Power Lunch - AI Disruptions Ripple through Market 2/12/26

Episode Date: February 12, 2026

Coinbase gets double downgraded to Sell. Stocks sell off on more AI disruption concerns. And what other companies besides Alphabet have issued 100-year bonds before? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks are under pressure, trading to new session lows. Welcome to Power Lunch. I'm Kelly Evans. Brian Sullivan will be back tomorrow, and Jeff Kilberg is joining me here today. He's the founder and CEO of KKM Financial. Jeff, welcome to you. We have concerns about tech and AI driving investors into economically sensitive sectors. Usually they're fleeing out of them. Energy, materials, and industrials are still among the best performing sectors this year,

even with some transport pain today. But one Wall Street strategist says not so fast. Investors may be chasing these sectors for the wrong reasons. today a glimpse of that. Speaking of tech, it's one of the worst performing sectors right now. Software falling again and on pace for its fifth straight week of losses. A close look at some of the biggest losers in the space as AI disruption fears continue to mount.

Plus, Coinbase downgraded to sell, a double downgrade in fact, ahead of earnings. The analyst behind that call is here. And a headline crossing just moments ago that some of its customers are unable to trade on the platform will tackle all of that with coin down 8% and down 50%. percent in three months. Let's begin with the sell off on Wall Street today. It's right across the board. Dow's down 500 pacing for its worst week since November. So what should you do with your money right now? Basic question. Let's bring in Chris Zennek, the chief investment strategist at Wolf Research. Chris, what do you make of this market? Hi, Kelly. Thanks for having me on. It's a manic market.

Some of the price action does doesn't make a lot of sense in recent weeks. And we turned cautious a week ago into where we saw that blow off top in silver and gold. And to me, and based on the work we do and how earning season is fared, it's not in many cases being driven by fundamentals. In fact, the most positive EPS revisions this earning season have been in energy, communication services, financials, and tech. And some of the areas that are outperforming, materials, industrial, staples, and even energy, if that matter, you know, are the ones that people are chasing here. So I think it's money flow. I think it's rotation. I think those rotations then build on themselves because there's price signals that

quant funds and others use to chase short-term momentum. And what started as a software problem has become a much bigger market one. And the carnage beneath the surface is so much worse than what we're seeing at the index level. Can you illustrate that such as? Such as if you look within sectors, for example, within tech, you have some groups like semi-s, still working and outperforming those will become even more crowded where software is underperforming in staples you have the food names and other names that's still being left for dead but then you have the biggest weights tobacco Costco Walmart names ripping higher right and the staple sector now

is trading at levels that we haven't seen since the late 1990s and it's a defensive group as you know right it shouldn't be a group that's outperforming when the economy's going to reaccelerate into this tax stimulus so there's a lot of carnage, weird factor rotations underneath the surface. And I think it's going to take a little time for that to play out. Jeff, you want to chime in on that? Well, Chris, I think you bring up a great point. And what's fascinating to see is this dispersion, but it seems like there's a lot of torque in the market. Now with the VIX going over 20, for the third time since January 1st, here we are, again, in a repricing or a price discovery mode. So despite the fact that it is manic and it is a little spastic, we're only 2% off the

all-time high in the S&P 500. And one of that percent is today's down draft. So, Are you looking at opportunities? Obviously, energy, staples, and industrials have led the way in the S&P 500 sectors, but is there anything specifically in the stock that you see that we're not? You know, beneath the surface, right, so you can get index volatility pickup. First, you get it as a single stock pickup, and there's a lot of dispersion in the market. You're right, there's not a lot of fear. If you look at put-call ratios, those are still very well-behaved. And then the areas that we think are, frankly, the most interesting are still technically.

tech com services and financials. The one thing that troubles me, though, is the financial sector. It looks like it's going to break some key support levels here. And with transports now rolling after some of the news today and financials not behaving particularly the banks, but it's the whole group, that gives me a little short-term cause for concern here. I'm glad you mentioned that because it was literally three or four days ago. We'd say, look, the Dow transports are at an all-time high, nothing to worry about,

Dow theory is intact. You know, look at the financials. It's a cyclical recovery. Now we're seeing both of those sectors sell off. Is this just an overdue correction from two areas that had been so strong? Or is that how it always looks until it's something more meaningful? Well, I think in industrials, it's a tail of two cities. One is the names that are levered to AI build out are doing very well, whether it's Caterpillar, G.

Verona or Averative or other names. So those names, I think, have the continued momentum, though they are very crowded, right? there's a lot of people that have piled into those names because they don't want to own software. On the other hand, the more cyclical shorter cycle groups, the truckers, the rails, and the like, have ripped after we had this relatively strong ISM manufacturer report, which frankly I think is a headfake, but until proven otherwise, the market will run with that narrative. So I think we're starting to see some divergence within industrials after some, you know, panic buying, if you will, over the last couple weeks.

