Closing Bell - Closing Bell: The Power and Pitfalls of AI 6/6/23

Episode Date: June 6, 2023

What does this new frontier mean for the future… and for investors? Brad Gerstner of Altimeter Capital gives his unique, expert take. Plus, a rare interview with AI pioneer Mustafa Suleyman – the co-founder of Deepmind – on the big risks of artificial intelligence. And, we hear from Sridhar Ramaswamy – Neeva co-founder and Snowflake SVP – developed what some are calling a “co-pilot for the enterprise software industry.” He weighs in on the future of AI and the company that he thinks is winning the AI arms race.

Welcome to Closing Bell. I'm Scott Wapner, live today from One Market in San Francisco. This special hour begins with the mania around AI, the risks, rewards, and runaway success of the stock set to benefit from this transformational technology. We have several special guests joining us today. Brad Gerstner, he's the founder, he's the chairman and CEO of Altimeter Capital, and he is with me for the hour today. In just a little bit, we'll have a rare interview with AI pioneer Mustafa Suleiman, the co-founder of DeepMind, a company sold to Google back in 2014. Is Alphabet losing out in the AI arms race? We will ask him. Neva's co-founder, Sridhar Ramaswamy, is here too. He ran Google Search for 15 years. He just sold Neva to Snowflake. Who else was interested

in that? Oh, we're going to ask him that as well. Find out where all of this is heading as well. Let's check the markets with 60 minutes to go in regulation. You see here, Dow's a marginal loser today. Been red slightly for most of the day. Nasdaq, what else is new? It's been positive for most of the day. Tech names like Alphabet and Meta hitting new highs today. And there is the Russell, the winner today for sure. Brings us to our talk of the tape, AI, the power and pitfalls of this new frontier and what investors need to know. For that, we welcome in Brad Gerstner. It's good to be back with you here where it all started.

I think the first time we had an interview in person was out here. And now we are covering what is this new frontier. When you were with me last, you said, quote, we have one of the most significant technology disruptions of our lifetime, probably bigger than the internet itself. Walter Isaacson alluding to the same thing in an interview I did with him a short time ago. This is everything. Yeah, I mean, these systems are exponential. Well, first, it's good to be back here with you. We were back here. This is this. This commemorates that COVID is really over, that we're back in studio. But yes, these systems are exponential.

What I mean by that is the primitives to AI are data, compute, silicon, the transformer model. We couldn't be where we are today with all this substrate not having been laid down but when we say it's bigger than the internet itself what we mean by that is the internet really allowed us to discover information to retrieve information think 10 blue links what ai allows us to do is extract the knowledge from that information to get a co-pilot to help us make better decisions. So you have made building your portfolio central to AI in many ways, whether it's NVIDIA or Meta or Microsoft and Snowflake and some of these other companies that are expressing what they think AI can be for them. I mean, this is the central way you are investing today.

Correct. I mean, but in many ways, it's an evolution, not a them. I mean, this is the central way you are investing today. Correct. I mean, but in many ways, it's an evolution, not a revolution. I mean, those of us who've been around the internet or Silicon Valley for the last 20 years, the goal was never to give people 10 blue links, right? That's kind of like a glorified card catalog. We just help you discover the information. So for us, it was a question, not if, but when we would have the transformative breakout where businesses and consumers could live better lives, get better answers through their information. So for us, over the course of the last two years, we saw the acceleration, right, coming out of the chat GPT models that OpenAI was building. We knew the work that Google was building. We hosted an investor day last year ChatGPT came out. And the thesis

or the theme of the Investor Day was all the world's data moving to the cloud, augmented and intelligent applications being built on top of it. So we started re-architecting our own portfolio around modern data stack and AI applications in anticipation of where we're going to go. You've also been, I think it's fair to say, kind of reassessing the positioning of your own portfolio as to where you've identified the winners and maybe in some case the first losers, the ones who finish in second place. I'm obviously alluding to your selling of Google Alphabet recently. Do you think that every investor watching us have this conversation today needs to reassess their own portfolios and their positioning around tech and AI? Well, I think in moments of major platform disruptions, and this is the third that I've

managed through, so the first one being the web itself, think about 1995 through 2000, then mobile and cloud, think 2008 through 2012, and now we're at the kind of beginning of the age of AI, there's major value creation, but also value destruction. Let me give you an example. The entire architecture of the web, what most Internet companies extracted value from, whether you were selling a product or whether you were advertising, was static web pages. You would go to a web page. That web page was optimized for the

