Closing Bell - Closing Bell: Trading AI Anxiety 11/18/25

Episode Date: November 18, 2025

We debate the state of the markets ahead of Nvidia’s earnings in a little over 24 hours from now with our all-star panel Sofi’s Liz Thomas, Humilis’ Brian Belski, iCapital’s Sonali Basak. Plus, NYU’s Aswath Damodaran weighs in on tech valuations. And, Goldman Sachs’ Elizabeth Burton tells us where she is finding opportunities outside of the U.S.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Brian, thanks so much. Welcome to closing bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This maker breakout begins with AI anxiety. It is again the story today, following a downgrade of two hyperscalers and even more questions now about those so-called circular deals. We will have reports on all of that coming up in just a little bit. We're showing you the scorecard here with 60 to go in regulation. We're well off the worst levels of the day. We do have more sectors green than red, and that has helped turn the market picture around just a bit. include the banks today. The alts managers, they have been weak, but there's JPM, Goldman, and Morgan Stanley. There are the alts managers getting a little bit of a bounce back. Airlines have been green, not Home Depot. Home Depot has been a drag today after its earnings miss. We'll watch that stock down near 5% today. The Bitcoin sell-off very much in focus, reversing a little bit, dipped below 90,000 earlier in the day. Negative for the year, a little bit of a bounce. We'll watch that as well because it reflects the market picture at large, too. It takes us to our talk to the tape, the state of these markets, ahead of

NVIDIA's earnings in a little over 24 hours from now. Let's welcome our panel. Sofyes, Liz Thomas, Brian Belski, he's the founder, CEO, and CIO at Humulus Investment Strategies, iCapital, Shinali Basic, everybody here at Post 9, how we like it. It's good to have everybody. Liz, are we closer to the end now of whatever this pullback is? I mean, it's not really a correction. We're six percent off the highs for the S&P. What do you think? I think we're closer to the end. Now, some of the stuff that I think has already found the end. Look at things like Small Cap actually got to some oversold conditions and now have bounced back. They're the major index today that's green. You mentioned this already. Nine out of 11 sectors are green

today. So we've had a pretty good wash of some of that excess. And it's important to wash out this excess throughout a very strong bull market. I've mentioned this before. We're going to have have these intermittent breakdowns in beta. And frankly, I think some of these are what's keeping us from getting so overly exuberant and unhinged. So they're healthy to see. They're tough to sit through, but they're healthy to see. And I do think we're getting toward the end. That doesn't mean that I think it's done today, right? But I do think we're closer to the end than it could be. I don't know. I mean, it's, you know, Jim Labenthal, Brian made the case on halftime that this is a sentiment-driven pullback. It's not like something terrible happened somewhere, and now

the market is, you know, having these ripple effects through it, people are concerned about too much spend, too much debt, too high valuations, and as such. I mean, if you look at the Bank of America Fund Manager Survey today, it tells a story. More than 50% of fund manager survey investors continue to think AI stocks are in a bubble. That says it all. Yeah, I heard you push him today on that, and that was really, really a great exchange back and forth, but I think you've got to take two steps back and look at stocks on an individual basis. But, but also look at stocks in the SB 500, but especially technology,

where you're seeing free cash flow levels at what they are, where debt to equity is at near all time low. So it's on a stock by stock basis. And so I do think that this, again, just begs and people hate when I say this, but it really begs to be more of a stock picker versus buying a technology ETF or anything like that because we're very clearly seeing stock differentiation.

Look at today. And so that's, and how bottoms are made, you're starting to see that actually occur. What also is very, very healthy, and Liz nailed it on what's happening with the market, is that you're seeing people come in and buying these areas that are providing opportunities, whether that's health care, the banks, and the fundamental prowess of the airlines are also being rewarded today in terms of their stock strength. You know, J.P. Morgan's vice chair, Dan Pinto, warning of a possible correction in valuations.

You have the downgrade of Microsoft and Amazon today at Rothschild where their commentary, I think speaks to where the concerns are, Sinali. It's a time to take a more cautious stance on the hyperscalers and move beyond the industry's reassuring, trust us. We think there's going to be bifurcation at this point. You're looking at the narrative starting to change in AI, and we don't believe that the whole story is over just because you have a few days of negative headlines

of what came into this year as a mega trend going into the next few years. We do think that you have to still be more selective at this juncture, given just how much debt we've seen come into the space in a short amount of time. You know, you look at every metric, actually, at this point. You look at even the weighted average maturities of how long these companies are holding debt and have to roll them. So I don't think it's over. I would agree with Liz completely.