All right, Chris, thanks. We'll leave it there for now. Chris Seneca, highlighting the strangeness of this market, Wolf Research Chief Investment Strategist. Some breaking news out of Washington. Let's get to Emily Wilkins. Emily, what's happening? Kelly, it looks like the Department of Homeland Security is going to be in for a shutdown. Lawmakers did fail to pass funding just now. They needed 60 votes, came up short. Democrats, of course, all but one voting against because they still are trying to push for reforms to ICE, cover. Customs and Border Patrol, of course, following everything that we've seen over the last couple weeks in Minnesota and elsewhere. We know that the White House and Democrats have been exchanging some paper and some ideas on this. We heard Senate Majority Leader John Thune say yesterday that he does feel that there is some middle ground, but it's going to take time to really flesh out what, if anything, an agreement looks like. And it's not clear exactly how long the DHS will be shut down for. Lawmakers are out of town next week, although they are on standby to come back if there's an agreement.

But of course, on the line, it's not just ICE. This is the agency that oversees the TSA that could lead to issues with airports. FEMA, that could be a problem if there is a natural disaster and a number of other things that they do as well, including the Coast Guard, all set to be impacted by a shutdown. And we'll be watching to see exactly how long it lasts. And if there can be an agreement when lawmakers come back from their one week break. So, Emily, with the failure right now, does that mean the partial shutdown is now guaranteed? Yes, I mean, Kelly, for the lawmakers who I've talked to, maybe there's some sort of last-minute miracle and they're able to put something together, but no one in this building believes that that's going to happen. Lawmakers are currently on their cars to get to the airport, to fly back home.

They've been told that they will be on notice if they need to return to D.C., but I think many of them are even planning to go overseas next week because they just don't see an agreement coming together anytime soon. Wow. All right, Emily, thank you for now. Really appreciate that update. Just watching the markets here. Again, the Dow's still hanging on to a decline of about 500 points. That's Emily Wilkins on Capitol Hill. And Amazon, the other mega-cap tax, they are squarely in focus still. Five of the seven-of-the-seven are lower for the year. And among the biggest laggards is the one you're looking at right now. Amazon, down 2 percent on a seven-day losing streak and on pace for its first eight-day slide since 2019. We're also keeping a close eye on chairs of Apple today, which is now down more than 5 percent at session lows. worst day since last April, could be something about a delay in Siri. Our next guest is underweight the MAG 7 and is keeping his portfolio nimble to find opportunities in this market. Adam Phillips is Director of Portfolio Strategy at EP Wealth. Welcome. Okay, so let's back up for a second. In MAG 7, you think emblematic of the problems we're having, so you just steer clear of them, you'll be okay, or are we seeing broader problems? Well, no, I think what we're seeing is a more discerning investor. So right now, we are seeing

the MAG-7 is really the biggest source of weakness. I think there's this tension right now. There's this tug of war. It seems like every day we're rotating between people are worried that we're not going to see the payoff from all of this CAP-X investment. The next day, we're hearing that it's going to be too successful. It's going to put these software companies out of business.

So I think that remains to be seen. We've been underweight the MAG-7 for some time. What we've been telling our advisors and our clients is it's okay to look different than the index. Sure, we care about tracking error, but we're focused on diversification. So some of our biggest holdings are still those mag-7 companies, but they're significantly smaller than the S&P 500 weighting,

and that's deliberate. And so we think that there's opportunity outside of this AI theme. I think that's great, Adam, and you're beating to my drone because we've talked about this great rotation for quite some time. But when you see that, yes, today, folks, we're not seeing the AI robots take over the world, despite the fact that's what the tape feels like. But when you talk about 65% of the S&P 500 outperforming,

And you see that mag seven continued internal rotation. What are you looking at right now? Because the Exxon mobiles, the Costco's, the food company. These are blue chip boring names. Is that where we should be? Because you're speaking my book if you are. Yeah, look, there's nothing wrong with boring. And that's what we've been saying is that.

Well, there's something wrong with boring today if you look at Cisco. I mean, that's true. Cisco, the food company is up to an 8%. Yes, yes, yes. Yes, yes. Yeah, yeah, yes. So, but I think that boring, it does not have to be AI associated with AI in that theme. I think boring is okay in this market.

We've seen the run that these companies in the MAG 7 and broader technology have had over the last couple of years. And it's okay to look for other opportunities. That's how we're playing it right now. You can still express conviction in that theme. But let's take our foot off the gas pedal a little bit. And so that's what we're looking at. Let Adrian in the back put up SYY. Just to clarify.

The same face. Thank you. I don't want anyone to think that Jeff is saying that, you know, Cisco's not. Although, like you said, so even for those guys who have said, fine, I've been hearing thinking about the MAG 7, It's been a comfortable place to be. Now you're telling me to go out on a limb into these cyclical areas that on a day like today, you know, I find myself getting whipsawed in the transports, for instance. Can you just kind of chime in on that?