Google crawler, right? The Google bot would come there, eat up all that information, and it would show you this in a 10 blue links. Then they would put an advertisement on that page. That's not where the world is headed. The world is headed in a place where we're just going to chat our questions. We're going to say, how do you make a French omelet? And you're going to have this chat agent on this device or another device that just gives you the answers. You're not going to have to search through 10 blue links. And so, yes, a lot of the companies

that were beneficiaries of the Google ecosystem are now suspect, right? They may lose that value. And who are the companies that are going to benefit? I said on your program, you know, six or nine months ago,

and in my letter to Mark Zuckerberg, I said double down on AI. I think Meta's position to be one of the biggest winners of the hyperscalers from the application of AI to consumers. You know, you mentioned the period of 95 to 2000. We obviously know what happened at the end of that period. And it seems all roads in this conversation about the possibilities and the power of AI lead to us thinking about what happened back then and this mania compared to that mania. Are there any similarities at all or do you scoff at the comparisons?

Well, I think the greatest disservice we could do for investors, right, whether you're playing at home or whether you're a professional investor, is to compare this moment to 1999. In 1999, you had valuations of make-believe revenue and profits. It was the promise of what may come. We had 30 million people connected to the internet via broadband, right? It was a tiny fledgling industry

without real businesses, without real free cash flow, and it was trading at dramatically higher multiples. I'm not saying that at the start of platform disruptions that there's not a lot of excitement. I'm not saying that at the start of platform disruptions that there's not a lot of excitement. I mean, the very nature of the venture business is you're going to have a lot of things that go to zero, right?

That's the business model that the venture industry embraces. But today, if you look at Facebook, it's trading at a deeper value stock than a lot of the cyclicals that are out there, notwithstanding the fact that they're leveraging the benefits of AI. So I don't think you serve yourself well by saying, oh, this is going to end in 19, look like 1999, end like 1999. I think you have to take a fresh look. You have to find the company. I mean, listen, NVIDIA, the consensus expectations for

NVIDIA to start the year, Scott, where the data center revenues were going to be down 6% for the year, down 6%. The consensus expectations for Q2 was that they were going to do $7.2 billion in revenue. They came out with $11 billion. Like, those aren't make-believe. These are people who are consuming these products to drive better decisions in their business and their lives. I think we're all trying to think of as well how we're all going to be impacted. As an investor class, as a worker class, Goldman Sachs suggests their research says 300 million jobs around the world could be impacted. Mark Andreessen today on Twitter, I'm sure you know him well and our viewers know of him quite well.

Why AI will save the world is what he tweeted. The era of artificial intelligence is here, and boy, are people freaking out. Fortunately, I'm here to bring the good news. AI will not destroy the world and, in fact, may save it. You said you agree with that on Twitter. Yeah, I mean, listen, the future is a distribution of unknown probabilities. So we can all dig a hole and hide in it because there's tail risk in the world. I mean, I remember these same arguments in 1998, 1999, right?

That the internet was going to displace everybody, that it wasn't going to be, you know, we weren't going to read books anymore, we weren't going to do these things. The fact of the matter is all human progress. The human condition is better today than it's been at any time in its history. There's been 110 billion people

who've lived before us on this planet, and we all live a better standing of living than all of them. And the reason for that is because of innovation and invention that drives human progress. And when you think about artificial intelligence, and here's where I am in total agreement with Mark, the known benefits to solving life science problems like blood cancers, the known benefits like Saul Kahn talks about giving every kid a one-on-one tutor that's going to help solve the two sigma problem, the known benefits, you know, in terms of helping engineers develop software faster, those are huge and well-known. The tail risk needs to be observed.

It needs to be discussed. It needs to be debated. But just like we have regulations that say you can't use your phone and your computer to plan a terrorist attack against the World Trade Centers, right? That's illegal. But the Internet and your phone can be used for that, right? We need to be vigilant around AI. But it is way too early to start throwing up roadblocks to AI. The real dystopian place is if we put roadblocks in front of the good guys building good AIs while rogues go build these things, right? That's the true dystopian future. So I think that the government, you know, we've spent a lot of time talking with our congressman, Ro Khanna, and others. I think there's going to be a balanced approach, right?

Like there should be. And we have a lot of laws on the book. Just enforce the laws that people are breaking, you know, breaking the rules we need to come down on. We will talk much more about that over the rest of this hour. You, of course, Brad, are going to stay with us. Let's get to our Twitter question of the day. We want to know, do you worry about your job with the emergence of AI? You can head to at CNBC closing bell on Twitter. Please vote yes or no. We'll share the results a little later on in the hour. In the meantime, let's get a check on some top stocks to watch as we head into the close today. Christina Partsenevelos is here with that.

