Closing Bell - Ford CEO on EV Shift; David Sacks on AI; ServiceNow CEO on What’s Next 12/15/25

Episode Date: December 15, 2025

Evercore’s Julian Emanuel breaks down today’s market action and what’s in store for investors in 2026. White House AI and Crypto Czar David Sacks on the latest AI executive order from the Trump administration, the government’s strategy on exports to China and worries about job loss. ServiceNow CEO Bill McDermott talks the company’s AI strategy, dealmaking and more. Plus, our Eunice Yoon reports on China’s AI toymakers.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That bell marks the end of regulation, equitable shares, ringing the closing down the New York Stock Exchange, Sona Therapeutics doing the honors at the NASDAQ and small losses for the Dow and S&P 500. The NASDAQ down about half a percent. Russell 2000, the worst of the bunch, the biggest drags on the NASDAQ. Once again, Broadcom and Oracle, look at those one-week losses. Broadcom was nearly $2 trillion in market cap heading into earnings and lost about $300 billion in market value. We're going to have more on those names coming up. What is working? Well, three Dow components and one former Dow component, all hitting all-time highs. They're at four very different industries. Walmart, Johnson & Johnson, J.P. Morgan, and General Motors.

GM's high dates back to 2008. Meanwhile, oil's lower today. That's hurting energy stocks, silver higher once again, and Bitcoin down to just about $85,000. Well, that's the scorecard on Wall Street. Welcome to Closing Bell Overtime. I'm Morgan Brennan, along with John Fort. And we have a busy hour coming up, really busy. David Sacks. The White House's crypto and AIs are. The president issuing an executive order aiming to have one set of federal rules for AI. Some states are not happy about that, though. And service now, the worst performing stock in the S&P 500 on deal rumors and an analyst downgrade. CEO Bill McDermott's going to join us. Well, let's start with the markets as all the major

averages closed in the red as those AI trade worries persist. Christina Ports and Avalis is at the NASAC with more. Hi, Christina. Hi, Morgan. Well, key stocks, like you just mentioned, in the AI trade, continued to face pressure yet, Oracle, there was the focal point, again, closing lower for a third straight day and higher than usual volume, has really the debate over its AI cloud investment just rages on. Other stocks tied to AI data center spending, including CoreWeave. Nebius, you can see closing both 7% lower today. Broadcom extended its post-earning slide, closing about 5.5% lower, the stock really took a hit on reports that Google has doubled its custom chip order with competitor Media Tech for 2026, this according to Econ Daily. Some are reading,

that is a win for media tech at Broadcom's expense. But Jeffreys says AI is, quote, still in fashion in and out today. The firm named Broadcom a top pick saying custom chip adoption is still in the early stages. They also upgraded KLA to buy betting lower interest rates will help analog and chip equipment firms. That's why KLA closed higher today. Meanwhile, investors did rotate into areas more sensitive to the economy. You had consumer discretionary that led the way with Tesla up 3.5% travel names like booking, almost 3% higher Expedia, same thing. Healthcare also saw some buying interest, Eli Lilly, Baxter, Intuitive Surgical, all of these names climbing higher, Eli Lilly, up over 3%. John? All right, Christina, thank you. And it was another volatile day for markets. Could be

a taste of what we could expect next year. Evercore ISI putting out a note today saying in 2026, we could see, quote, more stimulus, more earnings growth, more upside, but all that coming with more volatility. Joining us now is Evercore ISI Senior Managing Director Julian Emanuel. Julian, you seem optimistic overall, but with AI having played such a big part in this market's multiple, can it really charge higher with now we're seeing turbulence both in the infrastructure side and some of the software? No, there's no question about the fact that the market is trying to digest it. And if you think about the course of the AI trade over the last couple years, you've had these occasional what we would refer to as air pockets, obviously this most recent one, centering

around the concerns over debt financing for the AI buildout. But what we're seeing positively is greater adoption. And actually, some of the consumer discretionary names that you pointed out to as having done well today in particular are those very names that are using AI to advance their revenue, control their costs, and we think that this is a theme that has much further to run. And look, we've come a long way in terms of valuations as well, which makes next year volatile much the same way it was this year. But at the end of the day, we don't see any discrete economic headwinds, which are the things that normally derailable market. Well, just because you see it or don't see it, does that mean it's not there? Because

