Closing Bell - Trading the Uncertainty 4/24/25

Episode Date: April 24, 2025

How should investors be trading these markets? We discuss with JP Morgan Asset Management’s Gabriela Santos and Invesco’s Brian Levitt. Plus, we drill down on what to watch from Alphabet’s results with Laura Martin from Needham and Ayako Yoshioka from Wealth Enhancement Group. And, Vista Equity Partners’ Robert Smith weighs in on the AI arms race, trade war and much more. 

Welcome to Closing Bell. Scott Wabner live from Post9 here at the New York Stock Exchange. This make or break hour begins with another update for stocks and a big earnings release is looming large. Alphabet's report coming tonight in overtime. We're going to set you up for that in just a moment. It is sure to be a good read on the state of tech spending, cloud growth, and of course the economy at large stuck up two and a quarter percent leading into the print. And on that note, a little bit later, a CNBC exclusive interview with Vista Equity Partners founder, chairman and CEO Robert Smith will get his take on the markets, enterprise software and so much more. In the meantime, let's show you the scorecard here with 60 to go and

regulations. Been green all day on optimism about the trade war. Tech the outperformer today. All of the mega caps are up. Chips having a nice day as well on the back of ServiceNow's numbers and good earnings from Texas Instruments. Software doing well. You get the idea. Nasdaq is the out performer. To our talk of the tape, how to trade these markets right now. Let's first go to the White House for the very latest with our Eamon Javers. Eamon? Hey there, Scott. Treasury Secretary Scott Bennett. Besant was in the Oval Office with the President of the United States and the Prime Minister of Norway just a short time ago, and he gave a little bit of a preview into some of the trade talks that are happening between the

United States and South Korea in particular. Here's what he said. We had a very successful bilateral meeting with the Republic of South Korea today. We may be moving faster than I thought and we will be talking technical terms as early as next week as we reach an agreement on understanding as soon as next week. So South Koreans came early, they came with their A game and we will see if they follow through on that. So no specifics there in terms of timing but he says they're going to talk technical details

as early as next week and that follows on this sort of bizarre back and forth through the course of the morning in which we had the Chinese denial overnight that there were any talks. Then the President of the United States suggested that there had been a meeting. He said earlier on camera there was a meeting. They had a meeting this morning. But then he said, I'm not going to say who they is. Maybe we'll reveal it later, but I'm not going to say it right now.

And so that set off a kind of a mystery here at the White House. Who is the president talking about? Who's having this meeting? I went in the West Wing and tried to get officials to give us any guidance at all on who the president is talking about having had that meeting. Officials here are simply not engaging on that question, saying we're just going to let the president's remarks stand. So it's possible there's some kind of secret negotiation going on behind the scenes here,

but we can't see any evidence of it publicly, Scott. Notable too that I guess because we didn't hear it that the Treasury Secretary didn't say anything regarding those alleged talks or meetings or what have you with China. Right. The Treasury Secretary yesterday said, in fact, the talks hadn't started yet, that both sides were waiting for the other side to engage. Then we had the President come out and assert that there were, in fact, talks. Now, in theory, the Presidents of the United States are aware of more things than Treasury secretaries are aware of. So maybe the president's talking about something the

Treasury secretary doesn't have access to, but it's just not clear at all what the president's talking about. And we've been trying to get some answers. No luck so far. We'll keep pressing. Yeah, I'm sure you have and I'm sure you will. As always, Eamon, thank you. Eamon Javers, North Lawn of the White House. Now let's bring in JP Morgan Asset Management's Gabriela Santos and Invesco's Brian Levitz. Good to have you both here. Okay, Gabby, you first. Size it all up for us. What do you think?

I think we're really in the depths of the policy storm right now, and I think it's tough for anyone really to have a lot of conviction around forecasts for economic growth, for earnings growth. I think we've taken some of the tail risk or worst case scenario off the table. We seem to have dialed down some of the actual tariffs themselves, but it's still hard to feel your way around

where we're gonna end up. What is the base case on tariffs and what does that actually mean for economic growth and earnings? So when that happens, you see higher volatility. The VIX still suggesting up and down days of about 2% or that's what the implied volatility is. But low conviction doesn't mean no action. And what we see a lot of our clients doing is just strengthening the core, meaning having more of a balanced allocation, stocks and

bonds, having more of a balanced value growth, rebuilding core fixed income for diversification, and waiting to have a little bit more clarity before stepping back in to take some rest. Should we think that these bouts of extreme volatility are not over? Is that how you're generally approaching? Yeah, I don't think the extreme volatility is necessarily over.