Christina. I'm worried about my job, but I write all of my own scripts. Shares of Intel getting a boost after the chipmaker announced it was selling $35 million shares of Mobileye, roughly a $1.5 billion stake, with an option to sell more down the road. Intel bought Mobileye, which develops autonomous driving technology, for roughly $15 billion back in 2017 and listed it this past October. The market cap has surged well above $30 billion on all this AI excitement, but it won't receive the proceeds from the Intel sale. You can see Mobileye is down, I'm ever so slight, less than a percent right now, but Intel up 3%.

A tale of two giants, Needham and company analysts once again pitched the idea that Apple should take over Disney. Apple's wearable technology, Disney's roster of content makes for a good pair, and they pointed out that Disney CEO Bob Iger was even on stage touting Apple's Vision Pro goggles yesterday. And of course, because we're CNBC, we booked that analyst Laura Martin today on Overtime, a conversation you won't want to miss at 4 p.m. Eastern. Scott? And you are awesome for doing that. Christina, we'll see you in just a bit. Christina Parts

in Nevelos. We are just getting started on this special edition of Closing Bell. Up next, the big risks of AI. Mustafa Suleiman, he's the co-founder of DeepMind and a pioneer in artificial intelligence. He's here. He's been raising the red flag on the potential dark side of AI and the best way to contain those threats. That rare interview is just after this break. We are live from San Francisco today. You're watching Closing Bell right here on CNBC. For all of the potential powers of AI, some say the risks shouldn't be underestimated as the world essentially undergoes a dramatic technological transformation. Our next guest

is a pioneer in the space. Mustafa Suleiman is the co-founder of DeepMind, which was sold to Google back in 2014. He's now the co-founder and CEO of Inflection AI, also the author of The Coming Wave, which is out in September. It's great to meet you and have you. We feel lucky to have this interview with you today. It's great to be here. Thanks for having me. So your book is essentially a warning of sorts about this coming wave of which you say, quote, we're not prepared. I don't think we are prepared. And I think it's important for us to be

super aware that this is going to be a dramatic transformation. The benefits are going to be unbelievable. I mean we are on the cusp of unleashing an intelligence revolution. Think about it over the last 20 years we've all got access to smartphones and laptops. Whether you're a billionaire or you earn $20,000 a year we all get to use the same cutting-edge hardware And over the next 10 years, maybe 20 years, we're all going to get access to intelligence in your pocket, the best, the smartest, the most incredible tool you could ever imagine. And that's going to change everything. I think we're trying to get our arms around what it's really going to mean. And the obvious thing

that you come back to and others have made the comparison is to the invention of the Internet, of which you say one perspective of how to sort of visualize what this is going to look like. In 1996, 36 million people use the Internet. In 2023, it is five billion. That's the kind of trajectory we should expect for AI tools only much, much faster. Those are astounding numbers. I think that's absolutely right. Everybody is going to get access to the smartest intelligent assistant that you can imagine. I'm personally focused on building a personal AI. And I think that in your pocket, you're going to have a really capable tool that will make you much better at everything that you want to do, give you access to information and help you take actions. You've been very vocal, too, to this point on the fallout from what AI is going to mean

for white-collar workers, for job loss. Unquestionably, you said many of the tasks in white-collar land will look very different in the next five to 10 years. There are going to be a serious number of losers. Can you explain that more of really what you see? Anything that makes us smarter is clearly going to enable us to save time in certain ways, right? So there are huge efficiencies to come here, and those efficiencies will definitely change jobs. There's going to be a reshuffling of who does what and when. And I think the challenge for society is trying to make sure that we make that transition in as smooth as possible way. And that means we're going to have to catch the people who aren't able to retrain as quickly as

they will need to or even relocate to places where there are jobs. I mentioned at the outset as well that you are the co-founder of DeepMind, which you sold to Google in 2014. And people like Brad and other investors, I think, are trying to understand how, if Alphabet had DeepMind under its roof for that long, it got, quote unquote, beaten to the punch by Microsoft and chat GPT. How do you assess that? It certainly did. I mean, they were behind the times. And in some

ways, it was pretty sad because we had Lambda, the conversational AI at Google, a year and a half before ChatGPT. But of course, you know, the bureaucracy takes a while to unravel itself and get out of the knots that it's tied itself up in. But there's nothing like, you know, competition from an outsider to get them straightened out. And they've obviously caught up now with their own AI. And, you know, I'm sure they'll be just fine. I think you're wondering as an investor if they are caught up and if they ever will. I mean, you know, you've heard me say that the most valuable thing Google had was it owned the verb for search and discovery in the age of the Internet.

