Closing Bell - Market buoyed on fresh AI optimism; UiPath CEO on stock surge and retail investors 10/13/25

Episode Date: October 13, 2025

Markets weigh new AI momentum and geopolitical jitters. Baird Investment Strategist Ross Mayfield breaks down investor sentiment as Bank of America Securities Senior Analyst Vivek Arya analyzes Broadcom’s new OpenAI deal and some bold chip sector calls. Our Eunice Yoon reports on China’s response to the President’s latest threats, and UiPath CEO Daniel Dines discusses automation’s evolving role in the workplace and his company’s soaring stock. Plus, our Kate Rogers examines the restaurant divide: will value meals or premium dining win out this earnings season? CFRA Director of Equity Research Ken Leon previews what to watch when the big banks kick off earnings. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, that's the end of regulation. Columbus Citizens Foundation ringing the closing bell at the New York Stock Exchange. FG Nexus doing the honors of the NASDAQ. Stocks regaining some of Friday's sell-off with all the major averages closing higher this Monday. As the president softens his tone on China, trade relations, the Russell was the standout. That was up almost 3%, the Russell 2000, that is. Tech and Consumer Discretionary were the S&P sector leaders. Staples was the only sector to end in the red.

ConAgra, J.M. Smucker. Altria, among the worst performers there. Semis leading the tech sector with every member of the semi-ETF, the SMH, higher today. Bitcoin moving higher as well after a dramatic decline on Friday that saw cryptocurrencies drop from $122,000 to $102,000 and under an hour before recovering. Gold hitting another all-time high today, rising 3% silver. Also hitting a new record, jumping more than 7%. The last time we saw silver at these levels was back in 1980 with 100%.

brothers, crude recovering some of its losses, but unable to get back above $60 a barrel. That is a scorecard on Wall Street, but we're going to close about overtime. I'm John Ford alongside Morgan Brennan. Ahead tariff worries? What tariff worries? Markets are moving past the president's threats against China as the AI trade dominates the headlines once again. We're investors too quick, like this prompter, to dismiss the tariff risks that may still be ahead. Speaking of AI, the CEO of UiPath joins us, that stock has rallied. 28% last week. It was up for four straight weeks. It's partnering with OpenAI, Microsoft, Google, others. Plus, let the earnings begin. The big banks set to begin reporting tomorrow. We'll get

you set up for the results. But first, Christina Parts and Nevelis is at the NASDAQ tracking what drove this market sharply higher today. Christina. Well, Don, by the dip buyers really rewarded today. What tariff worries, like you said, after the S&P 500 posted its worst session since April just last Friday. It wasn't the case today. Goldman's Sacks led the big banks closing over 3% higher and having really an outsized impact on the Dow's positive close. You can see on your screen those shares of rare earth mineral producers like MP Materials up 21% USA rare earth surging again today.

Just across the board, 18, almost 19% after J.P. Morgan announced a decade-long $1.5 trillion investment in industries like AI, manufacturing, and critical minerals. That investment also helped drive quantum names higher like Raghetti, which closed over. over 25% higher, I&Q, up 16%. Chips also reversed Friday's sell-off, and video fell almost about 5% Friday, but closed up about almost 3% today. Broadcom closed nine, almost 10% higher

after announcing a new 10 gigawatt deal with Open AI. Even Intel managed to eke higher about 2%, despite a second downgrade over the last week on what else, foundry manufacturing concerns. Among the Mag 7, I'll end with this stat, only Alphabet and Tesla though have recouped recouped all of their Friday losses. John? All right, Christina, thanks. Look at Intel getting near 40.

Well, investors seeking to put the China tariff risks behind them as stocks rally sharply after Friday sell off. Will the markets leave tariffs in the rearview mirror now, focus on earnings, or did stocks rebound too quickly today? With us, as Bayard Investment Strategist, Ross Mayfield, Ross, welcome. This bull market pause was pretty short. Is that a problem? Yeah, I mean, we're talking about buying the dip.

There wasn't much of a dip or a chance for anyone to really dip their toe in. I mean, it was a one-story sell-off, and then, you know, the president was able to kind of reverse that sentiment over the weekend. I do think that it shows that maybe tariff fears have been left a little bit too far behind in the market's rearview. You know, if you look at things like the PMI surveys or the beige book that the Fed puts out, you still hear a lot about tariffs. So I'm curious to see if this earnings season kind of brings some of those trade troubles back to the four a little bit. But obviously the president wants to ease these China trade tensions de-escalate and get that bull market back on track. So for investors who might be looking a little bit more at the data versus listening to the messaging, how do they hedge if the data, in fact, continues to play out in a direction different than the messaging?