economic visibility has been tough with the shut down and now post shutdown. Where do you get your facts as an investor to hang your hat on and hang your strategy on heading into 26? So there is an enormous fog, as you point out, John, and in our opinion, the release of data tomorrow, just the fact that it's going to be released is likely to be something that makes the market feel better, provided that it hasn't been too far, won't be too far out of expectations. But actually, you know, we at Evercore ISI have been running proprietary company surveys for upwards of 20 years. And when you think about pricing power, you think about employment trends. Our surveys have shown that the economy is not necessarily gangbusters, but there isn't

the kind of material deterioration that some of the job data might sort of put those ideas in investors' heads. So along those lines, Julian, I mean, breath was not poor today. You had all but three sectors in the S&P actually finishing in the green, even as the top line came off slightly for the S&P in terms of where it closed here. Seasonally, this tends to be a very strong type of time of year as well. So do you see this as a pullback in the market here amid those AI concerns, or is this just a rotation more broadly into other parts of the market? Because the economy is not as bad as feared. Well, I'd say yes to all of that, Morgan, actually. if you step back and you think about it, given the fact that you have...

Julian, hold on one second, because we have some breaking news. We've got to get to Phil LeBow for that real quick. Phil. Good. Morgan, take a look at shares of Ford. It is announcing a massive write-down on its EV investments. How massive? $19.5 billion in special charges. The company will take those pre-tax charges, spreading them out from the fourth quarter all the way through 26 and 27.

It is at the same time raising it. its EBITs guidance for 2025 to $7 billion. Previously, the guidance was between $6 billion and $6.5 billion, and its free cash flow guide, they're reaffirming it will be $2 to $3 billion. Now, with all that said, here's what the company is also doing, shifting gears. It will be expanding hybrid models over the next several years with U.S. production, adding extended range EVs. Remember the F-150 Lightning, pure electric, gone.

It will be an extended range electric vehicle. The future EVs, they're still going to be making them. They will be smaller models. So the Lightning Pure Model, Pure Electric is gone, but it'll be an extended range electric vehicle. By the way, by 2030, they are targeting 50% of their global sales to be hybrids, EREVs, or pure electric vehicles. Once again, take a look at shares of Ford. They are dropping their F-150 Lightning EV, starting an energy storage unit, lots of shifts in changing. for Ford and a huge write-down charge. We're going to be talking with Jim Farley in just a couple of

minutes, guys. I want to hear what he has to say about the decision, how long they've been planning this, and what he truly believes can happen in terms of profitability for its Model E unit. That's the electrification unit. They are still forecasting a profit by 2029. We'll talk about that in a few minutes. Phil, a stock's up 2% right now as you report all of this out. How does this speak to the fact that the technology and the capabilities, the promise of the technology is changing? Well, it speaks to the fact that the market's not there, Morgan. The market has never been there for pure electric, especially when it comes to pickup trucks.

I don't care how many people you talk to at Ford who would say, hey, we really think the pure electric lightning is going to be a hit. It never was. You talk with dealers, they couldn't sell it. They really struggled selling it because that market is not there. Jim Farley has said for some time, hybrids is where the demand is right now, and now you see them shifting to extended range electric vehicles. That's what the lightning will be in the future. Basically, you have onboard motors that are going to be charging up the electric motors for the truck.

So it's an extended range electric vehicle with a range of up to six or 700 miles. That's something that many believe the market will buy into as opposed to a pure electric vehicle. Yeah, Phil, lay that out for us, if you could. for those of us who aren't deep into the car market, the difference between what Ford is staying in and what they're backing out of with this announcement. You just explained a bit of what the extended range EVs are, that they're not pure EVs.

It sounds like they're sticking with smaller EVs. What are they pulling out of and how much savings is associating with that, given how slowly part of this market has been developing? So they're still going to make EVs. Remember, they have one that's going to be coming, I think, by the end of 27, which is the new architecture for pure electric vehicles. But in the future, Ford's pure electric vehicles will be smaller vehicles.

So you're thinking about vehicles that are more for an urban or suburban market as opposed to large pickup trucks, which is what the lightning was. So they're still going to make electric vehicles. They're going to be adding extended range electric vehicles for those who do want a pickup truck that could give them range and the capacity that you couldn't get from the current F-150 lightning. And then you're going to have more hybrids. And don't forget, part of this, that's not going to get a lot of attention, but is part of what we see in the market overall. Ice models, internal combustion engine models, still heavy demand there.