We used those same words this morning. We felt that it was closer to the end than the beginning when you looked at the sell-off that we're looking at. You said something really interesting just now. The amount of debt that has come in in a short period of time, Yes, these companies have announced debt raises fair amount in a short period of time. By historical standards, the total amount of debt being raised by these companies, which have unbelievably great balance sheets, is not much.

It's just we're not used to seeing it. We're not used to hearing about it. We're not used to an Oracle being questioned, having its balance sheet, you know, called out by the market. It just adds to the sentiment concerns. it's not like you're worried that one of these hyperscalers has borrowed too much money and has all of a sudden taken on so much leverage. Companies are sitting on piles of cash. Right.

I think the nervousness came in because it started to seem like it was changing the story. The story had been, well, these companies can internally finance. They just use all the cash that they're sitting on. They don't need to go to the market to get debt. They don't need to raise money to do this. So now it was like, well, how come now suddenly they need to raise capital to do all of this spending? Maybe they don't, right? And I'm painting with a broad brush. I have to. I'm not going to talk about individual stocks, but maybe they don't have to, but sometimes it's the more efficient thing to do. Sometimes it's more cost effective to raise debt rather than extend more equity, whatever the case may be. But you're right, it's not at a concerning level. There were some questions raised about, okay, does it mean that they don't have as strong of a cash position as they thought? Or does it mean that that's crazy, though, right? I mean, there's no way that's the case. I don't know who would be asking that question, but I mean, if you look at what the hypers have in terms of their cash positions, I mean, let's get real.

Right. They don't need to raise the debt. It's not as if suddenly they're short on cash, and that's what they're doing it for. Sometimes it makes perfect sense to do it. Yes. Like, why are you going to draw down your cash levels when you can go to the debt market and you can raise some debt and you can help fund this incredible build out that way? The other point, I guess I would ask you all is this idea of a bubble, right? If I tell you that more than 50% of fund managers think that AI stocks are in a bubble, based on what?

Like, how can you determine that they're in a bubble? They're spending, you know, gobs of money on a build-out, the likes of which we've rarely seen, and we don't really know what the end game is going to be. Can you declare it a bubble today? No, you can't. And I think it goes back to your conversation earlier about sentiment. I think when you keep on hearing bubble, bubble, bubble, bubble, bubble, you start to believe it. That's number one. Number two. Self-fulfilling prophecy. There's a difference in life between needing something and wanting

something, right? They don't need the cash. They want to take the cash because, oh, by the way, some of these companies are going to do different things with their cash on their balance sheet, too. Might be acquisitions. Could be other, could be buying back stock. So that's why they're going out in the public marketplace. Remember last week we were talking about Oracle was really the poster child for this. Remember Oracle got just ripped higher after earnings fundamentally. People missed the stocks. They chased it. And all of a sudden, whoa, why are they going out in the public marketplace getting this cash? And then you really started to question what they were doing at their cash. And then you started to believe the bubble stuff. So again, self-fulfilling

prophecy. So that's a fair point. We'll get more on Oracle in a little bit. The other question that's being asked is what is up with all these circular deals? You have more. for today. Anthropic spending $30 billion through Microsoft and Invidia. Invidia investing up to 10 billion in Anthropic. Microsoft investing up to $5 billion in Invidia. Circle, circle, circle. Again, Steve Kovac joins us now to talk more about this because all this does is raise more questions about what is happening here. Yeah, Scott, and I actually just got off an interview with Judson Nalthoff.

He's the commercial CEO here at Microsoft. I'm at the Ignite Conference, by the way. And, you know, I asked him that. You know, why invest basically in these companies that are effectively also your customers? And his answer is they kind of want to be a part of have access to this technology in addition to being kind of their competitor and also their partner. So it's kind of playing it all out. The big theme to take away, and the way Microsoft at least tells me they're thinking about it,

and Althoff was telling me, is to think of them sort of like an agnostic platform. Yes, on the consumer-facing side, Scott, they're making co-pilot, they're making all these sort of tools that might compete directly with Open AI, might compete directly with Anthropic. But on the back end, the server end, the developer end, there's so much demand, so much activity, and that is what for them is driving that spending that we keep hearing about, and that is also behind the deal. You're going to start seeing Scott, Anthropic, more and more,

take a front seat in these Microsoft products. Obviously, they were relying on Open AI for so long. But Althoff just told me, in certain use cases, anthropic is actually better. You might want to use, for his example, chat GPT, to do a deeper research, but you might want to use Anthropic for coding or something like that. So they see this as kind of casting a wider net.