Well, first we have to start getting some data. Part of the issue right now is, I mean, one of the major potential headwinds for the market is the labor market, and we just don't have good data on it. So this earnings season will shed a lot of light on hiring plans for companies, firing plans for companies, and again, looking at things like raw materials, costs and profit margins for the big companies, particularly those exposed to cross-border trade. So the big data dump will be this earning season, and there will be a lot for investors to keep an eye on from tariffs down to consumer health, and then obviously the big thing that

the market cares about right now, AI investment, and how different companies are utilizing those tools. Earnings expectations have inched higher ahead of this reporting season. Does that make sense, or is the bar now very high going into those reports? The bar is very high. You don't usually see estimates revised higher across a quarter. So there's obviously a very high bar. I think you can bank on earnings coming in strong. I think the thing you can't bank on is how will stock prices react to the those earnings. So, you know, anytime you have a bull market like this, you want to take pauses

and consolidations to let the fundamentals catch up to price. I think this earning season will be a great example of that. I'm not sure that you'll get the big price pops that you might have otherwise because those estimates have moved so high, you know, over the course of this quarter. So it'll be an interesting one to watch. But I think at the end of the day, once the dust clears, it'll be a pretty solid fundamental picture for the S&P 500. It's a global bull market. Do you buy an internationally as well here? Yes, absolutely. Tons of momentum abroad, you know, sentiment from the average investor. I talk to our wealth management clients. I get the sense that most of them have punted on international at this point after a decade of underperformance, a decade of a strong

dollar. I think there is a lot of momentum behind kind of a broadening globally of this market. You look at Japan, first all-time highs in 35 years. I think there is a lot of capital that can move into international, even a little change would help sustain this full market. So I think investors need to be thinking globally. Own plenty of U.S. own the big tech, but make sure that you own some international as well. Okay. Ross Mayfield, thank you for kicking off the hour with us with all the major averages higher on this Monday. Now let's get into some of the action happening in the chip space. Shares of Broadcom closing higher after it announced a custom chip deal with Open AI. Oracle also moving higher after kicking off its AI World Conference. And one of Oracle's two

CEOs telling CNBC's David Faber that he is confident open AI will be able to pay for the cloud infrastructure. Every member of the semi-ZTF SMH ended the day higher. So as the deals keep coming, is there enough capital and appetite for all of the major players to win or will some get left behind? Well, joining us now is Vivek ARIA from Bank of America. Vivek downgraded Intel to underperform today. It's great to have you on. And let's start right there, because you are very busy with the downgrades and the upgrades and the price target changes in your note today. Yeah, thanks, Morgan. I think a few things are happening. First of all, it's great to see Open AI make these moves with its different silicon partners, right? First with Nvidia, then with

AMD, next with Broadcom. And Open AI is the most disruptive force in the generative AI market today. So the better they do, the more it means there is going to be pressure on other hypers to spend and I think that's that's great news for semiconductors the second thing is just like other cloud service providers we are seeing open i also have a mix of off-the-shelf for merchant chips as well as custom chips right and at most customers the ratio is about 80 20 percent or so up until so far open i had essentially been deploying uh only nvidia chips but now it's uh it's diversifying its chip supply into custom chips with the help of broadcom as well and then the final point i would make is that, you know, Open AI is the most deceptive force for sure.

But we do think it's going to be one of many different AI ecosystems that develops over the next few years that can take, that can essentially triple the spending from 3 to 400 billion to over a trillion dollars by the end of this decade. So we are extremely bullish on the AI market. So when you make a comment like that is the read-through then that while we're seeing a flurry of open AI deals right now, you expect that there's going to be a flurry more with other names of rivals in the space to Open AI? Yeah, I will be, in fact, surprised if we don't see those kind of, you know, deals.