And I think search and discovery in the age of the internet. And I think search and discovery in the age of AI today is chat GPT. And every conversation that we're in, it's not barred. But let me shift a little bit, because I think it's a really important architecture for how we think about AI. So talk to us a little bit about Pi. You're building a personally intelligent agent that Bill Gates has said is maybe the biggest winner in AI that is going to be, you know, that intelligence in our pocket to help

us with our personal life, everything from booking a trip to figuring out how to better educate your kids. So talk to us a little bit about why you think that's needed on top of chat GPT in order to drive our personal lives forward. And I did try it out, by the way, before you came. It's very clean. It's easy to use. Certainly, it's going to remind some of GPT, just in the nature of how you operate it. But that is Inflection AI. That's your new company. And Pi is the product, personal intelligence. Yeah. Think about it like this. This is just the beginning of a revolution. Everybody is going to have AIs, businesses, brands, organizations. AIs are going to be representing their values, trying to sell you things, persuade you of things, be super useful

to you in certain ways. I think everybody's going to want their own personal intelligence that's on your side, aligned with your interests, that can advocate on your behalf, negotiate, find you great deals. And of course, most of the time, your AI is going to be talking to other AIs to find you the best possible way to solve the problems you care about. I mean, you've described it as your personal co-pilot, right? Is that how we should see all of this? Absolutely. Listen, everybody who's watching, if you don't have these apps, ChatGPT you know, pie character on the front page of your home screen, if you're not playing with them, then you're you know, the people who will be first displaced are the people who don't embrace the tools of knowledge in your pocket. Right. Just like the people who didn't want to use Google or didn't want to use mobile phones at the start. And so for us, this has become a deeply important way

in which we do business. But talk to us a little bit about what patterns of use are you seeing with Pi today? So when Bill Gates mentioned it... Who, by the way, is an investor. Right. Right. That's right. So when Gates mentioned it, you know, like saying that this will be the natural successor, implying that it could be the natural successor to search, right, to help everybody make their decisions. What are the use cases, the early use cases that you see people dogfooding? I mean, people are using it to weigh up difficult problems.

They're making a tough decision in their life and they want to think through both sides of a problem. People are using it to pursue their passions and hobbies. Like sometimes your partner isn't as interested in your golf hobby as you might be, but Pi's always there to be interested in your passion. And so I definitely see it evolving to be a chief of staff for your life. Imagine a scheduler, an organizer, an advocate, a buyer, a booker. So it's going to take all those actions for you on your behalf and make things much, much easier. Nobody ever woke up in the morning and said, you know, I'm going to New York and I need to book a hotel.

Gosh, I just wish I could go to the Internet, type in, you know, New York hotels in Google. Give me a long list. And then I got to click on something in that list. It gives me another long list. And then I got to click on that. I got to do all the research myself. What you want to do in the morning is wake up and say, hey, book me the cheapest hotel near Times Square, you know, for these dates. And oh, by the way, I want a room with this type of view and I want a restaurant reservation. And it automatically happens.

How far away is that from happening as the way Brad described it? Because that's how people generally think that this is going to evolve. I think this is going to happen within months, right? Today, we have access to information distilled in succinct and precise answers. You don't go to use the websites on 10 Blue Links anymore. You go and ask your favorite AI for access to information. Over the next 12 to 18 months, that AI is going to use it to interact with other AIs, make bookings, plans, and schedule, just in the way that Brad said. I think we're just on the corner of this. I want to read you something that Roger McNamee said, well-known out here in Silicon Valley to many, of generative AI. Generative AI is a con, like crypto and the metaverse. Threats of extinction are a marketing ploy designed to distract from the massive real world harms of quote unquote AI products today. AI equals automation. How do you respond to somebody like that? I mean, that couldn't be more wrong. There's

absolutely no hype here. We've been working on these technologies for over 15 years, 20 years in some cases, and we've seen a steady improvement across every single area and every trajectory. And many, many businesses have this in production, in use today, saving tons of money, making their businesses much more efficient. Elon Musk was an investor in deep in deep mind. That's right. Yeah. He, along with some others, even Sam Altman, have suggested we need to, like, put the brakes for a bit on what's happening here, because the advances are too potentially explosive to society in both a positive and negative way. Do you agree with that? Look, naturally, this is going to be difficult to predict. Things are moving really, really fast. Even those of us who are developing AI at the cutting edge are sometimes surprised at the pace of progress. So given that, I think it does make

sense to be cautious and to be respectful and thoughtful about the consequences for all of society and not just those who are going to be winners. It's been great talking to you. I so much appreciate you being here. When your book is out, we'll have another conversation. We'll certainly do this, I hope, on a more regular basis. Look forward to it. Thank you. Download Pi. Download Pi and use it. Mustafa Suleiman joining us here on Closing Bell. Up next, we are counting you down to the close with the biggest movers that need to be on your radar. Plus, our special AI coverage continues.

