here in the United States. And by the way, I'll add on that Andy Jassy, the Amazon CEO, Scott, he was on with Bloomberg earlier today, and he

backed the same proposal, saying it just makes them harder for them to do business with our allies, and it opens up a chance for a country like China to swoop into these countries and provide the technology instead of a United States company, Scott. All right, Steve, thank you very much for that. Steve Kovach, I mean, you talk about a stock you suggest went from like AI darling, started this whole thing at the beginning of the AI craze. It was all about Microsoft and the relationship with open AI. That's what got us here in the first place. And now you think the goalposts may have moved enough that you need to rethink how large you want to be in the stock?

Well, I think what's happening is that, you know, I don't think you have to rethink wholeheartedly, especially since the stock has come in as much as it has. However, there has to be some acknowledgement that, you know, they aren't chasing the OpenAI dream of AGI. And that might be both good and bad, because the CapEx requirements for OpenAI are so incredibly egregious to get to AGI that Microsoft isn't going to bet the farm on it. But on the other hand, they're going to have a lot of inference that they're going to be not only creating inside of Microsoft, but producing for the world and meeting. So I just think it is a slight narrative shift for Microsoft, not to mention their numbers were not great on the last earnings call. Their non-AI data center numbers were slower than expected. And that could be just a sign of the times that enterprise, you know, is slowing a little bit.

You'd run a momentum ETF, Joe. Yes. There's been no bigger story in the market than the unwind in momentum stocks. You snap a five-day losing streak for that cohort of stocks yesterday. Correct. And here we are, for most of them, right back red again. Yes. You point to so many different ones. CrowdStrike, AppLovin', I'm looking at. TradeDesk is down again.

I mean, almost pick your momentum. It's down. People keep suggesting that the momentum unwind is over or ending. Is it? No, I said yesterday I didn't think that you should take comfort in the price recovery that we were seeing from momentum and believe that it was a return to leadership. That's one of the biggest problems right now because momentum was the leadership in the market, and it's not anymore. Earlier today, you had some of the financial sector where large momentum weightings reside right now try to find its footing and establish itself as a leader. But no, Scott, you can't take comfort and believe that this is the end of the momentum unwind. And not to not to I'm not trying to correct you,

but remember, I don't believe in purely investing in one factor of momentum. I think you have to introduce the quality factor. No, no, no. And I'm not talking about necessarily it's the MTUM ETF, but yours, you know, hasn't been performing great lately because of momentum in and of itself. It's hard to perform very well when you're holding Applovin through the slide. Yes. You know what I mean? Well, listen, and a name like Applovin, a name like Palantir, a name like Deckers, which has a reasonable valuation, we rode that all the way up. We did really well.

And now you're getting the pullback on it. So when you're getting the pullback, the hope is that the introduction of this quality factor that we combine here with momentum, it acts as a shock absorber. But I'm fully acknowledging right now you're seeing an unwind of those momentum names. And there's nothing that I see in front of me to suggest that it looks like it's going to stabilize and evolve into a V-shaped recovery. Because I think that's what everyone's wanting. Everyone's looking at those names like Palantir and saying, OK, am I going to get a V-shaped recovery? I don't think it looks like a V-shaped recovery. I think it's more of a U. I mean, another momentum name getting hit yet again is Vistra.

Pippa Stevens joins us now with what's going on there, because this is another one on the list that just can't find any footing. That's right, Scott. It's down 10 percent today and now down 19 percent in a week. The stock was actually in the green pre-market, jumping 6 percent after earnings. And on the back of NVIDIA's comments that next-gen AI will require 100 times more compute than older models. But the stock sold off as the conference call got underway because Vistra has yet to announce a partnership with a hyperscaler, which the street has been waiting for. Now, CEO Jim Burke said, quote, you can assume we're speaking to all the major hyperscalers saying the type of deal matters. But that is pretty similar to what the company said last quarter. And Wall Street was waiting

for something more concrete. But John Bartlett from Reeves Asset Management, which owns the stock, told me it's now trading alongside its AI infrastructure peers, but that he's not concerned about the longer-term outlet thanks to ongoing expansion from data centers, developers. Again, that stock down now 11.5%. Scott? Wow. Yeah. Thanks for that update, Pippa, very much. That's Pippa Stevens. What do you make on Curve? What's happening with these stocks? Yeah, I think one of the issues around this AI trade has been, you know, Satya made some comments about whether or not we'd be in oversupply. And I think that has thrown a little bit of this AI trade into a frenzy of, oh, gosh, are we in oversupply?