Because, again, with Open AI, what is you have someone who is able to go and disrupt many different markets, right, social, search, e-commerce, right, streaming, video. You know, their soda software is one of the top downloaded softwares on a consumer platform. So they can even go off to the consumer market. So because their tentacles are going into so many different end markets and so many different models, we are assuming that the incumbents in those markets will have to respond. And the way they respond is by building enough computing infrastructure on their own to go and serve these different use cases. So, yeah, I'll actually be very surprised if we don't see other hypers scalers step up and increase their investments in building out this AI infrastructure.

Vivek, earlier this summer, when I was speaking with AWS CEO Matt, Garman, he was suggesting that their infrastructure build-out strategy is a bit more, I don't know, careful. So I wonder, is this a game of infrastructure chicken? What if there's an air pocket from one of the hyperscalers or more in AI demand? I mean, sure, Open AI is spending, I think they're even arguing ahead of demand, but how many different stocks get affected here if there's a sense that maybe the pace and momentum of this infrastructure buying isn't constant? Sure. Now, John, I would agree with that.

I think the constraints here are essentially access to power. It's the build out of data centers. I do think CAPEX, of course, and financing matters. But I think that matters more in the medium to longer term. In the more near term, I think it's really access to data center and it's access to power. And when you look at the next nine to 12 months or so, if you are a cloud service provider and you want to build out any kind of capacity, you would have to be able to. better put in orders to the likes of

Nvidia and Broadcom and AMD and Marvell already. Because if you have not put in those levels of orders, you're not going to get those chips, right? It takes several months for these chips to cycle through Taiwan semi, get, you know, get memory, get packaged, you know, get put in the rack scale systems and so forth. So I think for the next year

the industry is pretty well said. Beyond that, but let me put it differently. If there's a glitch in the backlog numbers, which set of stocks is going to suffer first and most. Well, keep in mind, it's not one customer, right?

You have many different buildouts from meta, from Microsoft, from Amazon, from Google, from OpenAI. Don't forget there are a hundred different new clouds out there. Don't forget that there's a lot of sovereign buildouts, right? The Middle East is building out a lot of infrastructure. So can there be a glitch? Absolutely. I mean, the nature of infrastructure deployments is that they are never, you know, linear and

up and to the right. there are there are going to be periods of digestion in between. But because there is a diversity of customers, we think that, you know, these, these, you know, so-called glitches, you know, might be isolated to one or two customers, whereas the broader build-out continues on track. But who will be impacted? All of semiconductors will be impacted, because I think to the points you made before, AI is such an overwhelming force for the semiconductor industry, you know, right now, that if there are those periods of digestion, you know, like we saw that one-day affair with, with deep seek, right? Everyone in semiconductor has got impacted more or less.

Okay. Vivek Aria from Bank of America. Thank you. Thank you. President Trump says it will be all fine when it comes to the trade war with China, but China is now issuing a warning about what it will do if President Trump doesn't back down. We're going to head live to Beijing next. Plus, the CEO of Red Hot Stock UiPath on his stock's huge rally and his partnership with Open AI and more over time back in two. Welcome back to overtime. A huge rally on Wall Street, gaining back most of Friday's losses, but not every stock was a winner today.

Notable names hitting 52-week lows include Colgate Palm Olive, Procter & Gamble, Kimberly Clark, and General Mills. So basically consumer staple names. Well, market rallying in large part today because President Trump eased his trade rhetoric against China, but China's promising retaliation if he doesn't back down on his 100% tariff threat. our Eunice Yunn has the details in Beijing, Eunice. Thanks, John. Well, after we're getting a strong reaction from the U.S., the Chinese are defending their new restrictions

on rare earth exports. The foreign ministry today said the U.S. has continuously introduced a series of restrictions and sanctions against China, which has severely harmed China's interests. China firmly opposes this. So, in other words, from China's perspective, Beijing is merely matching Washington's approach.

the Chinese are also threatening to take retaliation if President Trump follows through with his 100% tariffs. Over the weekend, the Commerce Ministry pledged to take, quote, corresponding measures. And this comes at the same time that the Chinese appear to be trying to find a way to mitigate some of the negative response, saying that the curbs do not equate to a ban. There's speculation among China watchers as to why the Chinese have decided to put in impose these restrictions now while trade discussions are ongoing and when there's an expectation that the U.S. and China are going to meet in terms of President Xi and President Trump at APEC at the end of this month.