Neva co-founder Sridhar Ramaswamy joins us. We'll get his take on the impact of AI on the enterprise space. We just talked about what it means in your life. Well, now we'll talk about what it means in the life of business as well. We're live from San Francisco on Closing Bell, and we're right back. We're just about 30 minutes away now from the Closing Bell. Let's get back to Christina Partsenevelos for a look at the key stocks she is watching into the close. Christina.

I was thinking about the song When Two Become One by the Spice Girls, and this is how I'm going to start my script. The PGA Tour agreed to merge with Saudi-backed rival Live Golf. They've put their differences aside and will become a larger for-profit enterprise by par. But no name just yet. The merger helping drive golf name is much higher. AcoucheNet, which makes golf products, their ticker is G-Golf. That ticker is up about 4.5% right now, but the volume is a little low. Top Golf Callaway, that's the big one. That's up about 4%.

We'll bring that up in a second. And then you got Nike and Dick's Sporting Goods. They have exposure to not only the golf products, but the golf sponsorship deals and the athletes. And so that's why all of these names are climbing higher. That's it, Scott. All right. All right. Christina, thank you. Thank you. Christina Parts and Avalos, of course. When we come back, Neva co-founder Sridhar Ramaswamy joins us here at One Market. His AI search engine company was acquired by Snowflake. And just a few weeks ago, he'll tell us what he thinks is next for this space. Just ahead, we're live from San Francisco. Closing bell is coming right back.

We're back at One Market in San Francisco. Consumer-driven AI like ChatGPT has captivated our attention lately. But our next guest has developed what some are calling a co-pilot for enterprise software industry. Sridhar Ramaswamy, he co-founded AI-powered search engine Neva in 2019, which was acquired by Snowflake just two weeks ago. Welcome. It's good to see you. Excited to be here, Scott. Why Snowflake?

A word on the street was that a certain man named Musk might have been interested along with others. Is that true? Well, we started on the journey originally of search. And early last year at Neva, we realized that, like others, that generative AI was going to be a game changer. So it changed the game of search from that of links to providing fluid answers. So we got all of this done as a 50% company, but we also knew that like Bing and Google, we're going to dance. And that was not a great place for a startup.

And that's when we started looking around. And Snowflake is the trusted, secure, most respected platform for enterprise data and applications. We met with the team. We saw eye-to-eye on where this could all go for the enterprise, and my team was excited. I was. The transaction closed like 10 days ago. We couldn't be more excited.

Yeah, I'm sure. Congratulations on that. I mean, what Neva, as I understand it, originally started as was a privacy-focused search engine for consumers. That's right. Of course, trying to get people to pay for something they're accustomed to getting for free is difficult. But morphing from that to the enterprise and what this tool can do for business, we got, Scott, a really easy-to-understand use case from Mustafa for how our lives will be changed. How will my business life be changed? Yeah, just stepping back, without getting into does AI mean

apocalypse or world peace, what it clearly already delivers is an amazing new way to interact with computers. So far, all of us have had to follow the rules of the computer for how we interacted with anything. I'm sure all of us can remember the frustrations with any travel site or some other app that we used, it's a pain. What large language models do is it lets us talk to these programs in natural language. And now think about it, when you combine that with the functionality that's already available, whether it's a search API or some business API or data analytics, you're going to unlock incredible functionality.

So whether it is sending business email or doing analysis on business data or figuring out what are exactly the things that you need to do for getting a particular sale done, these co-pilots are always going to be there, and you're going to converse with them, and they're going to remember the context of what you are doing. Just like Mustafa was talking about Pi sort of being your accompanist, like your chief of staff for the world, you're going to have that for every enterprise function. That's an enormous opportunity waiting to be tapped. So, Scott, one way to think about this is the largest market in all of software, 23 years ago, at the start of the Internet, was databases.

They were worth a trillion dollars. Think IBM. Think Microsoft. Think Oracle, et cetera. Why are databases so valuable? Because businesses leverage the data in the databases to make better decisions, to tell you whether to merchandise black shirts or what your sales forecast is going to be tomorrow, what you should price a product. But you had to learn specialized knowledge to store the data and to extract the data.