And, you know, I think about it quite differently, and in part because, you know, he said many things that actually counter that opinion that we're going to be in oversupply on the chip side and for data centers, which are we're going to have an infinite amount more of inference. You've heard that over and over again. And if inference is making up 90% of the workloads and we're growing pretty significantly, we're probably not going to be oversupplied in 27 and 28. In addition, I don't think we have enough power to support an oversupply situation in 27 or 28. So when Vistra talks about, you know, talking to the hyperscalers, there's a reason the

hyperscalers are talking with them and contracting out 28 through 2040 because they need that capacity for inference. It's so many. It's the cyber names, Palo Alto, CrowdStrike, Zscaler. Yes. Fortinet. They're all in the red today. Tesla is down again today. That stock has been just a wreck to look at. You can blame a number of factors. Yes, there's uncertainty all over the market, which leads me to Steve Leisman, because the Fed's Patrick Harker is speaking as we speak, just as that inflation remains elevated and the progress towards bringing it down has slowed. He said it has taken us on a bit of a bumpy ride. The policy, right, however, he says is restrictive enough to continue putting downward pressure on

inflation. That tells you he's not in any hurry to change things either way. More on that in just a second. He goes on to say that outside factors are creating uncertainty, including changing policies in Washington. But he won't be moved by one month's inflation report. He points out that January has surprised him not in the past 10 years, and he is optimistic on growth. Earlier today, Jeff Schmidt, the Kansas City Fed president, said elevated uncertainty might weigh on growth, and the Fed could have to balance inflation risks against growth concerns. A bit of a stagflationary concern there. Meanwhile, Beth Hammack from Dallas saying the Fed is likely to hold rates steady, quote, for some time.

All of this somewhat hawkish talk or at least patient talk running up against where the futures market is priced, Scott. If you look at Fed Funds futures, they brought forward their expectations for Ray Dykes, now seeing a first cut pretty well priced in for June, solidly for July. And then that second cut has come, well, pretty far forward from January, now all the way to September with a decent probability. So the Fed rhetoric, at least what we're hearing today in the last several days, running against the market pricing, which perhaps is more focused on that weaker economic growth more than the Fed's concerns about inflation, Scott. Yeah, Steve, that is a bar chart which essentially is saying the Fed's hand is going to be forced, that what they're saying doesn't really matter right now because we're more concerned with growth slowing more than maybe they think it is. And despite what they believe about inflation, they're going to have no choice

if, in fact, the economy slows even further. Yeah, I think you put that in a more definitive way than any Fed official would put it, or even than the way they're thinking, Scott. But that's certainly up to the market to think that way if it wants. The idea being that if the unemployment rate starts going the other way, if jobs start being a problem, if growth starts to weaken, the Fed will be forced to move. I think the Fed is going to have a little problem doing that if you have these inflation numbers going up because especially of tariffs, retaliatory tariffs. It won't be long, Scott, before some of these tariff numbers start to hit the inflation numbers. And the Fed's going to be

in a bit of a difficult position. And that's exactly what Jeff Schmidt is pointing out. What do they do, though, specifically on the inflation front, excuse me, on the employment front? If you have hundreds of thousands of job losses coming from the government, theoretically, you're going to have a spike or at least a move higher in the unemployment rate. How do they judge that from a policy standpoint? I honestly don't know, Scott. Let me tell you what's supposed to happen. The reason why stagflation is a rare thing to happen is because weaker economic growth generally begets lower prices. Inflation comes off when demand comes off. But if you have this influx of workers into the workforce, that could raise the unemployment rate,

that could lower the job creation rate, and you have weaker growth before any of the other stuff that the president hopes will boost growth, I think the Fed might sit on the sidelines waiting to see if there are primary and secondary effects of tariffs. They could, of course, address it with a quarter point cut or a half point cut. You could be absolutely right that their hand could be forced, but it's going to be a very tricky situation for them. My best guess is they stand back and wait as long as they can for this stuff to work through and say, hey, we have 100 basis points behind us working through.