Yeah, absolutely. Well, look, I think that, as I said, you can have conviction to AI still, but be mindful about it. I think what we're seeing right now is the risk of overseeing your welcome in certain trades that have maybe run a little bit too far. And so I think that's what this is a rotation. This is not something that's going to be short-lived. That's how we feel. And so what we are looking at is the fact that, yeah, some of the cyclicals are getting pummeled right now,

but our economic outlook is still positive. And we have a day like today, we're going to take a step back and ask ourselves, does this derail the earnings story? Is this really going to change the long-term narrative? We don't think that it does. Just to put a couple sprinkles on Adam's Cupcake there, Kelly, I think if you equal weight that narrative, that's the secret sauce, because equal weighting has really been dramatically reducing that downside draft,

which we're seeing today. Look at RSP, down 1%. Yeah, I didn't want to hear about equal weighting. I didn't want here by international stocks. And now that's the best places to be in this market. It's how it works, I guess. Adam, thanks very much today. Adam Phillips from EP Wealth Advisors.

We're going to take a quick break. Roses are red, guys. Don't know if you know. Violets are blue. And a million dollar partnership, well, it may be through. Coming up, the latest sign that Microsoft and Open AI could be drifting apart. Welcome back. We have some news on Anthropics' latest funding round.

Let's bring in Kate Rooney. Hi, Kate. Hi, Kelly. So Anthropic announcing a blockbuster funding round in AI. It's a $30 billion series G valuing the tech company at $380 billion. It is about $10 billion higher than what I was told that funding round was going to be just a couple weeks ago. It does also top some of the biggest IPOs in history. I'm told there was strong demand here for Anthropic from investors at the 11th hour. The round was led by GIC and CO2. You also had Microsoft and Nvidia participating, although it is part of a portion of what they had previously announced. we're going to invest. A handful of banks also involved. You had Morgan Stanley and Goldman, for example. As we have reported, The Anthropic is among the companies potentially prepping for an IPO as early as this year, Anthropic, best known for its coding offering, B2B business as well. Also got some revenue numbers in this release today. Run rate, now $14 billion. They say it's grown more than 10x annually in the past three years. So the number of customers spending

over $100,000 annually, they say on Claude grew 7X in the past year, and then they now have more than 500 customers spending a million dollars or more annually. The number of weekly actives on Claude Code as well. This is sort of that buzzy code offering. That doubled in terms of users this year. Revenue run rate topping $2.5 billion for that section there. And then finally, business subscriptions for coding quadrupled this year. It does come, Kelly, as we see fierce competition in this enterprise space with Open AI in particular. Back to you. This, Kate, thank you very much, Kay. This is bigger than any IPO we've ever had. I mean, $30 billion is a huge.

I think Saudi Aramco wasn't even that large. And with Microsoft being part of that new anthropic funding round, could it put more strain on the relationship between Microsoft and Open AI? Could it help the shares of Microsoft which have been lagging? In an interview with the FT, Microsoft's AI chief, Mustafa Suleiman, saying it's pursuing

true AI self-sufficiency by building its own powerful models and reducing its reliance on Open AI. Microsoft has invested more than $13 billion in OpenAI, holds a 27% stake in its 4.5%. profit entity following a major restructuring in late 25. Joining us now is CNBC's technology correspondent Steve Kovac.

So Steve, welcome. Yeah. And react to the Anthropic round to what Microsoft is doing. I mean, this ties in beautifully with what happened with Anthropics. So we don't know how much Microsoft just put into Anthropic, but they did say they're going to invest up to $5 billion. And that would have been just unheard of a few years ago. Oh, my God, Microsoft is getting in bed with Anthropic.

What about opening eye? But this is what we've been seeing over the last couple of years, is then slowly drifting apart. I know Valentine's Day is coming up soon. I would call it, it's almost like they're in an open relationship with each other now instead of just married to each other. They're able to do deals with other cloud providers. Microsoft has more

bandwidth now to go out and do deals with Anthropic. They're incorporating anthropic into more and more of their products. And now we hear from Mustafa Suleiman, the CEO of AI, over there, that they want to build their own frontier foundational model to compete directly with open AI. And this, by the way, Kelly,

I spoke with Suleiman about 11 months ago over at Microsoft HQ, he told me the exact opposite. He said, we kind of like using Open AI, even though we might be three to six months behind the technology that they do incorporating into ours. It allows us to make this stuff cheaper and more efficiently. Now we're singing a different tune. All right, Kilberg, you've got your list over here. I don't want to call it dumpster diving. That'd be unkind. These are great companies that, but it's been a big move down. Do you look at a Microsoft now, which is trading at one of its lowest PEs in maybe years now, if I'm not mistaken? And with the news or think, is this a time for investors to get in?

I think it is absolutely a time to add on to some of these main staples. Think of the Microsoft, look at Amazon. Amazon is down dramatically from its last earnings report where previously when CEO Jesse talked about needing more AI, more capacity because it turned into more revenue. That was in 2025. Now they talked about spending more in CAPEX, the last earnings call, and they've been punished for it.