One line of thinking is that the Chinese are ramping up pressure in order to extract more concessions from Washington because of those talks. And then there's another theory that perhaps this is just re-escalation on the part of the Chinese because they aren't necessarily seeing a deal that they like, guys? So, Eunice, is it fair to say that while President Trump is saying here in the U.S. and to U.S. markets, it'll all be fine. The Chinese leaders are trying to signal something different. Well, the Chinese are trying to signal that they are willing to take tough action if they

need to. At the same time, they appear to be keeping the door open because at the end of the day, They don't necessarily want to have an expanding trade war if they could stop one from happening. All right, Eunice Yunn, thank you. We'll follow the leaders up next. Mike Santoli looks at what the performance of two key leadership groups during the recent volatility could mean for the market going forward. Plus, UI past shares continuing to move higher after coming off its best week ever. CEO joins us ahead to discuss the company's role in the AI trade as it signs its own deals with

Open AI and Microsoft. We'll be right back. Welcome back. Banks and Industrials, two market pillars, just hit key levels that we haven't seen since the 2024 election. Is this a rotation or is it a red flag? Let's bring in senior markets commentator Mike Santoli for a closer look at what all of it means. Mike. Yeah, Morgan, I don't think it's necessarily yet a red flag, but it is an indication that there's been some hesitation in some of these cyclically important parts of the market. And by the way, we're going back to those levels of the November election in relative terms. So here is the KVW bank's ETF relative to the S&P 500. And you'll see it kind of has plateaued here. That

vertical jump that we saw is basically the November election of last year. So we're in that one-day range at this point. So you're going to want to see perhaps if this gets tilted one way or another as we get the big bank. earnings coming in. Industrials, this is the equal-weighted version of the S&P. Industrial is also relative to the equal-weighted S&P 500, just for apples to apples. Obviously, it's still closer to its highs on a relative basis, but once again, you are sort of threatening those levels from back in the election. And really, it just shows you, in part, how strong the underlying S&P has been on the strength of all the AI plays, but also that you've seen a little bit of an uneven moment

in the economic growth. Industrials, things like transports have struggled, even as other parts of the industrial's economy have done well, which are the fast and all results today and sell off. So I think it's a little bit much more about, you know, be on alert, monitor these areas closely, but it's not yet time to say that the cyclical leadership has surrendered. Does all of this data, to all of these moves in things like cyclicals,

carry more importance, more significance now with the government shutdown continuing and a lack of government data alongside that? Yeah, Morgan, I guess I would view it as it was an indication that there might be a little bit of fatigue or a little bit of anxiety working its way into those sectors. And, you know, one of the big questions, I think, for investors has been, can we assume that the soft patch in job growth is not reflective of an absolute economic downturn? So far, the market is assuming that actually those things can diverge pretty helpfully for a while anyway. are these little eruptions in credit losses that we've been seeing, you know, just one-offs,

or are they kind of contradicting some of the other benign credit indicators? So those things, as we worry about them, to the extent we do, it's going to make its way into these parts of the market in the absence of confirmation or refutation from government data. All right. Mike Santoli, thank you. Well, now it's time for a CNBC News update with McKenzie Segalos. McKenzie. Hey, John. The Israeli military says the coffins of four hostages have arrived in Israel. In a post on Axie Israeli defense forces said a convoy carrying the coffins is on its way to the National Forensic Institute in Tel Aviv for an identification procedure.

Nash's jet propulsion laboratory said it will lay off about 550 employees this week as part of a restructuring. The cuts represent about 11% of JPL's current workforce. The director of the research unit said the cuts were not related to the government shutdown. And affected employees will be notified tomorrow. JPL's NASA's Research and Development Lab, and it's managed by California Institute of Technology. And we have the first head coach opening in the NFL this season. After a dismal one to five start to the season,

the Tennessee Titans have fired coach Brian Callahan. This is Callahan's second season, and he finishes his tenure as the Titans coach with a 4-19 record. The team has yet to name an interim coach. Back to you, Morgan. All right. McKenzie, thank you. We've got a news alert for you. Goldman Sachs announcing it will buy industry ventures in a cash and equity deal.