The good news is that there are pain points for the administration. So on the morning of April 9th, we weren't sure when we had trouble with the plumbing and the bond market, is there a pain point? This Monday, we've had a good week, but remember this Monday was stocks down, bonds down, currencies down, right? That was disconcerting. We were wondering whether the Fed chair was down.

Right. So do we have to go from pricing a correction to a recession to stagflation? Right. In stagflation environments don't tend to be good for risk assets. So we're still moving through this. The policy uncertainty hasn't disappeared. I think on days like this, the last couple of days, it's a little bit of a rejoicing that the administration does have a pain point. Reciprocal or Liberation Day may have been the worst of where we were

and things will get incrementally better. Incremental steps to Brian's point, good enough as long as we have a backdrop of what some have suggested is a tonal change from the White House and then just no more bash, well maybe we still get the bashing of the Fed chair, but no more talk about potentially firing him. When it comes to tariffs themselves, it has been really important since April 9th to have a toning down of the actual implemented tariffs and this 90-day pause on the so-called reciprocal tariffs.

But I don't think it's just about how loud the volume is on tariffs. I think the level themselves really matter as well. And we would feel a lot better about future economic and earnings conditions if they get down a bit further. I mean, having an effective tariff rate on Chinese imports of what we calculate to be 110% is just not, as Treasury Secretary Besant used the word, sustainable, right? You're basically charging importers more in tariffs than the value of the good. And it's just not a situation that's really tenable

here. So we would like to see actual dialogue between the US and China, reduction in those China tariffs, and then a more permanent postponement or cancellation of the reciprocal tariffs to then be able to better digest what this all means for economic and earnings forecasts. At what point on that note do we sort of cross the rubicon of not being able to come back soon enough? If you listen to the commentary you know from Chipotle on the back of their earnings the frequency of visits being reduced by consumers some of the airline commentary is fairly negative tariffs have been cited on more than 90% of S&P earnings calls this season.

The staffing firm, Robert Half, slashed its guidance because of everything that's going on. That's a somewhat ominous sign for the strength in the labor market. It is. And leading indicators of the economy are certainly pointing lower. If you look at sentiment on the business side, the consumer side, pointing lower. So if you're investing on a tactical allocation basis, given where leading indicators are, they're pointing to below trend growth and deteriorating.

So you would want to be more defensive here. The challenge that we have is the market's priced in some of this pretty quickly. Does it get better? And so the market bottomed on April 8th because things have gotten incrementally better. The hit to the economy is coming. Right? And so... There's a lag.

But there's a lag, right? So any economic data releases we're getting right now, first quarter earnings, the guidance matters more than what you're... On the earnings calls than what you're actually hearing. It doesn't need to be necessarily the worst case scenario though. Just as you know the White House initiated all of this, better outcomes can be reached maybe sooner than expected and a lot of it can be reversed reasonably quickly. A lot of it a lot of it can be reversed reasonably quickly. What you what you'll need to see is

businesses believe that the worst of it is behind us, that we're moving directionally in the right way and start turning our attention to the extension of the Tax Cuts and Jobs Act and deregulation. A lot of talk of, well, is money going to flow out of the United States? There's not going to be foreign investment in the United States. If we can start working on deregulation, enticing money back in, then yeah, the pain may not be as bad but right now it's a tough policy mix uncertainty means lack of investment.

Some are wondering whether the best Gabrielle is behind this U.S. market. That's been a lot of talk since you know you had the activity in the bond market and then the dollar that assets were leaving the U.S. Jeffries today their global head of equity strategy says the best is over for U.S. stocks the stocks. The US has made an all-time peak likening it to the Japanese market in 89. The dollar's begun a long-term weakening trend that's going to reduce the US stock market cap as a percentage of the world. You worry about that kind of stuff? Over is that overblown? I think it's... Brian's shaking his head yes. I think it's all degrees's shaking his head yes. So what do you think?

I think it's all degrees of magnitude here. In terms of do we think the US will turn into Japan, which used to be the larger share of global equity markets and is now about 5%. No, I think it's way too early to be able to have any conviction and visibility on that. But is the US share of global equity is going to come down from here?