One way I've been viewing this, Scott, is it's also a kind of hedge against Open AI, which has been at the center of so many of these deals and kind of that single point of failure that we keep talking about. You kind of see Microsoft here, Scott, spreading the risk a bit. You make a really good point, because part of the criticism was, boy, everything's leveraged to Open AI. And if Open AI has one little stumble, the whole system comes crashing down, so to speak. But your point is well taken, that some are hedging their bets. there are going to be more than one winner in this whole conversation. Yeah, and Scott, like, I can't be on with you without talking about Apple. We're going to probably see Apple adopt a very similar type of strategy

where Siri becomes integrated with Gemini or Anthropics Claude or it's already integrated in a small way with Chatchibati. You can see a future here where you get to kind of choose the model you want for whatever you want to do. and then it adapts to that. And so that really makes sense for what Microsoft is doing on the cloud side and the developer side, where by the way all the growth is,

Microsoft's holding this event here today because they gotta sell this stuff in addition to the consumer-facing audience, not just the back end. And that's part of the reason why they just filled the chase arena behind me with 20,000 customers to really push this hard sell of them of these new AI products

that they claim can at least produce productivity, but they also, got to sell this to justify this enormous capital expenditures. All right, good stuff. Steve, thank you. Steve Kovac joining us there, which was really helpful. Now, let me ask you each quick, too, NVIDIA tomorrow, okay? After the bail earnings, everybody's anticipating that. The call is going to be most important. Got to hear from Jensen and what the questions are asked by the analyst community. How important is this report tomorrow? Because of the volatility, too, that we've seen lately. Well, honestly, I think the volatility

that's already happened makes us less fragile to some of this because we've given back some of the froth that was already there. So it's important. It's always going to be important, right? It's a humongous company that is now the size of four sectors added together in the market. So of course it's important to sentiment. Absolutely. So yes, this matters. But I do think coming into this on the heels of some already existing volatility has actually gotten us to a healthier place. I think the same thing. I'd be much more worried if stock market was at all-time highs and then you'd be talking about price to perfection. This is going to be about receivables

and about really honing in on what next year's growth looks like. You know, it's interesting. We think about this, and I hope this analogy really lands where you have Bessent who sues the bond market. Treasury Secretary. Exactly. And you have Jensen Huang who sues the AI trade. Can he provide that affirmation that you need

to get comfortable behind a lot of these trends we're seeing, the continued spending, the pace of growth when it comes to the newer chips that they have, Those are some of the things that we're looking for. Okay, well, that landed. I think that landed. I'll roll with that. We mentioned Oracle.

I mean, perhaps nobody's been in the eye of this whole conversation like this company has. They had their first shareholder meeting in a few years. Sima Modi joins us now with that. So this is the first one in a while, and it comes at a really important time. It really does. We're watching the stock minute by minute higher today, but still down about 33 percent, Scott, from that all-time high hit back in September when it announced that mega deal with Open AI. Since then, worries have been growing around its negative free cash flow

and the increasing use of debt to fund this mega data center expansion across the U.S. Just today, UBS strategists flagging Oracle's more aggressive use of debt financing while analysts at Baird cutting the price target on Oracle from 365 to 315 a share, maintaining an outperform rating, yes, but writing that there's a lack of clarity on CAPX. And funding has left room for interpretation, particularly around the company's debt structure. In other words, Scott, they won Oracle's management. to articulate the speed at which it plans to lean on the debt market going forward, and if it can get any guarantee from OpenAI AI on that $300 billion deal over the next five years.

Seaman, thank you. You've been hot on this story, and I know it's going to continue. That's Sima Modi. What about this? Brian, anything about this story, make you nervous or no? No, I think it's a kiss of death when an analyst downgrades their price target, but maintains their rating? Oh, that makes me excited.

You own Oracle? Yeah, I've owned it for a long time. And I've owned it in my value portfolio for 10 years. But cheaper today than it was last month. But from a strategic position on short-term money, this is the area that you want to own the stock for the next 12 to 18 months. And so I wasn't being flippant when I said when an analyst maintains their rating but downgrades their price target, that's when you want to buy the stock. They've already missed the downward move. And so we think that this is where you want to accumulate the stock going forward in a place that is very, very important in the software space in between the semiconductors and the applications within AI.