Industry Ventures is a Silicon Valley focused company offering secondary offerings and tech startups and other capital solutions. Essentially a Silicon Valley play for Goldman Sachs. It's offering more investing opportunities for Goldman's wealth and asset management clients. Now, the transaction will consist of $655 million in cash and equity, an additional $300 million payable once certain benchmarks are met. Goldman has been investing in and alongside this company for decades, and this would essentially bring that platform and those solutions in-house and offer wealth clients more access to private markets. Transaction is expected to close in the first quarter of 2026. You can see shares of Goldman right now on this news are up fractionally, but certainly one to watch, especially as we do get ready for bank earnings, including Goldman's earnings,

tomorrow morning. Indeed. Up next, the CEO of UiPath, whose stock is coming off its best week ever, on what's driving shares higher on his company's role in the AI trade. Plus, the Secretary of the Army explains how he's trying to transform the military by treating it as a startup or giving it a startup culture, how he's attracting venture capital and private equity to turn waste into efficiency. Stay with us. Welcome back to overtime. Stocks ending the day higher as the president softens his tariff tone against China this weekend. The S&P gained back a little over 50% of Friday's losses. As you could see right there on your screen, finished up a one and a half percent today, 66-554. It was a bullish day for commodities, gold and silver, both hitting all-time highs, a short squeeze for silver.

Oil also rising, but closing just below $60 a barrel. The chip stocks were the winners on the day, with every member of the SMH ETF closing higher. Broadcom, the big winner, after announcing a new deal with Open AI. And take a look at this. Shares of Polaris, those are roaring higher right now and after time. They're up 8% after the company announcing plans to separate its Indian motorcycle business into a standalone company. It's going to sell a majority stake in it to private equity firm, Carol Wood, as well. So that leaves a remaining company, John, that is focused on off-road vehicles and the like.

Yeah, you need an off-road vehicle to ride that stock. Pop. Well, software company UiPath is coming off its best week ever. The company recently made a push into Agentic AI announcing partnerships with OpenAI, Microsoft, Alphabet, and others with us now to break down how these partnerships are driving growth for his company, is UiPath, co-founder and CEO, Daniel Dines. Good to have you. So if I recall your major customers include D.HL, Walmart, you're taking your automation platform, updating it for generative and Agentic AI with the questions out there about the stability of AI demand in this infrastructure push. It seems like your customers are the sweet spot that should be seeing huge agentic demand

to run their businesses. So what are you seeing? Yeah, we have a lot of experience into automating business processes that are transactional in nature. And while RPA was a great technology for addressing. processes that are rule-based in nature. AI helps us to extend our reach. So now we have introduced agentic automation

and orchestration in order to be a player in end-to-end process automation. And the combination between AI and RPA and automation, it's extremely powerful, and it's our customers resonates pretty well. And what I mean is, I suspect that of all of the CEOs out there, you could give us some sense of the momentum in how customers see the opportunity to save money because they were already working with you

to do that in a smaller or more specific area. Now, Agenic should give them the opportunity to expand. So can you give investors a sense of how that demand might be expanding? Because it might help justify in some people's minds whether or not this infrastructure build out has legs. Well, while we are in the early innings of deployment of agentic AI, we see a very solid demand. I can think that, you know, since the early days of RPA, I have not seen such a huge interest from customers in a renewed automation initiative interest. I think many of them realize that in order to deploy AI, you need to have both the foundation in data.

And the combination, again, between AI and automation is extremely powerful. Because many customers are asking themselves, how can I deploy this technology that is non-deterministic in a very reliable fashion? And then the answer is really put a great foundation of automation, and then on the top of it, you can add AI. And that AI is going to drive the automation with humans in the loop, human validating the AI. And this is actually quite a powerful combo. Daniel, it's Morgan. You know, I keep finding myself having these conversations about this divergence, at least right now at this moment and time,

between the hype, the promise, and the reality of AI within corporate America. As you do strike all of these partnerships, are companies ready to actually adopt and roll out this agentic AI? How big of an opportunity is that if they're not ready for a UiPath? Well, I think the answer is yes and no. I think that technology is pretty much ready, but in order to deploy at scale, we need to prepare for change management within the companies. We need a different workforce. And I think we need to think a bit bigger. I see many companies still just a bit touching the water in regards to

AI. They don't pick up, you know, the most difficult use cases. But once we work with a few customers that really get it and they want to go all in and they want to go fix some of their biggest pain. We see quite a tremendous interest and the potential is huge. Should we expect more partnerships from you? Well, we always look to have, you know, the best partnerships in the I space. I think that especially in some sensitive workflows and processes, it's very important that we play and we play like an agnostic player. So, we We aim to bring the best models and the best open source AI framers in order to give our customers the confidence they can address really, you know, the breadth of their use cases. So, yes, I think that there will be more to come for sure.