Yes, because coming into this year, it was a record, record high share at 65%. And we're already seeing a slow but pretty important normalization in the US premium versus the rest of the world, the concentration of equities in the US versus the rest of the world, that I think still has legs. But more about the exceptional, exceptional premium and not an unwind of the US exceptionalism itself. We still have amazing companies.

I think there's a difference between a rebalancing from where we were, where investors believed there was only one country to invest in to saying that sixty two hundred on the S. and P. five hundred is a multi decade high. Even if you think of the UK after Brexit with all the difficult calls we heard about the UK market still climbed six

percent per year in dollar terms over the last decade. So you know that's not outstanding returns but you still doubled your money within 10 11 years. So now it's that's that's hyperbole.

Lastly real quick because I got to go some are saying what's been happening in the Treasury market has created if not a historic opportunity an incredible opportunity because things are going to reverse. You guys believe in that that

treasuries are super attractive now just because the movement was so incredible in rates? I think it's hard to say they're super attractive right now. There's still 20 basis points below where they were coming into the year. And as Brian mentioned, there's still all this fiscal tax cut conversation still to come. And we know at a minimum, it's an extension of the deficit, but exactly how much. So we still think there's some volatility there on the long end.

Quick, what do you think? I mean, they seem pretty fairly valued if you consider a 2% GDP economy, 2% inflation, little term premium, 430 on the 10-year doesn't seem like a screaming buy. I would certainly own into, I don't think we're we're the end of the US dollar reserve end of owning US treasuries I think if you're if you're looking for safety and yield treasuries make sense I'd rather be out and things like municipalities or corporate bonds where I can get why can get better carry but you speak of an asset to like munis got crushed crushed absolutely

crushed but the fundamentals look great. We gotta go. We'll pick it up again. I appreciate you guys being here. All right. We'll see you soon. Thanks. Gabrielle and Brian.

All right. As we said, at the top of the hour, Alphabet reporting earnings at the top of the next hour and overtime, Dierdra Bosa joins us now with what to expect. Hi, Dee. Hey, Scott. So I like how Kelly put this earlier. Alphabet is like the new Alcoa

because it is such a bellwether for so many different themes in tech and the broader economy has the ability put this earlier, Alphabet is like the new Alcoa because it is such a bellwether for so many different themes in tech and the broader economy, has the ability to set the tone for everything from advertising to capex to AI demand. Now Alphabet does not provide specific guidance, but any color around search revenue growth that will be closely scrutinized as of course are still the engine that drives Google, but it's also the most exposed amid tariffs and this new AI paradigm where people are going to chat bots rather than search a lot of the time.

Now the street is expecting 11% top line growth. It's possible cloud could help make up for a slower ad environment, especially as new Gemini models gain momentum, but cloud still makes up a relatively small proportion of total revenue. Lastly, Scott, watch for any color around CapEx and what it might tell us about the AI trade. Back to you. All right, Dee, thank you. That's George Abosa.

Now let's bring in Needham Senior Internet and media analyst, Laura Martin, and Wealth Enhancement Group Senior Portfolio Manager, Ayako Yoshioka. It's great to have you both with us. It seems to me, Laura, that you have your eye on the advertising market, whereas I think a lot of people are hyper-focused

on cloud growth and Cappex spend. Absolutely true, especially in this world of growing uncertainty and potential consumer weakness. You've been really pushing your last interviewees about whether we're going into a recessionary environment. Alphabet will have a really strong read on that looking at the quarter to date for both YouTube and search and their third party network business, which is under siege by regulators, but it still gives us a really good data point. So we're really looking for a lot of advertising, up to date advertising information coming out of the alphabet call.

Top of mind, Aya, for you is what? Cloud growth. I think we saw last quarter when they missed on the cloud growth relative to expectations that really hurt the stock. And so we'll be looking to see what kind of cloud growth they provide this quarter. Twenty eight point one is the number expected. That's down from 30. I mean, is there a number that you have in your mind?