So this type of reaction, I think, allows you. But I'm also looking at Palantir. I'm also looking at Apple. Apple's down 5% today. It's remarkable to see an aim like that. And lastly, here's a hot one, Kelly, Frigetti, RGTI. So that's the quantum computing, small $27 billion company, down 75% from its all-time high. So I think there's an opportunity to dumpster die, but also to add some blue chip essential names that we...

I heard you mention Microsoft in there. I heard you mention Apple. Steve, is this Siri issue? What's at fault today? That's part of it, yeah. I mean, besides the broader market itself. So what we saw at Apple yesterday was Bloomberg put out this report, that upgraded version of Siri that was supposed to incorporate Google Gemini and all those things that they, promise way back in June of 2024. We were expecting that to launch in just a few weeks. Now Bloomberg

reports, only some of those features are going to come out in May and perhaps be kind of elongated and stretched out over the course. Sirius to break hearts. I don't know. Exactly. Why do they bother? Just get. Who cares anymore? This is not a great company. Now, look, Apple tells me, oh, it's not delayed because, you know, they only said 2026. So technically, it's not a delay until December 31st at midnight. I get it. But everyone kind of knew this was on the cusp of launching. and these kind of quiet pushbacks internally are just not good to build confidence that, hey, they finally have their grasp on artificial intelligence. And that is a partner with Gemini.

This is the Gemini product. Yeah. And so, and keep in mind, June of they long enough to have Microsoft to pick from them. June of 20204 was when they originally announced this. And Gemini is superior. I love using Gemini. That's what I use. I need Siri.

I need Siri to change your name. I need Siri to do something different because it's... I just trying to make phone calls with Siri. Hey, Siri. Call. Believe me, Apple knows these, all these issues are there. stock perspective, it's being overpriced, it's being overreactive. To be $5% today, absolutely not.

And by the way, with the AI picture, they've proven that they can just sell these phones without even having AI. The iPhone 17 cycle, just gangbusters, especially in China. Exactly. I mean, seriously. Maybe they don't even need this AI stuff. Maybe they don't just quickly darken the mood before we let you go, Steve. In that same interview with the F.T. Suleiman was also asked what he thought the broad impact of AI would be.

Take a quick listen to what he said. I think that we're going to have a human-level performance on most, if not all professional tasks. So white collar work where you're sitting down at a computer, either being, you know, a lawyer or an accountant or a project manager or a marketing person, most of those tasks will be fully automated by an AI within the next 12 to 18 months. And we were told that literally the reason why commercial real estate stocks are selling off today is on this concern that there will be fewer jobs. Yeah, exactly. Less office space being rented going forward. And we hear this from all the AI leaders, right?

Dario Amade over at Anthropics said, you know, half of all entry jobs are going to be nuked in one to five years. So look, we'll find out in 18 months if Sue Lamont is right there. I just want to point to co-pilot because that is their main product that's supposed to do a lot of what they're saying. It's supposed to make you more efficient and easier and maybe you don't have to hire as much. They've only sold 15 million seats of co-pilot out of a total group of 450 million seats. It took them over two years to get to this point.

So they are doing a pretty poor job right now of convincing people. Co-pilot is good enough to do what they say. They spent a ton of money trying to convince people. They spent a ton of money, Super Bowl ads, you name it. And not the Super Bowl, but a previous Super Bowl. And it just has not played out the way people thought it would. People are going to Open AI Enterprise. They're going to Anthropic.

They're building their own bespoke tools built on those foundational models. They're not buying co-pilot in a significant way. Now investors are arguing whether they should just back away from those efforts altogether. Yeah, we heard that last week. That'll be a chapter to come. Steve thanks. Steve Kovac. From Big Tech borrowing to the broader bond market, Rick Santelli joins us next with the latest on what's happening in the bond market.

Stay tuned. Welcome back. Maybe it's because it's a risk off day in the markets, although the Dow's slightly off the session lows. Maybe it's the data. The 10-year yield, though, has finally made a kind of decisive move lower. And it's back to its lowest level since early December. In fact, Rick Santelli has more from Chicago with a special guest. Rick?

Absolutely. And I'll tell you what, Kelly. This is a big day for a variety of reasons, not the least of which is, Jerome Snyder from Pimco. Jerome, it's always a pleasure to talk to you. You're the voice of the fixed income markets. So let's get right into it. Yesterday, job, job, jobs number was delayed, but it was very powerful. What are your thoughts now that it's simmered for 24 hours?