So they may take their time in responding. Yeah, well, I mean, a Fed that thought they were in a really good spot said so multiple times by the chair, maybe in a bit of a pickle in the in the months ahead. We shall see. Steve, thank you very much. That's Steve Leisman, our senior economic supporter. Is this what we're watching in the market? Growth scare? Is that what this is about? It probably is right now. And in part, a momentum, a momentum unwind, a growth scare. Look, I do think actually the Fed needs to rethink that 2 percent inflation rate. And they're not going to make a policy error if they rethink it to maybe 3 percent, because we're structurally going to have higher inflation in this country until we get the

benefits of AI and all the technology. So we are getting a growth scare. It too shall pass. That's what this is. I mean, yields coming down, right? You have all this concern about the growth slowing too much. Yeah. Well, look, yields coming down. Let's remember something that speculators in the Treasury market carried their largest short position on record coming into the month of February. So they're on the losing side of that trade right now. They're unwinding. That's creating this risk off element. I wonder, look, you've got a lot of uncertainty coming from Washington, D.C. I also wonder if this is the lag effect that we've been hearing about for two years, where the Fed funds rate has been above 4 percent now for the better part of two years. Is this finally the lag effect

that we've been looking for? The economy's beginning to cool. So I think it's all coming together in this unperfect storm for us. Well, consumer sentiment hasn't been good. No. Discretionary is the worst sector. You know, consumers are obviously worried about inflation. They're thinking about tariffs forcing up prices and everything else that the market's just trying to grapple with.

We've got to leave it there. Ankur and Joe, thanks so much for being here. Thank you. To Christina Partsenevelos now for a look at the biggest names moving into the close today. Hi, Christina. Hi, Scott. Well, eBay customers may not be ready to shop till they drop. Shares are slumping after the e-commerce platform's first quarter revenue guidance left investors disappointed.

The company pointed to weak demand. You guys talked about that challenging macro environment. The outlook overshadowed top and bottom line beats with the stock down over seven and a half percent right now. And Warner Brothers Discovery making gains on the back of its Q4 report. The HBO Max and CNN parent added 6.4 million global streaming subscribers in the quarter and forecast that it will hit 150 million global subscribers by the end of 2026. The stock is up almost 7% and on pace for its best day since December. Scott?

All right, Christina, thank you. We'll see you in a little bit. Christina Partsenevelos. We're just getting started here on The Bell. Up next, Goldman Sarah Nason Tarahano is with us. She'll tell us how she's navigating tariff uncertainty and so much more within these markets. She'll join us right here at Post 9 after this break. Fears of a slowing economy hitting stocks recently, not to mention concerns that tariffs will raise prices on consumers and lead to more inflation.

It does raise the question of whether the market broadening that some have predicted can actually happen. Joining me here, Post 9, Sarah Nason Tarahano of Goldman Sachs. Nice to see you again. Great to be here. Thanks for having me. You've been talking about the broadening. Are you concerned now because of this growth scare, which we think is to play for this stock market uncertainty and upset recently?

Yeah, I still think that we're going to see a broadening of the market. And I think we are seeing that. I mean, if you think about the broadening versus the MAG7, which we've talked so much about, right, the outperformance this year is pretty dramatic. We see the 493 outperforming the MAG7, I think today more than 10%. If you look at what the last two years have been combined, the returns of the MAG-7 were over 200 percent. The rest of the market, only 31 percent. So we're definitely seeing it happen. I think it's going to continue.

What is this about right now? Is it about tariffs and growth and the consumer wavering, all the above, plus other things? What do you think? I think it's all the above plus other things. What do you think? I think it's all the above plus other things. I think it's I definitely think it's a bit about uncertainty, right? Markets. And I think that affects the markets and it affects the consumer. Right. We have policy uncertainty around tariffs. We have geopolitical uncertainty around the Middle East and Ukraine. And then, you know, some degree of regulatory uncertainty in terms of not knowing exactly what the path is going to be for this administration in the back half of the year.