There's always a whisper number. Maybe the street is expecting not such a great rebound anytime soon. But is there a number in your mind that would be good enough? I think if they can come at close to that 30% number that would be a lot better obviously. I mean I think even if they were just in line, just given where they were at last quarter,

it would be a positive for the stock. But, you know, I think the issue with Google really is that they've got a lot of overall issues weighing on the stock, whether it's their position in AI or a lot of the regulatory issues. You know, that's what's keeping the valuation down. But I think over the long term as some of that clears up you could see that alongside the growth that they have in their earnings their multiple can re-rate back up. Yeah Laura how about that regulatory how big of a time when they really need to be focused on the business both short term and long term. And stocks trading is 17 times 2025 earnings compared to an S&P above 27. So it feels like everything bad is priced into this stock. We see upside from here, unless we hear on today's call that the advertisers are abandoning

ship then everybody gets hurt and Google's the canary in the coal mine. All right. We'll leave it there. We'll see what happens. Look forward to speaking with you again. Thank you, Laura. We're just getting started here at Post 9. Up next, an exclusive interview with Vista equity partners, Robert Smith. We'll get his take on the AI arms race, the trade war and so much more right here at Post 9 just after this break. All right, welcome back. Tech stocks back on top this week as investors look past the trade war,

at least they try to, and refocus on the promise of AI. Software in particular outperforming today, which brings me to my next guest. He's ringing the closing bell today after a quarter century of making his mark on the industry as a leading software investor. Robert Smith is the founder, chairman,

and CEO of Vista Equity Partners. He is with us at Post9 in a CNBC exclusive, and I can't tell you how happy we are to have you. Thank you for inviting me, excited to be here. Congratulations on this great milestone. I know you have many family members here, and you're gonna be on that balcony, which never, ever gets old.

Never gets old, exciting. Could you have imagined that Vista would be where it is today 25 years later 90 portfolio companies 100 billion in assets under management 600 plus transactions more than 315 billion dollars in transaction value and annual returns that are just astounding I think somewhere around more than 30%. I mean, those are incredible numbers. Thank you, Scott. Can I imagine? I think so.

And I will tell you why. I learned early on in my career as an engineer the power of enterprise software, which is what we focus on. It has been the most productive tool in our business economy over the last 50 years, and likely will be for the next 50. But it will now be powered by artificial intelligence

and so it's an exciting time to be an investor in software an exciting time to be VISTA investing in software. We'll get into all of that obviously which I want to. You've managed through so many different economic cycles. Right. And crises that come up and other issues that you have to manage through. How do you assess what's happening right now? A few things.

In our world, software has proven to be not only the most durable, but one of the most resilient in these environments. It has become enterprise software, mission critical, business critical. All industries rely on it. All companies rely on it. And in fact, when you have challenges with labor,

you have challenges with trading environments, people lean into software. In fact, during COVID, one of the expressions that occurred were people lost visibility on their supply chains, their customers, even their own employees. And so as a result, they invested in more software, which actually created a pull forward of revenue, which is why we saw that peak in 2021.

So the dynamic of enterprise software still powering, really the connectivity in business hasn't changed. What has changed is people are gaining more access to it. People now have the ability to invest in some of these private equity funds in enterprise software that I think is gonna actually rebalance the opportunity set and democratize investing. What do you make of the trade war?

What do you think? How is it going to end? I think there will be a series of bilateral agreements that will bring, again, a new equilibrium environment, which I think is what is sought after at this point by numerous parties. A balance. A balance. But it's a new equilibrium and will be different than what what it was and hopefully it will be more fair for countries that felt that they were being abused in certain dynamics.

And I think that will then reignite the markets in a way that will create a roaring opportunity to take advantage of the advantage of artificial intelligence being introduced into each of these businesses and these industries. How are you thinking about the kind of time frame? Because you need to think about all that kind of stuff when you're thinking about where you're going to be investing. Yeah, there is this predictable volatility for a period of time. And I know the Treasury Secretary came out and said it'll be 90-day pause through the

administration to actually work on cutting these trade deals. And my guess is there's going to be, in that period of time, I hope, a number of trade deals that now settle the markets, give visibility, give transparency as to how we're going to interact as trade partners throughout the world. I think you'll see certain blocks starting to form and crystallize, but people realize I have the great opportunity to be investing in all over the world. We operate in 180 countries and you can see the demand and the desire for people to get back to some business as usual and trading with some clarity as to what the agreements are.