Well, the delay was a surprise, obviously, to the upside. And the market's simply been taking that in digestive form. Obviously, today's market reaction is more to do with auction strategies more than the jobs number itself. But the market and really the jobs market itself has been a bit under attention, job creations versus job layoffs. And a lot of the big job layoff announcements should be expected on a regular routine basis as businesses adapt to the new landscape, especially with productivity and AI and things like that. The other thing, though, is remember is that the economy continues to chug along. When you look at the weekly jobless claims, they've been between 210,000

and 240, pretty steady along the way. Although we might react as traders to the minutia, overall investors should be really aware that the economy continues to do fairly well and will continue to do better as we continue to focus on the fiscal stimulus to come in the first and second quarters of this year. I like the way you're commenting on labor. So it basically is the Fed thinks it's weakening, but much of that's anecdotal. A lot of the data looks pretty firm yet. Now, let's go to the other side of the street. What about inflation before tomorrow's January CPI, and we're expecting most of the metrics to come in a little bit cooler like the year-over-year numbers. Thoughts?

Right. Markets on edge because they were expecting inflation to cool down minutes by minute. And at Pemco, we think you're going to probably get 2.5% year-over-year number. Reality is we're going to see inflation creep up over the next few months closer to about a 3% core. Is that going to be alarming to people? It shouldn't be because we see that in the numbers happening. Over time, they'll come back down, and that's going to give motivation for the Federal Reserve to contextualize and put into their calculus potential rate cuts later on this year.

Again, don't overreact to the data. Now, if you think it's going to be a little bit higher, I can't disagree with that. However, if it's that far away from the Fed's 2% target, how much will that weigh on the Fed's decision in terms of their easing and their strategy for 2026? Well, I think it's two things in that strategy. Number one, everybody's focused on the new nomination of Warsh to be the chairperson. That's one aspect, and that creates a little bit more doveish bias to the Fed in addition to other factors. But remember, it's a committee. And that committee bias has been clearly transparent in the fabric of the FOMC and the decisions.

There's been dissents, and as investors, we should get comfortable with those dissents. That means there's healthy debate going on. And as long as there's healthy debate going on, we're going to see them rationalize the jobs and inflation metrics in addition to all the other factors going on into the economy. And that potentially puts that debate more in focus later on this year than at the front end of the year. Okay, the last issue, and I want to cover it quickly, Japan. Many believe, including myself, that there's a big influence in our markets, global markets from Japan, as they approach 250% debt to GDP, and now they're throwing.

out more debt and looking to have more stimulus. Final thoughts there? Clearly, there's some transformation going on Japan, which is having influence on global yields. From a portfolio manager point of view, it's one of the most exciting times in almost two decades where you're having divergence in global yields. That means that there's opportunities as we create that differentiation for higher income, higher possibilities. And so as we would say, just look out for the opportunities, steer clear of the risks. Don't be placated by the tight credit spreads and thinking that's the only way to go. Fixed income is a wide, diverse global world, and this is an opportunity set that makes exciting opportunities.

Excellent. Jerome, always right into the intricacies of the market. Kelly, back to you. Great stuff. Thank you guys very much. As always, Rick Santelli with Jerome Schneider there. After the break, we're going to take a deeper look at that 100-year bond from Alphabet. Could it be the sign of a debt-fueled AI arms race? And where is that taking us? We'll discuss next. The corporate debt market just keeps getting bigger this year. We have more debt issued now from another huge player in the AI race this week. CBC confirming that Alphabet raised more than $30 billion in its mega bond offering,

including a 100-year bond that has attracted a lot of attention. And of course, we've also had Oracle raised $25 billion of debt this year. Meta, Amazon, and Tesla are all expressing interest and raising money that way through the debt and equity markets, which raises the question is all this demand for hyperscalor debt, a green light for AI spend to continue or not? Here on set with us to answer that as FundStrat Economic Strategist, Hardica Singh. She's out with a note this week, taking a look back. at some of the other companies that have issued 100-year debt to see what that might forebode for,

or just bode, I guess, for Alphabet and AI. Hardica, it's great to have you here. Thanks for having me. So everyone's talk, what was it? In 99, Motorola, was the big one? Okay, but widen the lens for us. How else should we be thinking about 100-year debt? So thinking about just the age of Google

and these magnificent seven companies, they're not that old. They're pretty young. You know, Google itself is 28 years old, and all the magnificent seven companies that we've had, they were created in the last 50 years. And then, to put that into perspective, AI itself is three years old, and Google's just taking a huge bet on it with this $100 billion bond offering,

putting into perspective, other century bond offerings were done by companies that were, you could say, boomers in their age, right? Really? Is that right? Was Motorola, like a 60-year-old company? Yeah, yeah. So do you generally say this from the point of view of, it's better? I'm trying to pick an analogy that doesn't sound, you know, to try to, you know, get the, take the medicine for hair regrowth, right? I mean, is it better for them to chase this idea that this CAPEX will make them young again?

Does that actually, is that how it actually ends up working or not? That's a big question on my mind right now, especially because, let's take, for example, Disney, when they've had their century-born offering, they were about 70 years old. And even back then, there were all these concerns about the entertainment industry, especially back then when there were many questions about how it was going to revive itself. people in the Wall Street Journal when they gave codes, they said, oh, this is kind of a silly idea. You know, this is a crazy thing. Look at what happened to Coney Island, for example. So I think, like, it's just a matter of can you, as a company, keep disrupting the space you're in and reinvent

yourself because it's 100 years. It's a really long time. Yeah. Well, I think Google, from the diversification perspective, they continue to be like their little Berkshire Hathways. So it is interesting, they're coming to market, but the subscription, the over-subscription, it really talks about the appetite. In a time when, Should investors be concerned with these 100-year bonds, which are remarkable? Maybe we live to 100 with all the robots about to help us, Kelly. But what we see is the appetite for this, we're about to have SpaceX potentially this year, which is going to be the largest IPO of all the time.