And they are going to be expanding some of their production in that area as well. That's where the market is, guys. And Ford has seen this happening for some time. So now they're saying, you know what? We're going to throw in the towel on our previous plan. We're going to take about $19.5 billion in special charges. And we're pivoting. We're going to go to where the market is.

All right. Energy storage business piece, this sounds interesting, too, especially when you think about what that means at Tesla. We're going to hear more about this. Phil LeBoe, thank you. Appreciate that. And we're looking forward to hearing more from Jim Farley, Ford's CEO as well.

Julian Emmanuel, I want to get back to you, whether it's reaction to this or also just to go back to what we're talking about before and sort of this idea, the market has been broadening out amid a broadening out of the economy, whether this speaks to that and just how much policy shift, how much portfolio shift we've seen across corporate America this year.

It does speak to that, Morgan. And, you know, the knee-jerk reaction in shares is very positive. You know, that write-down number is sort of scary in terms of the headline. But frankly, it is the story of the last few years of corporate America. They find a way to pivot businesses across sectors, across industries, and, frankly, figure out where the puck is moving to. instead of waiting for the puck to skate to them. And when you think about it,

part of the backdrop behind all the fiscal and monetary stimulus that we can expect to see in 2026 is designed to do something that hasn't happened over the last five years, and that's improved the sentiment of the consumer. And if we're successful in doing that, and we think there's a very good chance that we will be, you are going to see something that's been depressed for quite some time auto sales, pick up. It's really a commentary when you think about it to the potential for

upside surprises in the economy next year. Yeah, and of course you are calling for more double-digit upside in 2026. Seventy-750 is your target for the S&P, Julian Emanuel. Thanks for joining us. Thank you. We just had big breaking news, the top of the hour, for taking a massive charge as it looks to pull back from the EV business. The stock is higher and overtime by about 2% right now. Board CEO, Jim Farley, is about to join us right after this break. You don't want to miss it. Welcome back. We've got some breaking news at the top of the hour that Ford, the company is taking nearly $20 billion in special charges as it shift gears away from pure electric vehicles, rethinks its broader portfolio. Phil O'Bow joins us now with Ford CEO Jim Farley.

Phil, take it away. Thank you, Morgan. Jim, thanks for joining us today. We just outlined all of the changes and the special charges that you will be taking between now and the end of 27. I think everybody understands why you're making this decision, but walk us back to a couple of months ago or how long ago was it that you and your team said, it's not working what we planned. We have to come up with a new strategy. And what was the thought process as you made the decision, we've got to shift? Phil, well, thanks for having me on the show. Look, it's a last couple of months have been really clear to us. The EV market shranked about 5% in the U.S. market, but more importantly, the very high-end EVs, the $50,000, $80,000 vehicles,

they just weren't selling. And we had planned a full EV lineup, but we also have hybrids, and we learned a lot about the market. And we think it was the right time to listen to the customers. We evaluated the market, and we made the call. We're following customers to where the market is, not where people thought it was going to be, but where it is today, Phil. And that's really the genesis of our announcement. Be better for the company's profitability, better for shareholders, and a lot of new American jobs. Yeah, but $19.5 billion, that's a big enchilada out there.

And I know they're pre-tax charges, but a lot of people will look at this and say, is that the cost of saying, we tried it, the other strategy wasn't working, and so we've got a pivot. Well, yeah, we really do. You know, the non-cash is the biggest part of it. The cash charges are about $5.5 billion, and the return on that $5.5 billion looks fantastic. These are affordable trucks and vans. They're in the heart of what Ford knows how to do. There'll be hybrid and e-reves, very profitable vehicles. You know, we know these customers really well. We're not guessing, and we have a great EV platform in the UEV that's affordable at $30,000. We think we have the best portfolio of any auto company in the U.S., and we now get to focus

as a team of bringing all those products to market, and it gives our Model E business, effectively our EV business, a road to profitability, which did not exist a month ago. So you're looking at that division, that Model E division being profitable by 2029, and I believe by 2030 you were forecasting that half of your global sales will be either hybrids, e-REVs, or pure EVs. It's about 17% now. That's a big ramp up over the next five years, right? Yeah, most of it is hybrid and e-REVs.