I think that uncertainty, coupled with the fact that we are coming off two incredible years of equity market returns, right, 25 percent last year. And then, you know, Tony was on the show and mentioned the back half of February tends to be historically weak anyway. All these things are coming together and creating some market volatility. I think it's to be expected. Were you one in the camp who thought, well, the first half could be a little bit dicey, and then the second half when you maybe get the tax cuts and the deregulation starts to have an impact and you get more deals done and more IPOs and things like that, then you'd have a smoother second half. Were you on with that view? And are you still, if you were, thinking that could be the case? Yeah, I think that's what I was thinking and what I still am thinking. But I

reserve the right to revise that view based on how all this policy comes out. But I think, look, our base case, I think the tariffs are going to be an important part of that, right? They're going to be an important part of what happens to inflation, which has a broader impact on the economy. Our base case is that we're going to see a 4% increase in the effective tariff rate. That only actually has a 40 basis point impact on core PCE, only a 20 basis point impact on GDP, only a 1% hit to S&P 500 earnings. So, you know, if our base case persists, I think we can make it through this first half. I think it's a little bit, I heard Rick Reader speaking about this, the market needs, I mean, there haven't been many opportunities if you haven't been long the stock market to get involved with what the market

has done over the last two years. So I think it's a little bit of a clearing out that's a bit necessary. And the hope, if we can stay on track, is that the second half will be better. You hit on maybe the most important word of all, and that's earnings. Yeah. X energy earnings growth is 20.4% this season, all in 16.9. That's what we needed. This is really good. The estimates expected

something like 8% earning growth. We expect 11 in 2025. I mean, these are not signals that would concern you about the U.S. stock market. And by the way, you want to be along the U.S. stock market if you're worried about inflation. The U.S. stock market has over cycles. So what do you think then about what you hear? Oh, you know, better. Europe is better. China's better. It was so bad and there was so much value, but much more risk. But now things have turned a little bit and there's going to be better returns coming from Europe and elsewhere in the world than here. Yeah, I would say from a strategic asset allocation perspective, we still favor overweight U.S. for all the reasons you spoke about. It's about what our GDP expectations are at close to two and a half percent. It's about earnings growth. There's

no question there's been some tactical opportunity overseas. Well, it's been really cheap, but it's pretty cheap for a reason. I mean, if you look at the GDP expectations in Europe, it's 70 basis points, right? So I think it's interesting for a tactical trade. But when I think about strategic allocations for clients, I think we want to be thoughtful about international allocations. You've liked financials, correct? Yes, I have financial. I mean, I find us sort of thinking now, well, maybe there aren't going to be as many capital market activities as we thought there would. And thus, those stocks have not traded all that well lately either. Are you rethinking what the road ahead looks like for M&A and deals, IPOs?

I'm not really thinking the road ahead for financials. I think this momentum give back is actually an opportunity for financials. And then thinking about kind of single stock volatility and the dispersion, by the way, in the last three months, single stocks have realized, you know, double the realized vol of the index. And so I've actually been thinking about as an opportunity to go long financials via put selling, because I still think you have a yield curve that's getting steeper. And you still have this overhang that I think is going to be for the second half of the year, where we'll get some deregulation that should be advantageous to financials. And if interest rates can come in a little bit, then that's super accommodative to M&A and capital markets activity. Maybe not as robust

as we thought. And I do think we have to have some of this policy uncertainty really work itself out for there to be that confidence that we need in the capital markets. But I'm still confident in financials. Lastly, because you mentioned momentum, do you feel like the unwind is nearing its end? It's hard to say. I mean, part of the part of the momentum unwind is just that there have been some really significant gains, unrealized gains. And when people get nervous, the the immediate reaction is to secure your gains. And so I think that's going to be a lot dependent on how this uncertainty plays out. The more certainty we get, the less nervous the consumer will become, the less nervous stock markets participants will become. So is it nearing

the end? I just don't know. We'll talk to you soon. Appreciate you being here always. Thanks so much for having me. Sarah Nason, of course, anytime. Goldman Sachs. Up next, CNBC Sports sitting down with the head coach of the L.A. Chargers. We're going to bring you the highlights from that interview next. All right, welcome back. CNBC Sports caught up with L.A. Chargers head coach Jim Harbaugh. Alex Sherman here with some of those highlights. We were just chatting.