Daniel Dynes of UiPath. Thank you for joining us. Thank you so much. Up next, the Secretary of the Army, Daniel Driscoll, on why he's been talking to the top CEOs in the private sector to help fix costs and modernize the Army's technology. And later, a top analyst on what to expect from a massive week of bank earnings, which stocks he likes most, heading into those results. We'll be right back. Welcome back to overtime. Stubhub rallying today.

The stock had been hit hard since going public nearly a month ago, but now some on Wall Street want a ticket to ride. firms, initiating coverage with a buy rating. J.P. Morgan points to a big growth outlook for Stubhub's ticket resale market, and Mizzouho says the stock looks cheap after its post-IPO sell-off. But not everybody on Wall Street is convinced. Wolf Research starting coverage with a peer-perform rating. Well, let's turn out a national security and defense. The U.S. Army is undertaking a massive transformation as it moves to adopt new technologies, modernize more quickly, and do all of this caused effectively. U.S. Army Secretary Dan Driskel, join me today from the annual AUSA conference, where he made the case for the military service

to adopt a Silicon Valley mindset. I asked him how this is going to happen. We do. So there are a couple of different verticals we're approaching, and so a couple of weeks ago, we had an AI war game where we invited CEOs of some of the top companies in America. I think we had about 15 CEOs, and the estimated market value of the participants was $15 trillion. dollars. So think kind of best practice in transportation and logistics and manufacturing and tech. And we brought them to the Pentagon and we said, hey, here are our problems. We need your help. And they were incredible. And we are actioning a lot of the suggestions they gave us. The next bucket is what you described, which was fuse. And so we are looking to the private markets and

try to mimic their what works so well for them. And so for Fuse, that is essentially the Army's approach to copying what venture capital has done for so long. which is find good founders with innovative ideas, get minimum viable products to customers, in our case, soldiers, and then when it, get them feedback, and when it works, scale it as quickly as possible. So for Fuse, we've set aside $750 million

this year to back emerging technology companies. And then just today, kind of a third bucket, we have Secretary of the Treasury, Scott Vescent coming, and we are co-hosting a private equity roundtable with about 20 of the largest private equity funds in our country. And we, the Army, have done two things. We have looked at all of the assets we have

on our arsenals and our depots. And we've said, this is what we have to offer. What can you come do with this? Can you build a data center where you keep 90% of the compute that is created and we, the Army, get 10%. Can you do a rare earth processing area where we need rare earth minerals for our things that we build?

Just give it to us in kind. And so that's one bucket. And then the other bucket is, We have $150 billion worth of infrastructure needs, whether it's our barracks or our repair, where we repair our equipment or our equivalent of cafeterias. We have so many needs, and there are so many ways that the Army can partner with private industry

and private investors to do it better. And so this is an opening kind of kickoff to that partnership. How quickly, how quickly can all of this go towards modernizing the Army, which, quite frankly, I've heard about this push to modernize the Army, and to change the acquisition process and to disrupt the bureaucracy across a number of administrations. But how quickly can you do it now at this moment in time?

So we are going to announce in probably two weeks a massive multi-generational 60-year change in how we do our acquisitions. Not quite allowed to talk about it yet, but that will be a tectonic change in the actual structure and speed with which we were able to purchase things as an army. And I would say what we just said in this opening kind of kickoff for a USA is we will no longer measure success in decades and billions of dollars for acquisitions. We're going to measure it in months and thousands of dollars. Wow. That's a tectonic shift. You just mentioned rare earths.

They've been in focus, obviously, through the China lens and trade and tariff lens as well. How critical is that to the supply chain from a military standpoint? and how much does China currently factor in from a dependency standpoint? I think our defense industrial base, a lot of people have written about this. It has suffered for decades. There was this thing in the 90s where it was called the Last Supper, where basically we the Army and we the federal government invited in a lot of defense primes. And we said, you have got to consolidate down from 50 plus to 5, 6, 7 major primes.