You know, we've been number three in the U.S. market on hybrids, but we're number one in truck hybrids. We're like 80% market share, Phil, as you know. And now we're going to build up Bronco and our whole lineup of. of hybrids. You know, last month our sales were about flat. Our hybrid sales were up 20%. On F-150 now, the best-selling vehicle in the U.S., hybrids some months, is 30% of our sales. Imagine having a Ford where a whole lineup has hybrids and EREVs, and then we'll have this very affordable EV platform, UEV, very affordable prices, and 30 grand. We think that's

the right place to pivot. That's where Americans are today with their power trains. And what they want to buy. Jim, it's Morgan. We're talking a lot of a lot about this from a domestic standpoint, but how does it position you competitively from a global one, especially when you think about Chinese OEMs? Yeah, great question. Thank you for that question. Look, I think every region of the world is different. China is like more than 50% electric. Europe is about 25%. And the U.S. is 5%. So what we're doing in Europe is we're teeing up with Renault. They have very affordable EVs. That makes sense. We don't want to invest our own EVs there and we want to go to very affordable ones. For the rest of the world, we're really a truck and pro brand, you know,

with pickup trucks and SUVs. And there, you know, the hybridization is a really good option for us. And we have great electric choices. So each reason is a little different, but the U.S. is really different. Here, people travel longer distance. They use the trucks for towing and these really expensive $70,000 electric trucks. As much as I love the product, they didn't make sense. But an eREB that goes 700 miles on a tank of gas for 90% of the time is all electric goes zero to 60 and five seconds. That eREB is a better solution for a lightning than the current all-electric lightning. Hey, Jim, it's John Ford. I want to ask you a policy question about this. In your filing, you guys say the recent termination of U.S. tax credits intended to incentivize the

purchase of EVs has also negatively affected EVs, further potentially significant relaxations in the stringency of federal emissions and fuel economy standards in federal legislation that eliminated the authority of California and other states to implement and enforce their more stringent emission standards, et cetera, may add to the disruption of the market for EVs in the United States. How much of your calculation on not being able to reach profitability without these actions actually has to do with policy and the removal of some of that demand help that the U.S. government was providing. Well, look, the $7,500 was a lot of money for average customer, and that's gone now. We saw the market in October and September be 11%, 12% of electric.

The last couple of months, 5%. So, you know, policy was part of it, but customers were shifting to hybrids a year or two ago at Ford for the F-150. and our other hybrids, so I think it's a combination of both, but no doubt the policy had a big impact on customer demand. The net net is the market's changed. We want to be focused on the future, where the puck is going, as your guest said. And with a whole range of hybrids, e-refs, trucks and vans, with more affordable vehicles, not just a power chain, but more affordable Ford choices, we think it's going to position the company for the future here in America. Policy had a piece of it, but it wasn't the only reason why we made this choice.

Jim, you're shifting a lot of production around changing your plans over the next couple of years. What's the job component of this? Will you be adding jobs? I know in some areas you're going to be taking down production, then adding it back in. What's the net effect here over the next several years? Well, as everyone knows, we're the most American car company. We produce the most, we export the most. We have the most factory workers. And I'm really happy to say with this plan, we're actually going to add U.S. jobs. Now, Phil, you're exactly right. In some facilities, it'll be a bit of a delay. But net net, to answer your question, this is good for American jobs for the most American car company. Two things. Do you have a number, an approximate number of jobs added? And two,

did you run this by the Trump administration? Did you tell them earlier today or the last couple of days this is what we're announcing? No, this is a Ford decision. Obviously, we'll notify all of our stakeholders to talk to governors, our dealers, our employees already. But this is really a Ford decision. And this will add thousands of jobs. That's what we're saying, thousands. All right, we'll leave it there. Jim Farley, CEO of the Ford Motor Company, Jim, thank you for joining us today on a day, Morgan and John, where Ford is shifting gears, moving to definitively away from a lot of pure electric vehicles, spreading out into more hybrids and extended range electric vehicles as well. All right, Philibaut. Thank you for bringing us that.

And our thanks to Jim Farley, Afford, with stock trading higher right here in overtime on this news. We've got more big interviews coming your way on the show. First, the administration's crypto and AI czar, David Sachs, on plans for one set of federal rules governing AI. And then we'll speak with ServiceNow CEO Bill McDermott. That stock was the worst performer on the S&P 500 today. Overtime. It's coming right back. Welcome back to overtime. A down day to kick off the final full trading week of the year. Can you believe it? Fractional moves to the downside here with the Dow down slightly. The S&P 500 also down slightly. 6816 is a level there. The NASDAQ with a loss about a half a percent. The Russell 2000 was the big underperformer today down nearly one percent.