Meanwhile, you're seeing $25 billion, $30 billion from Amazon, from Oracle. Should we be concerned at what point of this financing really is the undercurrent in the marketplace? Yeah, there's a lot of demand right now for these bond offerings, right? The oversubscription, my eyes just pop, you know, 10 times. That's crazy. I know these big tech companies, they've lost their cult-like status. But at the end of the day, the oversubscription kind of shows to us that, you know, investors haven't completely given up on these big tech players yet.

And I think that's a really good sign for the broader market because there's such an outsized portion of the market. If they don't rally, how hard is it for the broader market to keep pushing to all-time highs? And right now with the software stumble, I'm really thinking about that. When you went back and looked at it, did it make you come away from it? because I love hearing about the stories we've forgotten about. I wish I could do a whole series of, like, the news we've forgotten, right? The Disney one you mentioned is so fabulous. Does it make you look back and think, you know what,

these companies should have been more aggressive because all of these concerns were overblown? Or does it make you think, no, I mean, these typically were the signs of a business model at its peak, and they didn't see that the cliff was coming? That's a great question. I think that, yes, some of them should have had the oversight. For example, JC Penny, they also had a hundred-year bond offering back in the late 90s. Wow. And guess what?

They went bankrupt, 23 years later. So the bondholders for the 100-year bond, they got nothing out of this. GM was a bad one, too? Yeah. Was that as long as bad? Well, the bondholders got the haircut. But was it a century or 30 or long-term? It was longer.

Yeah. Wow, for GM. So with the duration risk, too, it's like you can make the money back. But at the end of the day, if you are a long-term insurance company, for example, you have long-term liabilities, you're a hedge fund, you are looking for, you know, high convexity, you kind of want the bond to continue paying out for the duration you thought was going to. Even if that, I know a lot of people, it's not a hundred year. It might be 30, depending on how you look at it. But that's fascinating. Those analogies. Hardica, thanks for doing the deep digging for us.

Thanks so much. Come back anytime. I think we're going to have a lot more of these to come. Hardica Singh joining us there from Fund Stratt. And we do have a market flash on the commercial real estate names Diana Oleg. Has the details. Diana. Well, Kelly, AI strikes again this time hitting commercial real estate services companies, CBRE, JLL, and Pushman in Wakefield all down over 20% in the last two days. Oppenheimer noted there have been only two periods of time where the stock has fallen more COVID and the global financial crisis. Now, CBRE, CEO Bob Selentick addressed AI on the company earnings call this morning saying

about the brokerage side, we've become quite confident that that business really is driven by this strategic creative thinking that our brokers do, and we think that's going to continue to be the case. But he added that they are using AI to get more data to their brokerage. brokers more cost effectively. He said, we think we've turned the corner on that with the use of AI. We're pretty encouraged in some tools we've built. Now, commercial broker Newmark is also getting hit. Piper Sandler's Alex Goldfarb, right wrote this morning, AI fears have cycled through various industries recently, including software and insurance. So it wouldn't be surprising if, in fact,

these same concerns drove the broker's sell-off, but he remains overweight on the stock and calls it a buying opportunity. Back to you, Kelly. Diana, thank you very much, Diane O'Lick. Let's get over to Kate Rogers now for the CNBC News Update. Kate? Kelly, retired Navy captain and senator Mark Kelly issued a statement this afternoon calling a judge's decision to block the Pentagon from punishing him a critical moment. The Arizona Democrat says the judge's decision shows the Trump administration cannot keep undermining Americans' rights. The Pentagon is trying to reduce Kelly's rank and cut his retirement benefits for his participation in a video with other lawmakers calling on military members to resist illegal orders. A federal judge is ordering the Trump administration. to allow Venezuelan sent to El Salvador's notorious Seacott mega prison to return to the U.S.

if they want to come back. The ruling impacts around 130 men who were held for four months at the prison. Judge James Bosberg said they were denied their constitutional rights before they were deported in July as part of a prisoner exchange. And the Senate Commerce Committee passed legislation today that would speed up the approval of new satellites to extend Internet service across the U.S. The bill would streamline the FCC's licensing process, Kelly. Back over to you. All right, Kate, thank you very much. Still to come, the landlords of the AI revolution. While everyone is keeping a close eye on the chips and software,

our next guest is looking at the real estate that helps power it all. Those names when we return. Welcome back. It's time for our market navigator segment today. And when it comes to AI, the story certainly doesn't end in chips or software. Our next guest is looking at the real estate that powers it. including one name that's soaring today to 52-week high after issuing better than expected full-year guidance. And no, it's not the gym you might have worked out at. Jan Salagi is CEO and co-founder at Reflexivity.