and we are continuing to kind of feel the price of, pay the price for that decision. We do not have redundancy. We do not have the scaled ability to create what we need. And so when you look at things like rare earth minerals, our nation, and this is a broader issue that we have across a lot of our manufacturing, outsourced a lot of those skills, outsourced a lot of that expertise, and a lot of it went to China. And so when you think about our current threat structure and you look at what the Secretary of wars, as said, which is China is our pacing threat. We have got to bring back

those capabilities. And there is nowhere better in our United States of America than our army depots and arsenals that exist around our country. They are already protected. And what we need to do is invite in private industry to help us solve these critical shortages. How are you approaching AI? AI, it is changing everything. It is changing everything in the consumer space. Warfare will no longer look the same as AI starts to scale. The kind of first step, the key to allowing AI to transform our soldiers' lives, is creating a data layer. We had 600 enterprise-level software solutions, 600, preposterous. We've gotten them down to a little bit under 200 now, and we're trying to get

it to 50 soon. What is nice is we are requiring every tech provider for anything related to the Army as a business to allow for APIs that will allow our systems to talk. And so I'm actually really optimistic in the next couple of months or quarters that the Army as a business will start to have AI making soldiers' lives better day-to-day and the vast majority of tasks they do. Well, the Army announced last month plans to invest $750 million over the next year in emerging technologies and innovation. The service today is actually running a live pitch competition. This is in partnership with Y Combinator and Secretary of Driscoll, as he touched on in that conversation is hosting this first ever investor day alongside the Treasury Secretary.

As Tara Murphy Doherty of Govini put it to me last week, the Army is going to be the canary in the coal mine as to whether this administration's policies are successful. We talk about disruption and defense. They're on the front lines of that. The defense sector's had a breakout year. The defense ETF, it's on pace for its best year since 2013. And this acquisition process and the adoption of these new technologies is really the focus here for investors. You can watch the full interview right now on cnbc.com and there is a lot more we cover too, John. Yeah, and Silicon Valley has been paying a lot more attention to this area as you have been covering. Well, up next, will investors have an

appetite for restaurant stocks this earning season? And if so, will value or premium brands do better? Also, shares of Este Lauder sitting pretty, Golden Sachs upgraded in the cosmetics maker from hold to buy, hiking its price target from 76 to 115, saying the companies nearing a return to revenue growth and noting improvements in China's economy. Over time, we'll be right back. Welcome back to overtime. Investors hungry for shares of a shake shack today after Jeffries upgraded the stock to hold from underperform citing valuation. The stock had been down roughly 40% over the past three months, but the analyst there is cutting his price target to $95 from 110 per share, citing promotional pressures and a near-term,

risk to same store sales. Those shares finished up 5% today. Speaking of restaurants, Domino's going to kick off earning season for that industry tomorrow before the bell are Kate Rogers, looking at what to expect from the competitive industry as consumers cut back on spending. Kate? Hey there, John. So you said at Domino's would be the first of the big restaurants to report tomorrow

before the bell in what continues to be a challenging environment for the sector. Its U.S. comp's expected to increase 4.2 percent, and the company's been emphasizing value on what its CEO Russell Wiener is calling the center of the plate or the thing that customers actually want, which is, of course, the pizza. The stock is down around 2% on the year, while its competitor, Papa John's, one of the few positive names for the year. Value is going to continue to be a big focus this quarter. We're going to find out more on how offers on extra value meals, for example, at McDonald's are resonating. McDonald's along with Yum Brands and Restaurant Brands International Burger King's Parent Company, also positive performers

on the year. Now, names like Chipotle, Kava, and Sweet Green, you'll remember all had challenging second quarters. They're offering is typically more expensive for the consumer. Kava and Chipotle offering up some new buzzy menu items to Lauren customers. Sweet green actually investing in protein portion sizes. That's something that Chipotle has done in the past. All of those names, though, are also down on the year. Chipotle's down over 30%. Kava down 40%. Sweet green down 76%. So those are more of the premium names. Another one that we'll have our eye on guys is Starbucks, of course, a more premium option for the consumer. Back over to you. Kind of a big picture question.

What should investors take away from the fact that Cheesecake Factory and DoorDash are doing particularly well in this economy? I mean, there have been lots of talk about healthier eating and all of that. And I guess maybe some of those Kava-like stocks had a big run-up. But what does it say that those stocks are, you know, DoorDash Cheesecake Factory doing better now? You know, John, it's a great question in something that we did kind of note last quarter that I think has continued into the back half of the year, is that people are willing to pay for more of a either sit-down experience or the perception that they're getting more for their money. So if you're getting something delivered, you know, you're getting kind of a premium experience that you can have at home. Cheesecake Factory, again, another sit-down experience.