And what's interesting to us today is we're tearing down the walls between those databases so that enterprises can capture all this data, much like is happening with the consumer. And then you have a new emergent class of businesses that are building that pie. Think of that personal intelligence, but for the business. That's right. Everything, as I said, from email to how you buy products to how you approve things, how you analyze what's going on with your business is going to be changed in a big way. And so there's a huge market for brand new applications that are going to be built on top of the things that are existing. And this is where we're going to shine.

This is the reason why Neva plus Snowflake is such a big deal. So Mustafa suggested when I asked him when is the great question. Of course, everybody wants to know when are these advances going to be at my fingertips? When is my co-pilot going to be able to be enhanced? He said in a matter of months for consumer technologies. What about for these sort of business applications? Well, so I think the pace of change is something that none of us have quite gotten used to. I took kind of two weeks to just focus on getting the acquisition done. It was more paperwork than I thought was possible. You need AI to do the paperwork. And oh my God, there's so many things that had happened

in the AI world within those two weeks. I'm like, now I have to spend an extra week and just catching up on what is going on. So I think you're going to see these co-pilots roll out from Snowflake, from others. We have a big conference coming up in Vegas on 26 with lots of announcements. So I think this pace of change and therefore getting the first mover advantage is going to be incredibly critical. Let me ask you this. You used to run Google advertising, I said, for 15 years. That's right. Why did they let you out of the building? And do you think that they've lost in the arms race of AI. How do you judge that? I mean, Mustafa touched on this a little bit. All successful companies get complacent. They get worried about change.

Absolutely, Google had the best technology in AI five years ago, but it's a different matter to apply it and wield it into a product that you and I want. To me, there's still magic in creating software products. No one knows how to. And even the open AI people, if you ask them, they'll be like, oh, you know, we did chat GPT. We didn't really think it was going to blow up like this. So there's magic there. And if you combine things like caution and worry about,

oh my God, what if we get it wrong in one out of the 10 billion times that somebody is going to use it, that's the kind of worry that Google had that ultimately put it further and further behind. By the way, it is not obvious to me that just by applying that money and the manpower that they have, that they're going to beat ChatGPT. Brad knows this. First mode advantage is very real.

ChatGPT is on my home phone screen. Now, if I need to put BARD there, it has to be 10 times better. So these things matter. That's why innovation matters, because that desperation produces amazing things for all of us. So when Pichai, Sundar Pichai, CEO, if he's watching the interview right now and he's saying, this is ridiculous, we haven't seeded anything. They may have gotten the first mover advantage, but we're Alphabet. And we have 90 percent of search and we are fully committed, as he said repeatedly of late, to being a major player. Your response is? Can I save you, Sridhar? Can I save you? Because, you know, he spent 15 years at Google. Everybody in the ecosystem wants a healthy Google. Right. When I was on your show at Milken, I said, listen, Google allowed

their moat to be breached by chat GPT. That is the verb today for search and discovery in the age of AI. However, Google has immense resources, immense technical capabilities. They're running fast. They're getting it organized. And I, for one, am rooting for Google because competition within this ecosystem, between Microsoft, between Meta, between OpenAI and Google, will make it all better. But they've got a long way to go. Just being the biggest and owning a monopoly in search doesn't entitle you to owning that monopoly in the age of AI. He saved you for 30 seconds, but still, how would you address it before I go? Competition is important.

Competition is important. Competition is good. A chat-like interface for getting at information honestly represents a new paradigm in how we get at information. It's not the age of links. We should all be happy that ChatGPT is out there and Google is competing just as hard. Sydney is there. I think this competition is important. If anything, this is a consequence of 10 years of Google search not having any competition. That's the real takeaway. Wow. Fascinating conversation. I appreciate your time so very much. Thank you, Scott.

All right, Sridhar, we'll talk to you again soon. It's the last chance to weigh in on our Twitter question. We asked, do you worry about your job with the emergence of AI? You can head to at CNBC closing bell on Twitter. The results are right after this break. All right, let's get the results now of our Twitter question. We asked, do you worry about your job with the emergence of AI? And the majority of you, 69 percent, in fact, said no, I do not. Up next, cracking down on crypto coinbase coming under fire today from the SEC.

We have the details, what's at stake when we take you inside the market zone. And from Chewy to GameStop to Bed, Bath & Beyond, a new CNBC documentary takes an in-depth look at entrepreneur-turned-activist investor Ryan Cohen. Do not miss Making of the Meme King. It's tonight. It premieres at 10 p.m. right here. That's 10 Eastern right here on CNBC. Closing bell right back.

We're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli and Altimeter's Brad Gerstner both here with me to break down these crucial moments of the trading day. Plus, Christina Partsenevalos is back on the SEC's lawsuit against Coinbase and Phil LeBeau on Boeing's latest 787 Dreamliner warning. We'll get to everybody. We start with you, Mike Santoli. Interesting day.