I found this interesting article today entitled China has an army of robots on its side in the terrafore. The point being is that we're not the only ones who are trying to make this tremendous leap forward. How do you think about that? We've known about this for some time. How do you think about that? We've known about this for some time. Once we distributed compute, which we have over the last 20 years, for many years, compute resided in a few places. And then once we got the cloud compute,

it resided pretty much ubiquitously everywhere. And as a result of that, people could access it, utilize it, and that created a massive opportunity for invention to occur around the planet and of course in certain pockets others outstripped others. So you know we've known about this for quite some time you know we of course continue to rely on our education systems in America the way that our businesses are organized and free enterprise. Free enterprise for people like me who grew up as a you know a young lad in Denver Colorado the son of the school teachers to build a business based on technology software very few places in the world does that occur and so I think in

America we still have infrastructures and institutions that enable that to happen. We talk about tech and software probably every day in one form or fashion just because such a popular place for our viewers to be investing. You look at what's happened with technology, stocks, your bread and butter obviously is enterprise software. We track it through the IGV, right? The ETF that tracks the space, it's down about 15% or so. You think that area has corrected enough? I think what is happening is there's a major bias right now

towards artificial intelligence and artificial intelligence infrastructure. The vast majority of capital is flowing in that direction and as a result of that people haven't realized like in every other cycle hardware vendors typically get the first wave of the economic rent in technological advancements. The second wave goes typically infrastructure providers. The third and most profitable wave usually goes to software and enterprise software in particular. And so there will be a period of time which you know in this in the downturn we've now taken six companies private we've also done a number of private company transactions when these companies become agentic

or gen ai enabled that you really start to see the benefits of what this new technology and how it will feed software. That's the advantage of being in the private space that we're in today. Part of the point you're making and in the list that you just gave is that you think software may be the last to see the great benefit but when they do watch out. It is huge because remember we don't have caEx requirements. And we have massive productivity. Our average company, which we measure today,

of the products they serve their customers is over 625% ROI. There aren't any other businesses that have that sort of return on investment. And when you supercharge that with agentic software and artificial intelligence and gen AI, the ROI will go up exponentially. The real question is how do you ensure that you distribute

this effectively to your consumers and your customers so they could take advantage of these of these tools as quickly as possible so that they are more competitive in the markets that they serve. You're talking about traditionally what has been looked at or called the the rule of 40. Potentially becoming exponentially larger a rule of 40, potentially becoming exponentially larger a rule of 60. I'm trying to think of how our viewers should be thinking about this whole space and the growth that you foresee it having.

Sure. To give you just an example, every level in the P&L statement will have some impact, AI will have some impact on it. If we just take code generation, in the world of enterprise software, that makes up a pretty large chunk of our costs. And we actually had a few of the folks who were running these big LLM systems that now actually have

code assist tools that they've introduced into our markets and our environments, some of which we have very exclusive partnerships with that can reduce the cost of code by 50, 60, 70 percent in short order. And so the productivity and the reduction of the cost of code creates a massive increase in the P&L. So that's how you can go from a rule of 40 to a rule of 60, rule of 70 in short order,

utilizing an AI tool on just one aspect of the P&L statement. I talked to you about how the space has corrected in terms of equity prices. You must look at the opportunity that comes through the dislocation. Absolutely. How so? Well, part of for us is, we look in our flagship fund and which of the deals that we should take private

in these environments that may be lagging in their adoption of the next generation of tools. One of the things we did very effectively in the last cycle when we were converting from on-prem to cloud was identify those businesses. The public markets punished those companies that didn't make that conversion fast enough. We were able to take advantage of that,

buy companies, transform those businesses, and actually accelerate their growth and their profitability. There's going to be something similar occurring from companies that are now cloud native or on the cloud to agentic and building an infrastructure to do that effectively at scale is part of our mission. When you have valuations correct, theoretically they become more attractive for somebody like you for the potential take private, right? Correct. I mean, you've done, I think, a half a dozen since 2022. Correct. Where do we see that moving forward?

I mean, what does the marketplace look like to you now? Is it getting to the point where you're starting to say, okay, we're going to have some real opportunities that we might not have had a few years ago because valuations were too high? It is in that point today. As you say, Smartsheet was the latest one that we took private. We have our eye on five or six others that we think are gonna be exceptional companies

when they become agentic and when we can convert those businesses to be GEN-AI enabled. And so you will see us continue to take deliberate, focused and measured action in that regard in taking companies private in this environment. I watched a talk that you gave at North Carolina AT&T where you described being the first M&A banker

on the ground in San Francisco back in 97. You were a mentee of Gene Sykes. You called the best M&A banker who ever lived. You saw, my point is you saw the internet, if not at its most nascent stage in its middle school years maybe. So you have good perspective between then and now. How does this revolution compare to what you saw then on the ground?