We've noted that some of the casual names I brought up earlier in the day, Chili's Brinker, they've fared a little bit better because, again, I think it's perceived as a little bit more value in this environment for your money than you might get at a fast food company or in particular fast-casual. right now. All right. Kate Rogers, thank you. Thank you. A massive week of bank earnings begins tomorrow when J.P. Morgan City, Wells Fargo, and Goldman Sachs report results. So up next, a top analyst tells us how you should be trading those names. Stay with us. Welcome back. Let's get your set up with tomorrow's trade today. There's no big economic data on the calendar. But earnings season kicks off with a bang when banking giants, JP Morgan, Citigroup, Wells Fargo, and Goldman Sachs, all report results before the bell. Now, speaking of what to expect from bank earnings, let's bring in Ken Leone from CFRA. Ken, welcome. So it looks like

you got a strong buy on Goldman, which makes money on deals, buys on JP Morgan and Morgan Stanley that also make money on wealth management. Now hold on Bank of America, which I tend to view as more consumer exposed. Am I looking at that right? Does it reflect where you expect the growth is coming from in this economy? That's great to be with you, John, and really to set the stage, we turned bullish on the global U.S. banks in May. The performance was enormous through the summer, outperforming the S&P 500. We asked the question, can they earn their valuation with higher prices? And then last week, we began to dissect what are we going to start to see starting tomorrow. We think the Delta for higher revenue and earnings beats are going to be the

capital markets. And then also the U.S. economy is still stable growing 1.5% plus, and that's good even for traditional loans for the banks. But we do have an order in terms of which ones we like. It's interesting, John, because the one we like with a strong buy is Goldman Sachs. And it's the one bank that the analysts have the lowest ratio of buys to the total ratings. And again, that delta is coming from what we think is outsized gains in investment banking, equity and debt underwriting, M&A. We're seeing this not only from the corporate sponsors, CEO confidence is high, but I got two trillion dollars of business coming from the private equity firms that have to monetize, exit that in their older funds in the next couple of years.

We have not had this scenario, really, for the last couple of years. And as we hear these managements, I think they're going to be talking very confidently about the outlook for their businesses. So the M&A wave then has legs and maybe some of this data center financing as well? It does. And what we are seeing is the banks principally are agents representing companies' in-prosings. private equity, and they're also getting involved now on principal. J.P. Morgan had the announcement where they're going to be lending and principal investing in those areas that are akin to our national security.

Also, when we look at the opportunity here, again, we're going to see that the opportunities of announced transactions in the pipeline is higher than we've seen before. Already, you know, The data here points to, I would rather be in those banks with a bigger weighting in investment banking than those that are really dependent on the traditional mainstream lending that we see for most banks. Yeah. So along those lines, the fact that we got this news just earlier this hour, that Goldman Sachs is going to acquire venture capital from industry ventures for $665 million cash equity.

Maybe not the biggest deal, but it certainly speaks to what David Solomon has said when he's been asked this question repeatedly, this idea that they're fully. focused on wealth management and building out that part of the business. Do you think we're going to continue to see more M&A activity, whether it's big ticket or smaller bolt-on acquisitions? You know, Morgan, I think we will. And it's a world of difference from, I go back to the financial crisis in 2008. Goldman really was getting out of principal businesses, which were mostly with hedge funds. But today, they're putting capital, principal, into good businesses, whether they be the example you've just mentioned or into infrastructure partnering with technology companies

for data centers. We saw that with BlackRock. So I think Goldman finally, you know, this is David Solomon. You know, we took the page off in terms of retail consumer finance. Now Goldman is doing what they do well, which is focusing on the institutional and the core business here. It's really great to stay. Okay. Ken Leon. Thank you. We don't have all the federal data because the government shutdown continues, but certainly a busy week between earning season kicking off and earning earnest, Oracle AI World. And then tomorrow you get Dreamforce from Salesforce and a $15 billion pledge for San Francisco ahead of that event kicking off. Yeah, a little controversial in my mind, given how long Salesforce took to come back to people working in San Francisco. But we'll hear what Mark Bendioff has to say.

Yeah. In the meantime, all the major averages finishing the day higher. That does it first here at overtime. Fast money starts now.