And you say that Equinix, Jan, is the landlord for the AI revolution. Why them in particular? Yeah, so they are really the largest player in what I would call is part of the AI infrastructure. They own a number of data centers. It's effectively where Google, AWS and so on. are locating their services, a number of other businesses do as well. And so I think it's a really interesting way to get involved with the AI story without paying for the multiples that you have to when you are only buying and going along

things like chips. What about the other data center stories? I mean, even Galaxy Digital has an AI data center. There are Bitcoin miners who are getting into the data center game. There's going to be a lot of competition in this space. Yeah, you're right. It's an incredibly fragmented space. But actually, I think that speaks in their favor.

They're the dominant player. I think there is what I guess you would call network effects here because the more businesses and ISPs and so connect into their center, the more attractive it becomes for others to locate there as well. And so I think they're going to benefit from that as well. Being the largest player there gives you potentially extraordinary advantage versus everybody else who might be doing one or two of these. How big a backlog, so to speak, do they have if they talk in those terms? And we also hear about how Amazon is so capable in the data center. build out because they have such experience with their warehouses. And a lot of this is getting the staffs and the permits and the land clearing and all of that to happen. So how would you compare Equinox's

favorable position, even to others in the data center space or in Amazon? Well, the key here is that they are focused on just data centers. So Amazon obviously is an incredible company, but it's doing a lot of different things. These guys, all they do is focus on building and delivering excellence when it comes to data centers. So I think that they do have, that does give you, a certain competitive edge that they are taking advantage of. So I would say, yes, there might be competitive threats that emerge, but even for AWS or Google and so on, ultimately, so long as it's competitive, it kind of makes sense to outsource some of these services to a player that just does it extremely,

extremely well. Yeah, and they are up 12% today. Based on how you value them, where do you think the stock should trade? I mean, I think even if you just look at, and so this is obviously something that the street has already realized, the kind of the average target curve. currently has them 20% from here. I think that as you see this fragmentation turn into consolidation, and just for the next 12 months

between the four top tech players, 400 billion in spend on AI, probably a trillion over the next five years, there is going to be an enormous, enormous amount of demand. So I would say 30, 40% from here is just from the infrastructure play, let alone the fact that they pay a dividend, which in the environment where the Fed is cutting rates is another plus. Yeah, and a trillion could be conservative based on the numbers that we're seeing. That could be annual in a couple of years' time. Jan, thanks very much for joining us today, Jan Salagi. And Coinbase has gotten clobbered this year.

Now it's getting hit with a rare double downgrade to sell from buy. The analyst behind that call joins us ahead of the company's response. More pressure on Coinbase today. The shares are down more than 6%, bringing its year-to-date decline to about 37%. And that's after getting hit by a double downgrade from buy to sell ahead of its results tonight. Shares of the world's largest crypto exchange have already been off to a rough start this year. Let's bring in the analyst behind this call, Gus Gayla, senior equity research analyst at Maness Crespi Heart. Gayla or Gala, guests, welcome. Gala, thank you, Kelly. Thank you. I apologize for that. Jeff Kilberg is here with us as well. To do such a bold, well, let me reaffaic. Look, it's not that, but obviously the

stock has had a tough run, but the boldness is to now double downgrade ahead of earnings. What if this is the turning point in which they surprise us all, pull some rabbits out of their hat and turn higher? We have decent visibility into the volumes during the fourth quarter. So on the transactional side, that would be truly quite a bit of a surprise. It really comes down to a call on the length of the cycle. Typically, using Bitcoin as a proxy for crypto, the down cycle historically has been 350-ish biz. Right now we're on day 1.30-ish. So just seems like there's a couple of quarters

before you're getting the really good entry points. So some would look at this, Gus, and say you're just following the stock action, which is down sharply. But what you're saying is that what's changed in or from where you sit is that we now have conviction that this is one of those down cycles. How many days does it take to know that you're definitely in one? I don't think you know necessarily how many days you are necessarily, but I'll give you this as an example.

The shortest down cycle on record was about 140-ish days. So we're around there. All the other ones are 300 plus. So just looking at the whole ecosystem, and then we get into monthly actives and downloads for the top, the five large crypto exchanges we track for consumer, the downloads are down. The MAUs are down, like large double digits.

So, yeah, but there's going to be probably, based on history, at least a couple more quarters of pain. Hey, Gus, it's Jeff. Just to jump in real quickly, Gus. I read your note. I found an interesting, a lot of points. But just from the trading perspective, we're seeing Bitcoin now at $66,000. Of course, hindsight's 2020. This would have been a great note when Bitcoin was trading $126,000.