Orders of magnitude greater, comma however, it's not going to come easy. You will actually have to embrace this technology and actively, actively drive it throughout your organization. People are often resistant to change, reluctant to make change. This technology, as we've seen it across our portfolio, 100% of our companies now are using code generation, 100% have a product or market or under development, and 100% are using it for reduction of cost in the implementation of their actually operating their businesses.

But it takes an evangelical type of a fervor to get people to adopt this technology. But once they see the power of it, you see an acceleration of the utilization of it. That's what's happening today. And it is orders of magnitude, that's 625% ROI, orders of magnitude more benefit to our customers. Bain and Company wrote in its 2025 global PE report of you guys, quote,

It's safe to say that software specialists, Vista equity partners has gone all in on generative AI. Firm leaders are already convinced AI represents a paradigm shift in innovation that will ultimately create a multi-trillion dollar investment opportunity. That says very much this is very early innings in your mind. It is very early innings, but you have to get there fast first. And I think that's an important part of what we're focused on. So first matters. First mover matters.

Absolutely. In certain industries, this technology is so powerful in what it does. You have the ability to not only turbo charge Your value creation for your customers But it will actually give your customers the opportunity to be more effective in their markets And so I believe the consumption dynamic when people see the value of it will be absolutely exponential in its in its in its draw We're trying to sit here and pick out the winners and I almost thought that you were going to say there's going to be many winners. Yes, it's okay to be first now, but you don't necessarily have to be first to take a lot

and that there can be many, many winners. There can be many winners, but there are going to be losers in this market. What's going to happen? Certain companies will become agentic. Certain companies will all call become GEN.AI enabled and their customers, others will not have a right to exist because they will not have adopted and evolved properly and fast enough to take advantage of this technology and their competitors will eat it will eat their market. So that is something to be very conscious of and focused on.

Data centers, one of the fastest growing areas. We talk about it obviously all the time and I know you think about it all the time you acquired logic monitor back in 18 for 415 million dollars partially realized that a 2.4 billion dollar valuation last year there's a little bit of a fear on the street that there's been some over investment in data centers how do you respond to that I don't disagree with that oh you, you don't? No, I think, again, from our calculations, again, it's our calculations, we calculated over $1.5 trillion of expected capacity going into the marketplace. Now, of course, there's all sort of activities, you know, these are data center capacity,

all sort of activities around the power, use, generation, ability to deliver that power, cooling. There's a lot in that supply chain that will take some time and of course everyone's thinking selling it that capacity to the hyperscalers. Well, at some point in time you have to start looking at what hyperscalers need, what capacity, what levels of latency, etc. So there's a dynamic there that quite frankly I'm not sure all the equilibrium sets are fully understood. In the way that we look at it, we think there's overcapacity for the utilization requirements for agentic enterprise software today.

You like that term. The equilibrium systems is something that has driven you from your days as a chemical engineer that there was no difference in your mind. If someone says, well, how does Robert Smith go from being a chemical engineer to the foremost software investor in the world, it all is tied together through that, where you saw the equilibrium systems then you see now through software and markets. Right.

This is all an equilibrium system, the buying and trading and finding different levels of value. What is what something worth the one person versus another, an asset, one person's asset is another person's liability and certain of these marketplaces. So part of what we have to do is identify not just the equilibrium state but what are the things that are changing that state. Introduction of new technology, introduction of liquidity in the marketplaces, those all change the state of that equilibrium. Identifying it, embracing it, recognizing it, and delivering that as value to, in our case,

our shareholders, our stakeholders, is what our job is. Okay, you're celebrating 25 years. I've mentioned you're one of the most prominent voices in finance, given your philanthropic endeavors as well, the incredible Morehouse gift and how you think about the future and the future leaders of this country. I want to ask you about DEI, which has become a huge target, as you know, by this administration. You said at the Economic Club of New York a couple of months ago, quote, America should be a place of meritocracy, but not just meritocracy in race, but meritocracy in an opportunity set. Explain what you mean.