One of the few who can give you great perspective on the college game and how that's financially changed versus the pro game. Exactly. So he won a national title last year with the University of Michigan, then left that job and is now back in the NFL coaching the Chargers. So I talked to him about both business of college football and the business of the NFL. One of the questions I asked him on the NFL front was, is he in favor of adding an 18th week, which could be a big revenue boon toward the league? Take a listen. Here's what he had to say.

More games. I'm for that. You know, don't have a, you know, not hell-bent, not opposed. But, yeah, 18 sounds better than 17. Yeah, Coach Harbaugh's sort of a football nut, so maybe that's not all that much of a surprise. I don't know, I'm kind of surprised. A lot of players and coaches have been complaining about this. Yeah, that's exactly why I'm kind of surprised. For several reasons. One, it's more work for no more pay. Two, it likely will take away a preseason game if they

add an 18th week. And coaches, I know, like to take a look and develop younger players, and they won't have a week to do that in this new format. Also, it's just more wear and tear on the players. And Coach Harbaugh was a player himself one day, so he must be somewhat empathetic to that. And yet, as he says, 18 better than 17. The more football, the merrier for him. I don't know that that viewpoint is shared by everyone. Yeah, interesting. Did you get into other stuff? I'm sure that you did. Yeah, we talked a lot about NIL and how the college football playoffs has altered the game. Of course, that Michigan-Ohio State regular season game is so epic and has been for a century. And I asked him, look, do you think the college football playoffs devalues that regular season game?

Because Ohio State lost to Michigan this year and yet went on to win the national championship game. That likely would not have happened in any other scenario other than the life we're sort of currently living here with the CFP. But he said, you know, I'm actually in favor of the playoffs. He didn't think that that last regular season game would be all that devalued because of the tradition. And so all the other sports have playoffs, March Madness. It was about time for college football to have one as well. I mean, if anything, it was a greater story that Ryan Day, coach of Ohio State, of course, could lose a really tough game at home, have all of that criticism for not being able to beat Michigan,

but then come back and win a national championship. That's a pretty good story. It is a phenomenal story, and good for him, too, because I think he was on the verge of being run out of town with another loss to Michigan. And yet, of course, he's probably bought himself a lifetime stay there now by winning the national championship. So what a turn of events for him personally now that he has that opportunity. Although it is a what have you done for me lately business.

Of course. Nobody has a lifetime. That's right. Where can we catch more of this? You can watch the full interview on CNBC.com slash sport. It'll also be up on YouTube. And you can also listen to it in audio form by following the CNBC Sport podcast wherever you find your podcasts.

Alex Sherman, thanks so much for being here post-9. Thanks, Scott. Up next, Naveen Saramalik is here to highlight where she is seeing opportunity outside of the tech space. We are back on the bell right after this. All right, we're back. Tech once again weighing on the market, the Nasdaq pacing for its worst week since September. Nuveen's head of equities and fixed income, Sarah Malik, says there are opportunities outside of tech anyway. Joins me now with more.

It's nice to see you. Welcome to Closing Bell. Good to see you, Scott. So where are you looking elsewhere? Well, Scott, there's been a lot of news thrown at investors this year, but there's been two factors driving the markets, and that is technology and tariffs. So let's start with technology stocks. Basically, when DeepSeat came out with their news, what it told investors was we need to be a little bit concerned about all of the spending that's happened in artificial intelligence

and whether we're going to monetize that and what is going to be the returns on that. You know, just yesterday, NVIDIA reporting a great quarter, but not quite good enough. Investors are used to these huge beats by these tech companies, and we're just not seeing those at this point. So we're looking outside to areas such as infrastructure. We like a company named NiceSource. It's an Indiana based utility. It is still a little bit of a play on data centers, which is tech related, but also strong earnings growth, cheap valuation for that company. That's another one as the U.S. builds more within our own country. I think that's going to be a winner in the utility space. Because you talk about that, you know, what do you make of what's happening with momentum names