What do you make of it? Apple didn't really do anything on the backside of WWDC and the market action by and large was pretty muted. Yeah, we've gotten a lot of light shined into some of the more neglected corners of the market. They're benefiting this imbalance market we've talked about for weeks, maybe months. It's kind of being rectified, at least for a couple of days now, the easy way rather than the hard way, which is to say small caps, banks, cyclicals, rallying a little bit. It definitely feels as if it's sort of a bit of forced relaxation, meaning you got some short squeezes going on. You have people feeling underinvested. You have the volatility index at 14 point almost nothing. What that shows is that the fundamentals have not gotten bad fast enough to redeem the underinvested positions of a lot of people out there.

There's a massive rush to cash in the early part of this year. People felt very comfortable sitting there getting four to five plus percent. And now the market is at least making them feel a little bit uncomfortable. So we'll see if this is just kind of the culmination of this move, if we're getting a little bit overbought or not. But right now it looks like, you know, it's don't short a dull market rules are in effect. Crazy, Brad, seeing the VIX at 14. I want to go to Apple, though, with you, because that's where I started sort of this market zone conversation. You don't own it.

No. And when was the last time you did, if ever? And why don't you now? Well, I mean, listen, I think Apple is one of the most covered stocks in the world. It's a ubiquitous product. It's a fantastic product. But the reality is I don't see a lot of alpha that we understand about the business. It looks like a 10 to 15 percent IRR sort of business. We saw a lot of things mispriced in the market to start this year. NVIDIA trading at one hundredpriced in the market to start this year. NVIDIA trading at one hundred and twenty five dollars at the start of this year. People thought, you know, revenue was going to be negative in the data center. So we look for that alpha in companies that, you know, we're going to have a variant perception and something's going to

happen in order to change that perception. We thought Apple was pretty well understood, even with vision that we're excited about. Right. And it leads to a lot of conversation about what Meta is doing with Oculus. I don't think it changes the narrative. OK, Christina Partsanovalis, Coinbase and the SEC. Tell us more. The SEC is accusing Coinbase of operating since 2019 without having registered with the regulator and alleging at least 13 crypto assets, including Solana as well as Cardano, not Bitcoin or Ether, by the way, were considered securities by the regulators. So you had the SEC chair calling the targeted crypto platforms

a web of deception on CNBC earlier this morning. Coinbase retaliated by saying that this is an enforcement-only approach, no clear rules. They've been saying this for a while, too, but that they plan to operate business as usual. The problem is they're going to have to figure that out quickly because the Alabama Securities Commission is giving Coinbase 28 days to show cause why they should not be directed to shut down from selling so-called unregistered securities in the state.

This coin lawsuit comes literally 24 hours after the SEC sued Binance and its co-founder, also accusing them of running an unregistered platform in the U.S. And this is an important point, very specific to Binance, co-mingling, a.k.a. misusing customer funds, something we did hear about with FTX, Scott. So that's the similarity there. So Coinbase is going after not registering certain securities. With Binance, it's not registering certain securities,

as well as misusing customers' funds and not telling them where that money went. Yeah. Christina, thank you. Christina Partsinovalos for the update there. There was a period of time where crypto was tracking the Nasdaq. That's obviously been broken. You have no crypto exposure from best I know. Why? Well, I mean, you know, again, there's this uncertainty surrounding crypto. And listen, I think Coinbase has been one of the best actors in the crypto ecosystem. I think there's a lot of blame to go around here, including the SEC, which for years has countenanced this. I can't believe it's 2023 and they're just giving guidance today on what is registered and unregistered to Coinbase. So, you know, I think that Coinbase

will do what it takes in order to be, you know, the most legitimate and registered crypto exchange in the United States. It's got an incredible team, an incredible board. I think they're trying to do the right thing. But when I look at the innovation that's going to come out of that and I compare it to the tectonic plates that we've been talking about the entire time on this show, I only have so much time. We only have so much money to invest. So I'm choosing to focus in on things like software, the modern data stack, AI, etc. I mean, because people look now and they say, OK, AI has a little bit of the wild west. They look at crypto. They say, OK, AI has a lot of the wild west with not a lot of sheriffs around. And they're still trying to figure out what all this crypto stuff is based on.

Well, you and I talked about this many times over the course of the last two years. Crypto was this super cycle valued at its peak, I think $3 trillion market cap for all of crypto, searching for a use case, right? Like, what do you actually do with this stuff other than speculate, you know, etc.? And there's a lot of work being done in order to bring that use case to the fore. But AI, every single business, we're just talking from riders to engineers, et cetera, they're getting real value in their lives today from AI. So I don't have to try to make up what that's going to be.