That's what it's all about. We have to open the aperture of opportunity so our people, our Americans, can participate in this great experiment, this great idea of America, which means how do you get the smartest people? People who grew up in certain economies, they may be brilliant, but may not have access to opportunity, irrespective of race or gender. Part of our job is to make sure that we as

business owners and business managers open up the opportunity so everyone has a shot and everyone has a chance and that's what the promise of America is all about. So it's our job to ensure that we do our part to ensure that happens. It also shows that the more diverse workforces are and boards, the lower the risk, the higher the returns. So the math supports the idea. We just need to make sure that the windows of opportunity, including internships, are open and wide enough and we are consciously looking for ways to improve the quality of the work that we do across every industry. You mentioned the way that it was

administered. I think was the word you used as maybe being the issue. It almost takes me back to the way you look at equilibrium, whether it's in chemical or markets. Did we get out of balance too far in the way we approached DEI? And are we in danger of swinging back too far the other way? And do we need to find our balance? As you say, that's the definition

of an equilibrium system, right? It goes through swings. And at some point we will find what is the proper balance where we have stability and opportunity can actually produce the best results. And that's part of what our society does. It goes through these swings in different ways, at different points in time, with different magnitude.

And so part of what we have to do, if we think it swings too far one way, then typically there's a force that brings it back the other way. But we as business owners have to do what's best for all of our stakeholders, which include, of course, our investors and our employees. What is the environment that they are living in

and they are working in that makes it most productive and brings the best minds, thinking, capabilities into that environment every day. That's what our job as senior executives is, in my opinion. We didn't even get to your book. We'll do that next time. It comes out later in August, I think, correct?

Yeah, it is. Excited to see it. All right, you have fun on that balcony. Thanks for spending time with us. Pleasure. Congratulations. It's Robert Smith being with us today here at Post 9 of Vista Equity Partners.

Coming up next, Netflix continuing its climb higher. We'll drill down on that big pop just after this break. We're back with a news alert from the pharma space. Angelica Peebles joins us with that. Hi, Angelica. Hey, Scott. The Wall Street Journal is reporting that Germany's Merck is nearing a deal

for US biopharma company Springworks. They're saying, citing people familiar, that this deal would be about $3.5 billion. Spring works has a market cap around $3.3 billion. You can look that stock up about 10%. Scott. Angelica, thank you. Angelica, in the meantime, Netflix has been on quite the winning streak of late. Julia Borston joins us now with that story. Julia. Hey, Netflix shows are up more than 4% today to a new all-time high, and the stock's on pace for its third consecutive week of gains, its longest winning streak since November.

This comes on the heels of far better than expected earnings a week ago, which prompted a number of analysts to increase their price targets on the stock. The streamer is increasingly seen as a defensive play. Piper Sandler calling it the best position name in consumer internet. A number of analysts noting that it's insulated from tariff risks, that consumers are expected to keep paying for Netflix

even in a turn down. Now shares are now up nearly 97% in the past 12 months. And despite those gains, analysts are still largely bullish. 71% have a buyer overweight rating on the stock, 27% have a hold, only one analyst is underweight. Scott? All right, Julia, thanks so much. Julia Borson up next.

We track the biggest movers into this close today. Pippa Stevens standing by with that. Hi, Pippa. Hey, Scott, one discretionary stock is popping after sticking with its guidance, saying it's managing tariffs at least for now. The name to watch coming up next. All right, we're up a cool 500 now on the Dow as we approach the close. What you see on your screen is our

introduction to you of our newest subscription streaming product CNBC Plus. You can stream Closing Bell and all of your favorite CNBC shows, CNBC shows, anytime, anywhere and also on demand. For information, you can scan the QR code on your screen or head to cnbc.com slash plus. About ten minutes to go before the closing bell. We'll go back to Pippa now for the stock she's watching. Tell us what you see. Well Hasbro shares are soaring after the company reported better than expected results and extended its long running licensing deal with Disney.

The toy maker said it's well positioned to manage tariffs but said it wouldn't provide an update to its full year guidance amid that uncertainty shares up some 15 percent. But Procter & Gamble is sliding after the consumer goods maker cut its outlook and said price hikes are likely due to the inflationary effect of tariffs. For Q3 the tide and bounty maker reported better than expected earnings but a miss on revenue and those shares are now down 4 percent. Scott. All right, Pippa. Thank you, Pippa.