And the other story that's been out there kind of around, it's gotten a little bit overshadowed by all the AI conversation that we've been having is ALTS, private credit, some of the stocks within that orbit that have not traded well of late. Many are getting a bounce today. Robert Frank joins us now to talk about this because you have your Inside Alt's newsletter that you and Leslie do. So we thought it would be great to hear from you as you follow this story, which again has gotten a little overshadowed by the whole AI conversation, but it's no less important to what's happening in the markets. Absolutely not, Scott. We saw that today. And a lot of it today was around Blue Owl, that company bouncing back today, those shares bouncing back after first falling to their lowest level since 2023. Now, the concern is around an earlier Blue Owl fund that's being merged with

a public fund, investors in that earlier fund facing potential paper losses and a freeze on redemptions until that merger next year. But this is all around the broader concerns about private credit, and that's hurt the shares of the publicly traded business development companies, as well as the PE giants like Apollo, Ares, Blackstone, KKR, all those shares. down 20% or more this year around these growing concerns around private credit around the loan quality. Now, the companies, of course, say their loan books and their underwriting standards. They remain strong. And the failures of, let's say, first brands, tricolor, all that round of concern. They're not systemic. Sonali can probably give us a lot more context around this blue owl

issue. But, Scott, this is a sector that has just exploded in growth. It's now $3 trillion in private credit. And as you pointed out, it's kind of a black box when you look at what's in the portfolio companies, what the loan quality is. So when there is a bit of bad news or concerns, it tends to be exaggerated in the market until we get some explanations from the companies. Well, that's how it's been explained now by the people who have gone big into private credit, that all of these concerns are simply overdone because of two, three, four, or five cockroaches, I guess you want to call them, only using that terminology because Jamie Diamond was like, well, there's never just one or two. We have to decide, I suppose, or the market

will discover whether any of these concerns on a broader basis or are valid or whether they're overdone. Yeah, and it's going to become a process of differentiation and education. Not all the firms are great managers, not all the funds within each firm are created equal. And so this is really going to be about understanding what each firm focuses on, how each firm has approached this. Apollo takes a very different approach, for instance, than Ares or Blue Al. And then within those firms, you have different ages of funds. This fund today that people are talking about is an eight-year-old fund. Blue Al says, look, we're better than we were eight years ago. This new fund that we're merging it into is a lot higher quality.

Yeah, good stuff. Thank you. Kovac, Robert Frank Simomori, you. really set us up well I appreciate you guys doing that now what about this issue is this is this overblown this whole private credit questions I I am worried about private credit but we you're talking about someone that owns Blackstone I think Blackstone's got the best he's got they have the best portfolio in those big publicly traded private equity companies you want to own the you want to own these companies if you think interest rates are going lower in the next year. And I think Blackstone has the cleanest loan portfolio. We're going to stick with it. Some of these others, I think, has been, people have been chasing that a little bit too much.

The other thing, too, is that you have a lot of private credit being now the alts versus 10, 15 years ago, it was hedge funds. So we're seeing the results of having a lack of liquidity, Scott, and some of these smaller ones that we don't know the portfolio holdings. And that's what really bothers me the most. Yeah, we spend a lot of time on this. And the problem here is that there are a lot of issues that are starting in a forum. They are idiosyncratic and that you're seeing one or two at a time. They're all different issues, but they're being lumped into one big issue. And that is that you have a lot of newer types of investors getting into this asset class and not recognizing, well, wait a minute, a lot of this is not liquid. A lot of this is into asset classes and

types of vehicles that they're partially liquid. And therefore, if you want to be pulling your money, all at the same time you can't. This is supposed to be the money that you set and forget if you believe in the manager. We look at scale, the bigger the better. We look at track record going through cycles, particularly 2008. Very important. And also knowing really what the issue it is that we're talking about. In the case of Blue Owl, this is a merger where they halted redemptions. This actually happens quite a bit when you're looking at fund mergers. I think that that's an interesting dynamic on this one. Now, how people feel about that is one thing. And whether that is comfortable for them to get into these structures, I think over time there is a sleeve for particular investors to have illiquidity in their portfolio.

I would also really caution here the reason we'd spend so much time on this, we think there will be more defaults, right? There's never a scenario where you don't have losses, particularly in a K-shaped economy, where a lot of these funds, particularly across the industry, have some exposure to some of these parts of the economy that are weaker. With that said, default rates, we're looking at the most credible indexes are still below 2%. So credit quality still is really strong. We're going to leave it there. Shinali, thanks. Liz, thank you. Brian Belski, thanks to you as well.