right now? For example, I mean, a lot of people love Vistra for the exact reason you just talked about, right? AI power, infrastructure. And yet that's a stock, for example, that has been caught in the downdraft of the momentum trade. Well, I think the momentum trade has been driving the markets for the last couple of years. We had the S&P 500 up over 20 percent each year. But it was that market cap weighted in the mega cap seven that really drove the markets higher. So we came into this year with the S&P already at a 20 percent premium to history. That momentum train to trade is unwinding. I'm not saying that U.S. technology stocks don't have a lot of growth ahead of them, but so much has become priced in so much hype around A.I. and

what we can do. And the reality is that we spent tens of billions of dollars on A.I. and we really have not seen significant productivity gains in that space yet. So I think it's time to look outside of the market. And you're seeing that already this year with international markets outperforming US markets. You take a look at Europe, which has a cheaper valuation, more of a cyclical bias.

European financials are up over 20% year to date. We like companies over there like NatWest. These are companies that can continue to do well in a period of black to lower interest rates, strong net interest income. You know, we think financials are a great global play going forward. So are you saying that you like international stocks better than U.S. stocks at this point? If you're looking at year to date returns, most investors would be well served to own international stocks. I think this will be a year where international may continue to outperform U.S. stocks.

If you look at earnings growth, even though fourth quarter earnings for the S&P 500 wrapping up right now at 12 percent earnings growth year over year, I think for the year the S&P could put up about 7 percent earnings growth. So markets have some upside, but our price target on the S&P 500 for 2025 is about 6400. Looking outside of the U.S., though, now we have more of a non-tech cyclical play. And I think that given the discounts, which European markets entered the year with, which was about a 40 percent discount to U.S. markets, I think European markets and some Asian markets may actually outperform the U.S. this year. Interesting. Sarah, we'll talk to you soon. Thanks for your time. Sarah Malik.

Thanks for having me. Still ahead, Dell reporting results top of the hour. We're going to drill down on everything you need to know. We are back on the bell after this break. All right. Up next, we run you through what to watch for when HP and Dell report in OT. That and much more in the Market Zone, which is next. All right, 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 two legacy tech earnings we are watching for in OT. Sima Modi on HP. Christina Partsenevelos on Dell. Michael, I begin with you, and there's been a slow drip, and then sort of we kind of fell down towards the end of the day here. Keep putting more straws on the camel's back. I mean, to state the obvious, NVIDIA has an outsized impact on the S&P today. More than a third of the net decline in the S&P is basically NVIDIA's loss, which is a little bit of a give up. It's sort of a nothing new here

type of response. I don't think of it as a real kind of alarm bell being rung. Lows of the day. What we have done, though, yes, absolutely. What we have done, though, is we've kind of cracked below the 5,900 area in the S&P, where a lot of folks were at least hoping would hold together. It was the low from earlier this month that kind of gets you below where you were in the beginning of earnings season. And we're down year to date. Now, one thing that is going on is it's not a full washout. I wonder if we're at the point where you actually want a more comprehensive, real kind of purge across the board as opposed to today, which is, oh, you know,

a third of all stocks are up and industrials are fine and it's mostly a tech sell off and momentum continuing to unspool as much as people want to call the end to that repositioning. So I do think you're in this zone where you don't need a big explanation for a four to five percent pullback, but there's just too much going on. Yeah, well, the volatility, I mean, you're looking at an almost 600-point swing today from high to low. It's very erratic action because these prices have to move far to find somebody with conviction to say, oh, I don't think we're going to get a tariff headline that's going to blow me out of a position right here. Now, we are also seeing this broadening move that everybody has been wanting. It's just happening in an uncomfortable way.

MAG7 is down 7% year-to-date. The rest of the index is up 3.5% year-to-date. And guess what? The S&P is down a little. So that is one way we can get the broadening that isn't necessarily satisfying for index investors. All right, Seema, tell us what to watch for with HP. Scott, HP is set to release earnings after the bell, and PC mobile demand will be top of mind for investors. So far, the PC refresh cycle has yet to take hold. That's been disappointing for the street.