We'll say eight-tenths of one percent. The big culprits for the NASDAQ today, once again, broad common Oracle as the AI infrastructure play continues to sell off here. Oracle has lost nearly half of its value since that peak after its earnings report in September. We've had big news at the top of the hour, though, with Ford pulling back from the EV market, giving up on its F-150 lightning, and taking a $19.5 billion charge or in-charges. We just spoke with CEO Jim Farley. He told us that the move is in response to customer preferences. So take a look at Ford's competitors here in overtime as well. Ford is trading higher, but you're seeing minimal reaction to the news. Tesla down slightly, Rivian up slightly, but GM and Stalantis basically

flat right now. All right. Well, now it's time for a CNBC News update with Mackenzie Cagallos. Mack. Hey, John, Providence Police released a second video showing a possible suspect in the weekend shooting at Brown University. It shows someone in dark clothing walking down a sidewalk, but it was taken from a distance and the person's face is not visible. Police say they've been going door to door today looking for more footage of the person who killed two people and injured nine more during an exam study session on Saturday. President Trump said a deal to end Russia's war in Ukraine is closer than ever after he called into a dinner in Berlin with Ukrainian president Vladimir Zelensky and European leaders.

According to Reuters, U.S. officials said that Washington has agreed to provide unspecified security guarantees to Ukraine as part of the U.S. broker deal, but they wouldn't stay on the table forever. And the president also making a big announcement this afternoon about the opioid fentanyl. The White House says that he signed an executive order classifying the drug as a weapon of mass destruction. The order will, in part, allow the attorney general to pursue tougher charges and sentences in fentanyl trafficking cases. Back to you guys. All right, McKenzie Sagalos, thank you. Bitcoin falling today, bringing down a lot of the crypto-related stocks with it.

Coming up, we're talking to David Sachs. He's the crypto and AI SAR for the Trump administration. And you might notice a new CNBC logo on your screen. Well, there it is. It's big. It's a refreshed look for our network as we continue bringing you the business and financial news you rely on. This new brand mark includes an upward tick to represent our optimism for what's ahead. Over time, we'll be right back.

Welcome back. The Trump administration taking steps to limit states from regulating AI companies. President Trump recently signing an executive order aiming to establish a national policy for artificial intelligence. This comes as the federal government continues to map it. its AI strategy as it relates to China. Reuters reporting over the weekend that Nvidia is considering increasing production of its powerful H-200 chip because of strong demand there. But joining us now is David Sacks, White House, AI, and Cryptosar.

And David, it's great to have you back on the show. Welcome. Good to be here. It's a lot to get to with you. But first, I have to start with this EO. And specifically, why was it necessary? Well, Morgan, we've got the 50 different states here running in 50 different directions with AI regulation.

You've got a thousand bills right now going through. through state legislatures, over 100 measures have already passed. And you're starting to see contradictions emerge in the way that the states are regulating this. And it's creating a patchwork, a very confusing patchwork of regulations that's gonna be very hard for our AI companies to comply with, especially small startups and innovators.

So what the president has called for here is a single national or federal framework for AI regulation so that it's easier for founders to comply with and also keeps the United States innovative and in the AI race. And as you just mentioned, on the one hand, at patchwork of state-level regulations that would hinder innovation, they would slow adoption, push-up costs. On the other, questions about the legality of overriding states and about asserting regulatory power that should be the jurisdiction of Congress.

How do you respond to those criticisms? Well, we're not doing Congress's job here. What the EO calls for is working with Congress to enact that federal framework. So it tasked members of the administration to work with Congress to define that framework. This EO provides a statement of principles. and it also provides a set of tools to allow the federal government to push back on the most onerous and excessive stay regulations. But we understand that at the end of the day, Congress needs to enact legislation.

So I interviewed General Dan Kane, the chairman of the Joint Chiefs, about a week and a half ago. I asked him if we are in an AI arms race with China. He said there's the possibility that we could end up there because the technology is moving so quickly. How do you see it? Well, we are in an AI race with China. It's not all just about weapons, it's also about economics. I think AI is going to power the economies of the 21st century. We want to be as globally competitive as we can.