Let's send it to Christina Parsonsolos now for a look at the biggest names moving into the close. Hi, Christina. Hi, Scott. Well, let's start with meta shares. They're recovering from their lows after it. The company won an antitrust case against the FTC. So a judge ruled the company does not hold a social media monopoly due to its acquisition of Instagram and what's up. That's why you can see shares down barely negative at this point, but off its lows of a 3% slide earlier.

Home Depot shares also sliding after posting its third straight earnings miss and cutting its full year outlook. The CFO told CNBC previously previous expectations of rising home improvement activity and sales of roofing materials as well as generators just never materialized. And that's why you're seeing shares down about 5%. Lastly, Honeywell shares are also lower on a double downgrade from analysts at Bank of America. the firm going to an underperform rating from buy ahead of the company's planned split. Bank of America expects shares to lag just amid disappointing earnings per share growth and said its previous spinoff of its solstice advanced materials business really just missed expectations.

So that's why shares are down almost 2% Scott. All right, Christina, thank you for that. That's Christina Partsenevallus. We're just getting started. Up next, what a great time to speak to the dean. Evaluation. We're going to debate what's happening in tech with us. Oswath Demoterin of NYU Stern School of Business.

We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Among the issues causing consternation among investors' tech valuations as the AI boom has sent many stocks soaring this year, as you know. Are we too stretched? That is the question of the moment. Let's ask the so-called dean evaluation.

He's NYU's Oswath-Demotermotern. It's good to see you. Welcome. I can't think of a better time to talk to you. I'll ask you the question straight up. I mean, are we overvalued in AI? I think so. And I think it's a feature, not about it. I think it's part and parcel of a big change coming to the economy and markets. And I think we've always stretched ourselves in terms of what that change can accomplish in terms of money being made off that change. But how do you know we're overvalued? It's easy for people to say, yes, this is a bubble based on what? Based on the fact that people are throwing money at investing without really telling me

where the money is going to come back from those investments, starting with, you know, Sam Altman who is asked about how does open AI expect to make money, blowing off that answer without giving me a business sense of open AI. What I get are companies like Oracle, like Meta, like Microsoft, like open AI, throwing insane amounts of money to building AI architecture without providing any tangible. I mean, I don't even want evidence. At least give me a story of how all the investment is going to play off in terms of products and services on which you can make money. So you agree with that downgrade today of Amazon and Microsoft, at least in the narration around it, which is don't, we can't do the trust us anymore.

You got to show me now. We gave you the benefit of the doubt. We drove your stock prices up. And now it's like, okay, we need some tangible answers on where all this money is going. But what if we can't get those for a while? We may be faced with months, if not years before we know. And that's the reason going from overvaluation to deciding to sell short is a bridge that's too far for me. Clearly AI is overvalued, but you ask me, is it overpriced?

That's a different question. That's about catalysts and corrections. And you're right. That moment of reckoning might take days. It might take weeks. It might take months. I mean, remember, Alan Greenspan warned by the rational exuberance in November of 1996. The correction itself did not happen until 2000.

So you could be waiting a long time for that catalyst and correction. So even though we might accept that AI is overvalued, I'm not sure what the immediate follow-up is going to be for you as an investor, other than not to pour in all of your money into these AI stocks because that's asking for trouble. I think it's interesting when I look at your notes to our producers that you think Nvidia's going to beat, right? I mean, I think everybody agrees that they're going to beat, but that the stock price is likely to go down. Why do you think that? Because I think markets expect you to, I mean, the expectations game is a strange one. If you keep beating analysts' expectations by 15% every quarter and you beat them by only 10%,

per market, that's a negative surprise. And I think increasingly, as these companies have become better and better in beating the analyst forecast of numbers, markets are building that end to their expectations. I'm actually arguing that this is the second set of expectations out there that we don't observe, which is what's driving the market. So that would be my prediction. They'll beat analyst expectations, but they won't beat market expectations. Is there a stock in the group, whether it's in video or another, that garners the most

attention or the most caution, do you think? I think the more a company spends, the more caution is called for us. I would just take the AI spending of each of these companies, now outside of Invidia. And the more spending they have, the more cautious I'd get, which is one reason it might, if you're planning to buy one of the Mag 7 stocks, it's not a great time to buy any of them. I would say buy Apple, because it's the most cautious of these companies. And this is a time where caution might actually be the buyword for.

for which of these companies who walk out of these with the least damage. That's so funny. You know, this company was so criticized. We've mentioned this several times over the last week for being behind and not going all in like the others. And now we've had this market upset and all this volatility. And we're like, well, Apple looks great compared to the others who aren't spending as much. Let me finish with this last question. The debt raises that we've seen among the hypers and the so-called circular deals.