I know what it is. Philip Bowe, Boeing's latest issues with the 787 Dreamliner. What are they? Scott, this comes down to a fitting on the horizontal stabilizer of 787 Dreamliners. They have been found or been notified by a supplier that they may not be in conformance with engineering standards. So as a result, you take a look at shares of Boeing. The company is saying that it may have to slow down deliveries of Dreamliners, at least in the near term. In a statement, Boeing says airplanes found to have a nonconforming condition will be required, will be reworked prior to ticket and delivery, while the inspections and required rework will affect timing of near term 787 deliveries.

At this time, we do not expect that this issue will change our full year guidance regarding 787 deliveries. Two important points here. One, this is not a flight safety issue, Scott. So the planes that are already in service will remain in service. Also, their full year delivery guidance is 70 to 80 Dreamliners. They expect to still hit that mark this year. Nonetheless, shares under pressure under another manufacturing question that has been raised at Boeing. Scott, back to you. All right. Phil LeBeau, thank you very much for the update there. We'll spend our final moments with Brad Gerstner. The markets in general, this incredible run that we've had in tech. I know your own performance has been off the charts as a result of this this year.

Does it have legs? What does it depend on if it does? If the Fed raises rates again, rates start to go up. Does that undermine it? What's the story? Well, remember when I came on your show and we talked in 2021 about how far above the 10 year average that multiples had gone in response to zero percent interest rates. Twenty twenty two was a huge reset. Right. We had parabolic increases in rates. The Fed was playing catch up and multiples fell off a cliff. A lot of growth stocks were down 70, 80, 90 percent.

Babies got thrown out with the bathwater. You know, the end of days for meta, like everything was done as far as the market was concerned. Markets overshoot in both directions. We overshot on the way up. We overshot on the way down. While the percentage gains feel big this year, realize that we're still trading below the 10 year average multiples for software and Internet stocks, right? So this is not 2021 or 2022, right? We're in a new framework. Now the question is, are these things real? How fast are earnings going to grow? We've been there. I think AI is going to drive massive productivity gains and margin expansion for these businesses as they tighten their belt, as they get fit, and as they leverage AI to drive down costs and drive up revenue. So I think that the future looks great for technology. And then I look at the rest of

the economy, and it's going to have to fight through the headwinds of high interest rates that are going to stay higher for longer. Has the community out here, the venture community, fully recovered from SVB and all that happened there? Well, what I would say, and we were talking as we came on, SVB was part and parcel, I think, of a broader thing in Silicon Valley. We got caught up in the age of excess. Too many things, too large of funds, the industrialization of venture, et cetera. And so we've been through a lot over the course of the past two or three years. I will tell you, there's more to go. We have a lot of companies still at

too high evaluations. Those valuations need to get reset and come down. But remember, the same thing happened in 2001, 2009. We're at the beginning of a major platform disruption. And I'm grateful that the venture community out here can help drive forward this innovation. It's been great having you. This has been super fun throughout our special AI hour with Brad Gerstner, of course, the founder, CEO, CIO, voltimeter, all things under the sun. Janitor. Yeah. Mike Santoli, an interesting perspective you just heard on valuations from Gerstner, too. Yeah, and it is important to recognize that a lot of this move we've seen in the NASDAQ 100 type stock has been mean reversion, has been catch up to the rest of the market. It's not all the way back.

I think I take less of a view that interest rates are as instrumental to exactly what the valuations are in that area. It's just a lot of the ebb and flow of the enthusiasm about earnings power longer term and whether people are under or over-invested in these things. And they certainly seem to get really cleared out in terms of positioning before this year. Now, maybe more in parity. Maybe they have to rest a little while. They've done a lot of this work that the market had ahead of it this year. Wouldn't be surprising either if the overall market started to maybe drift a little bit. We are a week out of a Fed meeting.

We think they're going to skip this meeting in terms of a rate hike, but you don't really know. So you might have a little bit of that wait and see ahead of time. As we mentioned before, the volatility index has ticked below 14, which to me mostly reflects what's going on in the index itself. At these steady levels with a lot of divergence beneath the surface and People not feeling rewarded for having hedged themselves coming into this year People sold a lot of stock last year and sit on a lot of cash still with Scott Yeah, nice little move here too at least to get into positive territory not going to be a big day by any stretch

But it's no longer red for the Dow the S&P the Nasdaq is going to go out as a leader today that does it for us