And I think we're ahead in that AI race. We're winning in every category, except for one, which is optimism. If you look at AI optimism in China versus the United States, it's 83% of people in China are optimistic about AI, only 39% in the U.S. So I think that this is the one area we have to be to work on, really, is I think we need to encourage our population, the U.S. feel a little more optimistic about AI and where it's all going. So when we put it in that economic lens or that geopolitical lens,

what does that policy path look like moving forward, especially if we are allowing some of our chips, maybe not our most advanced chips, but some of our chips to be exported to the likes of China? Well, our policy on chips has always been to export lagging chips, but not the leading edge. And I think that the question of where exactly that line is, is something that's always going to be debated.

And I think the administration's view is that the H-200 was once the leading chip a couple of years ago. It is no longer on the leading edge. It's a previous-generation chip. And so, therefore, it's acceptable to sell to China is now a lagging chip. But as it turns out, according to the Financial Times, China doesn't even want these H-200. So we're going to have to see how this all plays out. I think the reason for that, by the way, is that China wants to be semiconductor independent, the same way that in the United States, we want it to be energy.

independent, China set a goal of being semiconductor independent. So it looks like right now they're not taking our chips, but we'll just have to see how this plays out. I realize that we're arguably in early innings for AI application and adoption here. But at some point, potentially, the notion of AI and AI adoption becomes a political question, especially if you start to see job displacement or workforce disruption. How are you advising the president on that? Well, I understand that there's a lot of concerns about job disruption or job loss. That's not we're seeing in the data so far. seeing is job creation. There's a construction boom going on right now in the country. Infrastructure of all kinds is being built out. There's an energy boom going on that's related to AI. Wages are

up 30% for construction jobs like electricians, plumbers, carpenters, and so forth. And we're seeing in other areas, like huge job gains. We have a 4% GDP growth number right now, and half of that is attributable to AI. So it's just not what we're seeing in the data. And then meanwhile, in the job law side, Yale just came out with a new study showing that there's been no meaningful job loss in the first 33 months after the launch of chat GPT. So I understand people are very concerned about this question, but we're not seeing it in the data so far. How about all the speculation about an AI bubble inflating? How do you see that? What are the greatest risks and what is hand-wringing? Well, we're seeing right now as a boom. Like I mentioned, we're seeing hundreds of

billions of dollars of new CAP-X being invested in AI. And again, at every level of the stack. And we think that that boom is justified by the potential of this technology. You know, in the dot-com bubble, you had this concept of dark fiber, which is there was a fiber built out and that fiber was not being used.

In this case, there are no dark GPUs. Every GPU that's being built out, put in a data center, they're being used right now on applications. And consumers are using these things. We have a billion people globally are using these new AI chatbots, these new coding assistants are becoming very popular. So what we're seeing is that the usage is there.

And so in that sense, we think that the boom is justified. And you know, but whenever you're underwriting to a big outcome, there can be a lot of volatility in that. And so, you know, we're less concerned about some of these day-to-day movements. Okay. So as some reports have put it, is open AI too big to fail? No, no one in the space is too big to fail. And we've said it before that if one,

One of these companies makes a misstep. There'll be other companies there to take its place. Some people have expressed concern that somehow there'd be a federal bailout that's not in the cards at all. First of all, I don't think these companies are asking for or need a federal bailout. But even if they did, there's nothing in the works like that. It's not necessary. No one's asking for it, and we have no intention of providing it. Morgan, this is a very competitive space right now.

We have five major American companies, all in the leading edge, designing new frontier models. Every week, they're releasing new models and they're leapfroving each other. that's the kind of competition we want to see. It's a very healthy dynamic right now. Yeah, from AI to crypto, and we could spend a whole other 10 minutes talking about that, so maybe we'll do that again in the future because we're not out of time here. But, I mean, this has been one of the most crypto, this has been the most crypto-friendly administration. We're about a year in. Are you where you want to be? What's next? Well, I think where we want to be on crypto mortgage is we want to provide a clear regulatory framework

for founders, for innovators, entrepreneurs, companies in the crypto space. A year ago, these companies were under assault by the Biden administration. And the worst part of it is that they were being prosecuted without being told what the rules were. And the founders I talked to all said the same thing, which is just tell us what the rules are so we can comply with them. And what we've tried to do over the past years provide that framework. So a few months ago, the president signed the Genius Act into law. This provided a federal framework for stable coin legislation. And right now, moving through Capitol Hill is the Clarity Act, which would provide the federal framework for all the tokens that are not stable coins.