What do you make of all that? I think the circular deals first. To me, it's a sign that they're worried. They're worried that the entire AI, the infrastructure built could be put at risk if there's a disruption. I think of Deepseek a year ago, where essentially you change the AI story by saying, maybe you don't need these chips and these huge data centers. And what I see is this preemptive setting up to prevent that from happening by making themselves a status quo. So to me, it's a sign of fear, not a sign of optimism or,

confidence about the future. The credit, so far, if you look at the credit as a percentage of cash flows to the big tech companies throw off, it's not, to me, troublesome. That's not where I think the catalyst would come from. But I think the smaller AI companies that are using credit are putting themselves at risk. I understand. Professor, always good to get your take. Thank you so much for joining us once again here on closing bell, Oswath Demotron. Still ahead. The setup on target, that stock's down 35% this year. We'll tell you what to watch for when the company reports earnings before tomorrow's open. The bell's coming right back. With AI fears and volatility rising, is it time to look outside the U.S. for better returns?

Our next guest thinks so. Elizabeth Burton's Goldman Sachs Asset Management Client Investment Strategist. Welcome back. Thanks for having me. All right. So we've spent every day talking about this equity market. You want us to look elsewhere where the returns have been good. Yes, we just put out our 2026 outlook to the season for next year outlooks, right? And our theme in equities is get out, get down, get clunt, and get active. So in terms of down and out, down and cap, out of the U.S. A couple places to look there. I know you had my colleague on talking about small caps the other day. We're still constructive on small caps in the U.S. and outside the U.S. We are.

All right. Let's start there since you went there, because that's probably going to be the, if there's a controversial take, that's going to be it. Fair enough. Why? Well, for one reason, we're thinking about diversifying portfolios. So if you think about small cap growth in particular, we've seen a lot of our clients asking about low volatility strategies, extension strategies.

One of the best fits of strategies like small cap growth is you can capture more upside. Obviously, you're going to capture more of the downside, but you're not having to give up the upside like you would in a low wall strategy or potentially on the downside in 130, 30, 150, so there's that. Also,

interest stock correlations and interstock correlations in the small cap sector are at historic lows, multi-year lows, five to ten percent. So we think that there's a lot of opportunity for alpha in the space. And it's a part of investor. We've underperformed, I mean, relative to the other Martin. We're up the Russell's up six percent, a little shy of that year to date. A lot of that depends on the rate picture. Yes. That is part of it. And the growth picture. That is definitely a part of it. I feel like we're having questions about both. You could have questions about both. But it's also a good way to play or an interesting way to play the AI trade. So you can get some of your thematics in there as well.

I get that a lot of people had to defend their small-cap users, small-cap exposure lately. But I sort of like asset classes that you have to defend because it means a lot of folks are avoiding them. You know, another one of those is real estate. So we've been waiting for a time to get back into that market, and that's starting to look appealing, at least on the debt side as well right now. Okay, so it's fair to be a contrarian.

Overseas. So I think it's emerging markets and Europe. maybe have outperformed the U.S. this year. Right. Why does that continue into next year? And what's not known about it now? Well, so I'll take your question a little bit differently. In terms of emerging markets, the broad emerging markets

have outperform the U.S. But on a single country level, that's not completely true, right? So one area that we've moved, that our analysts have moved underweight to overweight is within India. So EM up 20, 30% year to date. India specifically, only up about 3%. And then a lot of the headwinds that caused the underrating last year are now constructive for the overweighing this year.

That's interesting because we've been hearing a lot about India as being a favored place. The reason why it's underperformed this year is what? The trade war, the tensions that existed between the U.S. and India, which are obviously still there? I think that might have counted for some of the uncertainty in the pullback. But if you think about this time a year ago, India was trading at a 20-point trading at a 20-point. times multiple. It's retraced back to a 23. It's premium versus other EMs within the 90s. Now it's closer to a 45. They had a lot of headwinds going on there. But now we've seen government reforms that policy reforms that should be constructive. We see tasks cuts. We see policy cuts, bank deregulation.

So it's an interesting place to look for opportunities. How do you feel about the concentration of the U.S. market? How do you feel about the volatility that we've seen in these AI stocks? Well, I'm not going to say it's not concentrated, right? I think that it is. That it is concentrated. Is it worry you? Concentration is worrisome when you think about it at a total portfolio level, because it's not just concentration in U.S. equities, it's the thematics in that portfolio that are concentrated in almost every asset class that an investor owns, right?