Overall, analysts expecting just over $13 billion in revenue for the quarter, and that's just 1.5% higher than a year earlier, 75 cents adjusted on EPS, down from 81 cents a share last year. The stock, interestingly enough, has outperformed tech as of late, bucking the sector's sell-off over the past month with just three buys, 13 holds. The average price target of $37, that puts it right below it, and the stock is lower right now heading into the report. All right, Seema, thanks for that. Christina, Dell Technologies looking out for that one too. Yeah, well, Dell's AI server business is booming, making its infrastructure solutions group, ISG, the fastest growing segments. You'll hear a lot about that, but comparing to competitors, Supermicro may suggest some challenges ahead.

First, you got AI servers that are boosting revenue, but they're commoditized at this point, forcing Dell to compete on price and squeezing margins. Secondly, Dell is shipping NVIDIA Blackwell server racks, but there's concern about a revenue gap as customers transition from Hopper to Blackwell. We've heard about that with Supermicro as well. Third, PCs still account for roughly 55% of Dell's revenues, that would be PCs and servers. And Barclay notes the consumer PC market,

Seema just mentioned that, does remain soft. Any 2025 recovery, they're saying, is likely already priced into shares. And then finally, big overhang. U.S. tariffs on imported PCs and components do loom large. Bank of America expects Dell to pass these costs to buyers, raising U.S. prices by at least 10 percent. Dell's report really just going to reveal whether AI momentum can outpace these mounting headwinds. Shares down seven, almost 7% into the close. All right, Christina, thanks so much for that. We'll see you. We'll see you tomorrow. That's Christina Partzenovas. Dell's kind of part of that momentum trade too, that really, as

people try and suggest, it's done unwinding. It was a tag along. It definitely did get in there. Look, I think it's always going to be a little bit messy as these things, you can't just call it. Does the overshoot to the downside have to be as dramatic as the overshoot to the upside was? We just don't really know that. The issue, I think, for the overall market

is it's happening in conjunction with some other pressure points. So you came into the year, obviously very high macro expectations. Economic surprise index has been rolling over and is negative now, just things softening up. It's not a desperate situation, but it's one where it's giving people the idea that we're in a little bit of a slowdown. Tariffs and federal job cuts and all those things won't help, even if they don't hurt that much. At the same time, where the Fed feels as if it needs to kind of hang out here for a while

because inflation hasn't cooperated. So all that stuff going on is preventing the cyclical parts of this market from just grabbing the baton and running. We've reset sentiment to a fair degree. A lot of people pointing to whether it's the surveys. I don't think it's completely as bearish as that. But, you know, part of the work of a pullback is being done here. We just don't know where it ends. PCE tomorrow.

Important. Obviously, we're worried about sticky inflation. Fed's on hold, they would suggest. Although probabilities of rate cuts ticking up. They are ticking up. I mean, the two-year note yield is telling you that. So if you do get a really friendly inflation number tomorrow, it probably does open up that release

valve to say, OK, the Fed's going to be able to migrate toward cutting. Even if they're not really saying so right now, the market will get them there. And that will at least maybe act as a little bit of a psychological cushion in the short term. We still look, evaluation is not the reason to buy this market, but it has gotten moderated a little bit as the most expensive stocks have compressed their PEs. You want to give me 20, 30 seconds on Tesla? What it means is you're watching it? Yeah, I mean, this is another, this is like a kind of a compound issue where it seems

as if you're having a complete purge of whatever benefit of Musk's involvement in the administration is being taken out of this valuation. And then it's just also was momentum on top of momentum, because every single day it's the most popular or second most popular retail stock to trade. And those folks are on the run right now. And so I think, if anything, you could give the market credit for hanging in as well as it has when a 3 percent holding in the market or 2% has gone down as much as it has. All right, good stuff, Mike. Thank you.

That's Mike Santoli, our senior markets commentator. So we'll go out kind of ugly, certainly where we were, the big swing in the market. I'll send it in to OC. We're done for.