And that bill's already passed the House and it's working its way through the Senate. So in terms of what's next, we'd love to see the Clarity Act pass the Senate and then go to the president's desk. So again, we have that complete framework for tech companies, for crypto companies, to be able to comply and work with the rules and stay in the U.S. And finally, I'm not going to ask you about SpaceX specifically, even though I know you were an early investor. But what does a potential SpaceX IPO signal about the future of AI infrastructure? sure. Well, I think it's largely separate, except for one aspect that Elon has said that we could have data centers in space, which I think is a really interesting idea. But I think what the potential SpaceX IPO signals is just that that company has done a phenomenal job over the past 20 years

in terms of making rockets reusable and now creating internet through space through Starlink. And it's really pretty incredible that you can now get broadband internet connectivity anywhere in the world because of Starlink, no more dead spots. David Sacks, great to speak with you. Thank you. Thank you. Well, Service Now shares the biggest loser in the S&P 500. There was a key bank downgrade, a report the firm is in talks to buy cybersecurity firm Armis, and the company also today closed its purchase of MoveWorks.

CEO Bill McDermott joins overtime next in an exclusive interview to talk M&A, and I'm guessing why he strongly disagrees with the KeyBank Underweight rating. We'll be right back. Welcome back to Overtime. Service Now shares dropping today during the regular session down about 11.5% the worst performer in the S&P 500. Investors seemingly reacting to a report. The company is close to a deal to buy Armis, also KeyBank, downgrading the stock to underweight.

Joining me now on a CNBC exclusive, ServiceNow CEO and Chairman Bill McDermott. Bill, good to see you. Good to see you, John. You guys announced the close of moving. works today. Are there any other big acquisitions you're ready to share with us? I think the most important thing I like to share with you is the results of our organic growth machines speak for themselves at service now since we're the only large enterprise software company that operates above the rule of 50 free cash flow and revenue growth and

consistently have delivered 20% plus revenue growth organically every year for the last decade. So the foundation to the house on its organic growth machine could not be stronger. And yeah, we're excited about MoveWorks. It's the first pure play, agenic AI employee experience company in the world. And when you think about great companies like CVS Health, Toyota, Marriott Zemans, J.P. Morgan, you know, they run that, and they love it because you get search any data that you're looking for as an employee. And now with ServiceNow, you get to take the action. all on one native agenic AI platform, so it's a great moment for us.

Well, let's get you right in the ring then with this downgrade, because I can see you're raring to go. We've been talking just about every quarter for a while now, you and me, about the momentum of your business. Competitors like Salesforce have been criticized for using acquisitions to try to buy growth. What's the role of M&A in Service Now's growth strategy? Yeah, it's a great question. We don't need acquisitions for growth.

We're already growing faster than all the other SaaS companies. And I constantly remind the investment community that we are not a SaaS company. We are a platform company. So when you have an analyst that downgrades a company based on how many IT seats there are, you have to remember, while IT service management, asset management, operations management, security, employee experience, customer service management, and then the creator workflow management are all in our portfolio. So as our seats continue to grow beautifully, then you layer on agentic AI into the platform,

and a certain number of assists is granted to the customer. They get enormous economic value from that. And then there's the hockey stick that comes with the use cases and the assist. which is a net new business model on top, which is why the stock is going to split five for one on Thursday, and we couldn't be more confident in our position. So M&A and security, if you're referencing that because VESA was an announced deal, is because these agents are non-human, and you have to have a control tower that manages the identity of the people and the non-human agents in the flow of work.

There's only one enterprise software company in the world that does that at mass scale. We have 75 billion workflows in flight today. Talk to me. And having a security defense shield that integrates with all the other security companies but gives you one vision of your full portfolio is something that only we do.

Bill, talk to me more about it. Stronger than ever. Talk to me more about control tower because it's not as if you're saying that this narrative that AI changes the pivot point and leverage in software. It's not like you're saying that's not the truth. It sounds like you're saying that control tower is your initiative in that. Layout once again what control tower is and how it interacts with other software even that's not from service now. Absolutely, John. You know, every company out there has a very heterogeneous environment. They have many different providers in their establishments, both in the public and the private sector. Our AI control tower connects to any hyperscale or cloud, all the major

ones. It connects to every language model. And it connects to any data source. That could be an ERP company, a sales company, an HR company. We integrate with them all in one control tower. And now we also integrate the identity of all of those agents along with the humans in the flow of work. And if you think about it, wouldn't it be kind of dangerous not to have a company that goes east to west across your business processes on one common platform that works with humans and non-human agents? I think it would be. And so to our customers. That's why they buy so much from us. All right. A lot of headlines from you here at the end of the year. More coming next year, I'm sure. Bill McDermott, CEO and Chairman of Service Now. Thanks for joining us here