But someone at Goldman I was talking with the other day said, if you're going to say no to the U.S., you better get that timing pretty perfect, because there are a lot of reasons where the U.S. is still poised for performance. It may be over the next decade that it does underperform peers, but there's a lot of of reasons why they have outperformed and the fundamentals are there. Yeah, well, I mean, your colleague, I cite his stuff all the time. Tony Pascarillo is still pretty positive on the U.S. for a variety of reasons. Right. You know, where the flows are going, the Fed is engaged, earnings are still good,

growth is still good, CAPEX. He paints a pretty compelling picture still. And we still have some of our clients on the institutional side are still actually underinvested in U.S. equity. So they actually need to re-rate that exposure. There's also the, I've mentioned this, I believe the last time I was on, the reinvestment culture in CAPEX that is inherent in the U.S. market is very different than what you find elsewhere. We see reinvestment in the high 40s, low 50s for the MAG 7, for in the 30s in the S&P in Europe, for example, it's much lower than that. So there's a reason why we still continue to be constructed. Lastly, are you a believer in the health care trade? I mean, after doing nothing, it's had such a great move here. Do you like it?

Look, I think there's a lot of parts of health care that we think are really long-term trends. We don't think aging is going to go away anytime soon. So I think it depends how you play it. All right, we'll leave it there. Elizabeth, thank you. Elizabeth Burton, Goldman Sachs. Up next, we track the biggest movers as we head into this close. Christine is back with more.

Tell us what you see. Well, coming up, we have a medical device maker that's rallying on strong results, a major internet outage since one stock lower, and a fintech's first earnings report is some points. Those stocks next. We're less than 15 from the bell. Back to Christina for the stocks that she is watching. Tell us, please. Let's start with Medtronic, because those shares are leading the S&P 500 after raising its outlook, that would be management, and reporting better than expected results. It comes just really amid rising procedure volumes and demand just across all the medical device makers major segments, and so that's why you're seeing shares up 4.5%.

Meantime, Cloudflare shares are just a little bit lower after an outage in its platform knocked down several. major websites offline for hours, actually. ChatGVT, Shopify, and X were among the sites affected. The company implemented a fix by late this morning, and shares recovered, and now they're down only 2%. And last but not least, Klarna shares tumbling about 10% right now after reporting a loss in its first earnings report since its September IPO. The Buy Now Pay Later platform had better than expected revenue, just amid outsized US growth, but just not enough to boost those shares that are down 10%. Scott. All right. Thank you. Christina Parts of Nevelos coming up next to Crypto Crumble.

Bitcoin falling below $90,000 earlier today before bouncing a little bit higher than that. We're sitting at 92,680. I'll tell you what's behind the volatility when we take you inside the market zone, which is next. We're down on the closing bell of Market Zone. CNBC Senior Markets commentator Mike Santoli is here to break. down these crucial moments of the trading day. Plus, McKenzie Sagalos is tracking the action in crypto and Courtney Reagan getting a set up for targets numbers before the bell tomorrow. Michael, begin with you.

I mean, at some point, investors were going to sit back and say, enough is enough. Like, a lot of these stocks have pulled back enough on sentiment for nothing really else. Well, sentiment and struggling with the big issues, but nothing really new. Nothing new incremental that was either going to make you worry more or less. So price was going to be the thing to decide. when people came into the market in the intraday low this morning, kind of made a bid for this sort of two-month trading range to have a floor right in that area.

It goes back to mid-September. You know, we were all kind of congratulating the market for, you know, kind of defying the weak seasonals in September and October. Well, it's kind of come back to drag it lower. We did break the streak of up Mondays in the NASDAQ. We broke the streak of no 5% pullback because the low this morning was precise.

precisely a 5% pullback from the intraday high, whether that's a little bit too neat and tidy for it to be it. Who knows? But the market's acting okay here in terms of the stuff that got hit the hardest and the earliest is bouncing here. You have value overgrowth, small over large. And Bitcoin is bouncing to your point. McKenzie, tell us more about that. Do is snapping back today. Bitcoin, Ether, and Solana all ticking higher after a rough stretch that mirrored the broader rotation out of AI and high beta tech stocks and into more defensive. plays. We're also seeing a rebound in crypto-tide stocks. Newly public names like E. Toro and Bullish are trading higher. And then on the Treasury side, BitMine immersion, Marathon, and Riot are