But that's not the case. I'm a portfolio manager. I fully understand. But when you're talking about the duration of the bare cycle of Bitcoin, which is certainly the proxy to coin, we're also seeing Hood come up. off its all-time highs. Well, with coin being down 65% off all-time highs, where do you see that target in Bitcoin? Is Bitcoin going to $50,000, $40,000,

and where can you potentially reverse this double sell, this double drop on your note for Coinbase? Yeah. So the thought process, and we'll give a little back context here, we've upgraded it in November thinking, hey, what we saw in the cycle, it's about half of what we've seen prior cycles. There's more of an institutional asset base than this now.

you'll get a cleaner recovery. That's not played out. So we're thinking, hey, it's going to be a slightly longer down cycle. What will we want to see? I mean, estimates need to come down. That's the big byline and the note for calendar 26. Probably we're seeing some kind of recovery year-end.

But again, it's hard to pin the tail on the donkey on that one. But it's fairly, we're still. still construct on the company over the long run. We think it's the, you know, the valuation benchmark to the ecosystem, right? But the next six months, just based on historical crypto cycles, probably you see some kind of sideways action optimistically. Yeah. And then you got to consider the whole regulatory side of things. Things have gone turbulent, but it nicely. Yeah. Fair enough. Yeah. Because I really, I really. I really. like your point there about how you thought this institutional would provide a different kind of

bare market here, but in fact, it's not. It's kind of more like it used to be. I appreciate you joining us. Thanks. We'll see how they report this afternoon. Gus Gala from Maness Crespi and Hart. More power lunch right after this quick break. Don't go anywhere. Another day, and this time it's another rally for the memories. We were talking to Jeff about this a second ago. They're either up or down like 8% every time you look. Seagate, Sandisk, and Western Digital and Micron today or this time all moving to the upside. Christina Partsenevolus. Is there a catalyst? Yeah, there is a catalyst, but the disconnect right now with tech and memory just shows where

this market is searching for winners and losers. Today, there's a few catalysts with Micron CFO speaking at a Wolf event yesterday in New York, and he was denying any rumors that their memory chips wouldn't qualify for Nvidia, so he pretty much squashed those rumors. The stock jumped yesterday. He also said that they're moving ahead with their shipments of high bandwidth memory, HBM4. So that's for Micron. Sandisk in particular, their joint venture with a Japanese firm did quite well.

And they guided yesterday, Kioxia, guided higher. And so that bode well for Sandus. Those are very specific ones. But when we talk about all of these memory players, we have to talk about the fact that somebody is going to pay for it, right? Yes. We are going to pay for it in terms of the electronics. But of course, Cisco is going to pay for it. Exactly. The original equipment manufacturer. Cisco is a perfect example. Lenovo, too. the fact that their margins were hit.

Cisco had a pretty strong quarter. AI orders climbed higher. Just in general, they're moving ahead with a product offering. Security was a little weak. And nonetheless, look at shares, down about 12%. Because of that margin story. Even the markets bounce a little bit off the lows, but they're just down 12%.

Could also be the stock ran up about 15% just one month into earnings that outpacing the S&P 500 as well as the SMH. So perhaps that was part of it. It's clear. We need memory. And Jeff, you were saying, like, as a portfolio, you've had these names, Like you've owned it, but now the volatility makes you have to.

So Mike Ryan was our biggest, biggest position in the Mangled Growth, the TETF, ticker symbol, Gary. Nice job. And we close it in this price action because it's oscillating $30 an hour, it feels like. So we close that position. You never go broke, taking profits. We're going to come back in the name. But at the end of the day, memory, that is what we need.

It's like the need for speed, the need for memory. It's not going away, is it? No, no, definitely not. You have a lot of these, the executives of these companies saying that they've now signed long-term agreements with many customers. So what that means is that the industry is no longer necessarily cyclical according to them. This is going to create that longevity, which would argue, hey, the stock's going to stay up for a lot longer until it doesn't. Right, exactly.

But it's fascinating to watch how hard, every, I think it was Mark Andreessen who said this week that he thinks ultimately all the gains are going to accrue kind of to the hardware that goes into the physical stuff going into AI, even more so than the players, you know, who we talk about with Anthropic and everyone else with these funding rounds. You can say it for Intel and AMD with their CPU chips too, and traditionally we would always talk about in videos, GPUs, but there's these pockets of weakness everywhere. And that's where the opportunity comes. All the dispersion, all the profit taking, all the panic. All right. So killer. I can't call you kill it. But Jeff, in the final 30 seconds, you mentioned Raghetti.

What other things are you looking at amid the sell-off today that you might be picking up here? So we bought Palantir today because we've seen such a price discrepancy. So when we see these names in price discovery mode, that gets me excited as a portfolio. So we are trying not to dumpster dive, be considered about what we want to own for the next 4 to 6 weeks. Again, if you've had Mike Ron all along, when are you going to get back in? When it's that we don't want to stay in it? It was a 350% winner in 2025. We're going to take a little break and come back soon.

Jeff Kilberg, Christina. Thank you, Christina Parts and Nevelas. That's it for Power Lunge, closing bell right now.