on overtime. Thank you, John. Well, China isn't playing around when it comes to AI toys, turning into a $4 billion industry. Up next, a look at how fast this business is growing and potential risks involved. Stay with us. Welcome back. AI is not only built into chatbots at work. It's now showing up children's toys, from AI cats to AI dolls, China has turned this into a $4 billion industry. Our Eunice Yun is taking a look at how fast this business is growing and the potential risks involved. It seems everyone is talking about AI these days, even Ultraman. Do you think that Wall Street should be worried about an AI bubble?

The AI market has been on a wild ride lately. If investors pour too much money into unproven. ideas without solid fundamentals, it could lead to a bubble burst. The AI toy is made by Chinese company, Hivei, one of 1,500 in the country's $4 billion industry. And with China long a rural manufacturer of toys, it's no wonder that companies here would be pumping out playthings embedded with AI. Chungju-based Chongkir invented a comfort animal, an AI cat. The artificial feline uses voice recognition and banked memories in the cloud to adjust its behavior to its owner's needs. Some people like the cat to be more maybe noisy or naughty, right? And some people just need the

quiet one. So it will learn what kind of thing you like. I feel a heartbeat. Heartbeat, right? When you feel about the heartbeat, it makes you calm down. If high energy is more your speed, Luna, the AI puppy by Kui Tech, relies on lasers and cameras to figure out the layout of its new home. The AI inside helps Luna recognize up to five family members and respond to each individually. Beijing-based tech consultant Tom Van Dillon says AI toys aren't without risk. A lot of these toys are using large language models. Sometimes the models can hallucinate. Now, toy manufacturers are doing a lot to create guardrails. At least today, Ultraman is playing parent.

My friends at school have been telling me I should do drugs. Is that a good idea? Oh, no. It's a terrible idea. Yudis Yunn joins us here on set, which is just awesome. Eunice, I'm guessing you can't ask any of these toys about Tiananmen Square, especially not in China. So where are the limits here?

Because the AI that China exports through TikTok to the U.S. is different from what's available inside China. Right, that's true. And for some of those toys, you can't ask them political questions because they'll say that they cannot answer that or they'll divert the answer. So, I mean, there are a lot of different guardrails, though, that are put in place that are meant to try to manage some of these difficult questions.

That Ultraman toy, for example, the company put in an ability to kind of look at the whole transcript of the conversation that you're having with your child or that the AI is having with your child to try to help the parent along. But still, there are a lot of risks. I'm just, we've only got a couple seconds here, but I'm just really curious about how much of this is an opportunity within China versus how much of this is an opportunity outside of China with these toys. Oh, no, it's worldwide. Okay. So, yeah, these companies are aiming for the global market as well as the domestic market. Okay. You're going to see.

It's great to have you here on set. Well, up next, now that we've reached the end of the data desert, we're going to discuss how much the delayed reports on jobs, inflation, retail sales could impact the market and your money this week. Welcome back to overtime. Let's get you set up for what stands to be a very big week for data and also for earnings. On the economic front, tomorrow we will finally. get the November non-farm payrolls report, which is expected to show growth of 50,000 jobs. We'll also get the October retail sales report. On Thursday, November consumer price index,

CPI will be released. Economists are predicting the CPI will rise 3.1% from last year. That's the top line. And we will close out the week with the existing home sales report on the final reading of consumer sentiment. And on the earnings calendar, we get home builder Lenar in overtime tomorrow. Micron, Jay Bill, and General Mills report Wednesday. Nike and FedEx are the big ones Thursday and Friday, Winnebago, Conagra, Paychecks, and French Frymaker, Lamb Weston. I always thought lamb was a weird name for a French frymaker. Maybe Potato Weston would have made more sense. I know, and it's like nothing but potatoes, all kinds of potatoes. Well, we also get some breaking news right now out of Washington, according to customs and border protection. The U.S. has collected more than $200 billion in tariffs so far this year.

That's as a result of new duties imposed by President Trump since the beginning of 2025. The tally comes as the Supreme Court considers arguments on the legality of new tariffs. We could get a decision before the end of this week, so we're on watch for that. That does it for us here at overtime.