bouncing back too. Pantara Capital's Cosmo Jang calls these 30% pullbacks pretty typical for Bitcoin during an uptrend. And he said that the October de-leveraging event already flushed out a lot of the excess risk. Still, macro fears are weighing AI capex pressure, Fet rate cut uncertainty, tightening credit, all hitting high growth assets like Bitcoin especially hard. But I will say this with 16% of Bitcoin now held by institutions, the markets are getting less reacted to these kind of short-term shocks. Scott? All right, Mack, thank you. McKenzie Segal. You have a thought here on Bitcoin? I mean, mainly the fact that it stopped going down just takes one thing off the list of worries, mainly because it means that there's not some kind of force-selling, you know,

further de-leveraging portfolio stress out there. But the idea that, oh, don't worry, it was just a de-leverging event. It was just this kind of like people getting stopped out all at once, auto-liquidation. Well, why does that happen? Because people were over-levered and riding the momentum going through the highs and, you know, with 50 to one leverage on these futures. And so, you know, you can't just sort of say as if it's kind of like an act of nature that we had to de-leveraging, we're basically having the flip side of what got us higher

in the first place. So I guess at this point, if it stabilizes, it's at least one of those signals that says that we're no longer kind of in complete liquidation mode. We could use some stabilizing in some of these retail names, too. Cora, tell us about Target ahead of these numbers tomorrow. Yes, Scott, I mean, Target stumbled recently, right? And analysts don't think the retailer will have a turnaround plan to talk about, at least not yet, when it reports tomorrow morning. So expectations are for a drop in earnings revenue and comparable sales in Q3 from last year. Oppenheimer is adding conservatism to its model for Q4, citing pressure from the government shutdown and snap payment distribution.

Bank of America said competition, tariffs, and slowing digital growth are risks to target sales and margins in the longer term. The report to investors, cautions in upcoming CEO succession and merchandise partnership could also pose some unknown risks. Now, D.A. Davidson cites point of sale data that it tracks internally for putting target in its notable deceleration group, in recent weeks, again, for sales. Now, Target shares are down about 15% in the last three months. Walmart shares up just slightly in that time, and the S&P 500 up just about 3%. Scott.

Thank you, Court. Appreciate that. We'll see what happens in the morning. All right, Mike, you know where I'm going next. All roads leading to Nvidia tomorrow and overtime, and we'll obviously devote a fair amount of attention to that throughout the day on this network tomorrow, but how are you thinking about it now? So hard to game it out because, first of all,

the stock is back to where it was basically a few days before last earnings report in August. So you've sort of had this general reset of prices, presumably also of expectations. I know everyone kind of games it out to micromanage what's it going to mean for, you know, what's the minimum guidance necessary to have the stock rally? You've had the valuation compressed. I guess it's in general better than it ripping into the number. I do think the market has a little bit of a high threshold to be satisfied. with the AI story.

Maybe with the exception of Alphabet, by the way, because Gemini, the new model, I think, is getting raves. The stock is up again today. And so maybe it's starting to feed into this idea that we have to be very discerning about winners versus losers. But, you know, we'll see. It's hard to suggest that the stock isn't fully owned and fully loved, but it's nice when it's come in by, you know,

whatever it is. It was a 207 at the highs. And now we're down the low 180s. We'll focus, obviously, probably more so on the call and the commentary, the questioning of Jensen Wong from the analyst community, circular deals. You're going to be asked a lot about. I mean, just when you sort of move a little bit past that, it becomes front and center again. Like you did today. There's no doubt they need to keep the kind of the wheels spinning on those things.

I see people talking about by-side estimates for 2027 earnings. I mean, that's kind of where people's minds are at. And please tell us that the half a trillion dollars, whatever it's going to be, that you think of revenues in the next five quarters is solid. And I think it's not expensive if those numbers come through. The stock is not. But, you know, there's the if. It's amazing that we've just become, I can't think of another period of time, but we become so reliant on singular CEOs. I mean, Jensen Wong, Sam Altman.

For sure. We need them to keep telling a story that's going to work. and hope to, you know what, that it does. Because the market caps are so huge, the bet's so concentrated within the market on this one theme. And, you know, the investment levels that they've been discussing are just so monstrous. They're going to keep having to consume capital. So in order for the market to have faith in that, it's going to have to keep rolling in that direction. So, you know, I get why it is.

You know, Maryland's Fund Manager survey responded saying people are overinvesting. Well, if some companies are over investing, Nvidia is over-earning. That's the tricky part. Yeah, we're in that, you know, Max trust us environment, and we'll see if we can continue to do so. Invitius tomorrow, we'll lead you into it, of course, 24 hours from now as we go out in the red for the most part. Not as bad as we were, though, into OT with Morgan and John.