Steven, still ahead. We'll get you set up for Intel earnings in overtime. We're back on the bell just after this break. All right, coming up next we get you set up for all the big earnings hitting in overtime tonight. That and much more in the market zone, which is next. All right, we're now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of

the trading day. Plus two earnings reports we are watching closely in OT. Steve Kovac on T-Mobile, Christina Patsanvelos on Intel. But Mike, we have a nice move here going into the close. We do. You know, this market has kind of made very good use of it being quite oversold and having the overheated sell America trade pretty much culminate a few days ago. Now we're at an interesting spot. It might get

trickier pretty soon from here. We're no longer oversold. In fact, short-term getting a little bit overbought right at the top of the range. It's right at the level we fell to on April 3rd. So if you think that the market is sort of trying to get in sync with what our expectations are for tariffs, I don't know, the close on April 2nd, you thought it was going to be more benign than we have right now. At some point, hope has got a handoff to confidence

and you have to have these kind of sketchy talks about a deal turn into something substantive, but you're resilient. I will say one difference today, it's very much a tech-led situation. It's not, it's a broad rally, but basically it's the Microsofts, Nvidia's, Broadcoms that are really powering the index move. Steve Kovach, T-Mobile, what should we look for?

Yeah, Scott, this might actually give us a good read ahead of Apple's earnings, which is a week from today. Also just consumer sentiment in general. Let me go back to arrival of T-Mobile. So this week we heard from Verizon CEO Hans Vesterberg on his earnings call saying the company is not going to cover price increases on smartphones. In his words, that's just not going to be possible. We know carriers love to give those big subsidies to phones to get new customers on their plans or take them from another rival

carrier. Also you want to look out for commentary on pull forward or take them from another rival carrier. Also, you want to look out for commentary on pull forward demand this spring from smartphones and other devices. Anecdotal reports have been saying folks are buying ahead of those tariffs in late March, so we'll see what they say and also what they're saying in April, Scott. All right, Steve, thank you very much for that.

Steve Kovach, Christina Parts-O-Nevelos, what about Intel? Well, this is CEO Liputin's first quarterly appearance since taking the helm of Intel, and he's already supposedly making dramatic changes, including reportedly cutting approximately 20 percent of the workforce to streamline operations and create a flatter organizational chart. Despite missing the AI chip boom and losing market share to AMD in data centers, Intel stock is really outperforming this year, up more than about 5, 7 percent right now, while

the broader semiconductor SMH is down about 13%. But challenges remain. TSMC recently denied Foundry partnership rumors and concerns persist about Intel's ability to compete in the Nvidia-dominated AI landscape. So while Q1 results may benefit from PC sales being pulled forward by tariff concerns, investors are really focused on TAN's strategic vision for cost reductions, efficiency improvements, and accelerated product timelines to regain market share.

Scott? All right. Christina, thank you very much. Christina, parts of Neville, that's two minutes to go. And Alphabet loom enlarge. Yeah. So how much are you watching this now? I'm watching.

I don't know that it has magical bellwether powers, but the reaction to all these reports is what matters to me most. There's a lot of suspicion on Alphabet, there has been for a long time, based on how it allocates capital, whether it's gonna get a return on all of its investments, and obviously the breakup and the advertising leverage and all the rest of it, and really whether search

is gonna be as resilient as we've come to learn it to be, stock is as cheap as it's ever been relative to the market, but maybe that's what happens with very mature companies. So I like it as a kind of battleground tell for whether the market's going to start to rebuild some of that valuation premium on some of the better business models. We'll see about that.

I mean, we've done some work in terms of skimming away some of the valuation excess across the market. You've gone from 22 and a half on the S&P forward earnings down to like 18-ish times. Nobody's saying it's cheap, but it definitely lowers the hurdle just a little bit. Good to get the CEO on the record right now as to what he sees in terms of the spend,

what he sees and thinks in terms of the environment, when frankly, we're kind of questioning everything. Can the spending hold up? The capex from these companies, can it hold up? Questioning everything and also along the way, the market as a whole has become a little bit less geared to the overall AI theme as you would imagine. The Mag 7 has gone from 34% of the S&P 500's weight

down to like 29. That's still really high historically, but it's interesting. It does show you that if you look at the frequency of mentions in conference calls, AI's way down, of course, counts a way up. So we'll see if it can change the subject. The market's been looking for the opportunity

to have the subject change a little bit. We're on this trade treadmill. Hard to see us stepping off it soon, but maybe so. Good stuff. Mike, thank you. That's Mike Vancello. The bell's it stepping off it soon, but maybe soon. Good stuff. Mike, thank you. That's Mike Vantell. The bell's going to ring a string, and decidedly so.