Power Lunch - Countdown to Nvidia Earnings, Meta Legal Settlement, Latest OpenAI Exit 8/26/26

Episode Date: August 26, 2026

Stocks are relatively unchanged on Wednesday after the latest PCE report revealed inflation levels remain elevated. Brian Sullivan and Contessa Brewer sit down with Wells Fargo’s Ohsung Kwon and Interactive Brokers’ Steve Sosnick to break down the key factors moving the markets and impacting investors.  Evercore ISI Head of Internet Research, Mark Mahaney, chats with the anchors about Meta Platforms’ $16.7 billion settlement with 48 states over child-safety claims and the company’s plans to replace many of its staff members with AI agents.  In the tech world, CNBC’s Kate Rooney reports on the string of executive departures from OpenAI as the company works to justify its $852 billion valuation, and Baird’s Tristan Gerra provides his predictions for Nvidia’s Q2 earnings ahead of the company's report after-the-bell.    Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The key to the rally is on deck. The question is, will it ignite stocks or bring them back down to Earth? Welcome to Power Lunch. I'm Brian with Contessa Brewer. Kelly out today. The next test for the market is just over two hours away. Invidia earnings out. The number's expected to be huge.

But let's be clear, the report, not just about one company. It's a report card for the entire AI infrastructure cycle. And a blockbuster multi-billion dollar settlement. Meta faces a landmark reckoning settling with 47 states, D.C. and U.S. territories over claims its platforms harmed children through addictive design. The deal carries billions in penalties and potentially major product changes. With the stock down nearly 30 percent in a year is the all-clear investors have been waiting for. Evercores, ISI's head of internet research.

Mark Mahaney joins us on that. All right. There was a lot to do. And we start with the next test for the market. I mean, this is a big one. InVIDIA earnings and guidance, just about two hours. way. Now, Nvidia shares are in a correction. They're down more than 10% from the 52-week high. And Nvidia matters because, well, it's the largest weighting in the S&P 500. It's the largest

waiting in hundreds of ETFs. It's the largest weighting among semiconductors, which say themselves had the largest weighting inside of technology inside of the market. I really need to switch to decaf. We've talked about this. Joining us out of break it all down, Wals Fargo Chief Equity Strategist, Osang Kwan, and Interactive Brokers Chief Strategist, Steve Sazzo Steve, was I too, two on that? I mean, I think Nvidia earnings, and our guest agreed in the previous hour, have the power to move everything. I say this every quarter, and I still mean it.

Nvidia is the most important earnings release every quarter. Part of it is, for the reasons you just mentioned its size, part of it is because it's a standalone because the Mag 7 tends to clump together. So think about in July where you had Microsoft go up 15.5%. on its earnings, but at the same time, META went down 8%, so they kind of balanced a little bit against each other. Invidia, all eyes are on NVIDIA because we've got nothing else to watch today. And I don't want to get too much in the market weeds, but it's not just NVIDIA stock, is it? You got Nvidia options, they're huge, but again, there's things like Delta 1 and

synthetic strategies that hedge funds use that we don't talk about on the show because like 0.01% of the market uses them, but they're important. And they, so there's all these underlying aspects to NVIDIA, and Tesla and some others, by the way, that when the stock moves, explain how it can move a lot of other things, sort of the waterfall effect, if you will. Well, if nothing else, Nvidia is at the heart of the AI ecosystem. You know, people have been using the term that it's the central banker for AI, and I don't dispute that. So so much relies upon them, whether you view some of their interlocking deals as a plus or a minus, we could have a whole hour on that debate, and I won't go down that road necessarily, but everything hinges upon them.

If they're not holding up their end of the bargain, if they see weakness on the overall AI trade, we've got some problems. And that's really where the issue comes in. So, Osang, walk us through what you're expecting out of earnings tonight. And does it matter? Does anything that you're going to hear out of earnings change your overall strategy? Yeah. So, I mean, MVa earnings are going to matter, obviously, because to Steve's point, it's really, really the central bank of the AI ecosystem.

I don't know what they could potentially say that would really reverse this negative sentiment that we are seeing in semis because we kind of know that AI chip demand is still there. CapEx is going much higher. We're talking about potentially $1.5 trillion of CapEx next year. So the market fully understands that. And what the market's been telling us

is that there is this rising concern that we are heading into this late innings in terms of this AI CapEx build out. And if you look at semis and hardware, as percentage of GDP, we think that could potentially go up to about 3.5% by the end of next year. And that's above the 2.9% peak during the Internet bubble and above the 3% peak during the real-world investment cycle about 150 years ago. So this could actually be as big as it gets.

The pressure is on to prove profitability. It's like investors have decided, okay, now is the time I want to see the return. I'm on my investment. And a lot of these hyperscalers are saying, no, no, no. we still are in the investment phase to propel growth. What is the biggest risk, not just to Invidia, but to the AI trade overall, do you think? I think the single biggest risk to the equity market

is the data center moratoriums that we are starting to hear about. So it's coming from both sides of the aisle. And the reason is not just going to slow down the data center build up, which is negative for semis and the overall AI ecosystem. But it's really negative for the economy overall, because tech drove about one-third of GDP growth over the past year. So the entire economy is really being driven by this AI cap-back cycle, whether it be the PMI or these commercial real estate

and these communities that are being built around data centers. And we talked about how these local communities are seeing huge benefits from the data centers. So all those things could potentially take a pause, which I think could potentially be the biggest risk to the equity market. And then, Steve, we have Mr. Kevin Warsh, the chair of the Federal Reserve. First big policy speech on Friday, does that have the ability to move the market? Oh, hell yeah. Sorry, but yeah.

I mean, think about 2022 when Chairman Powell basically said, oh, no, we're raising rates, not cutting them. Enjoy it, bye. You know, Kevin Warsh, he's still an unknown quantity to most of us, And we really want to learn, but at the same time, he's someone who's professed an idea to be less communicative. So that's going to be a very interesting balance. It's going to be interesting to see how long the speech goes, whether he – it's also to me the question I would want answered most is what Besson's intervention in the treasury market, which is reminiscent of Operation Twist under Bernanke, undermining some of his inflation fighting credibility right now. And we know which way both their bosses. Stanley Drucken Miller voted yesterday in the op-ed pages.

But I think he won't address that because it's not a press conference. He's just going to, I think it's going to be... What if he says? I'm Kevin Warsh, chairman of the Fed. We're watching the inflation data. Have a nice day. I think that's going to be a just-the-fact ma'am speech, which I... Then what does the market do? Market probably either, depending on his demeanor and his tone, I think it probably either yawns or gets a little bit annoyed because I think they want more out of him.

So the question is he's got to walk this line about delivering just... enough information to sound credible, to give us an opinion, to get us to know more about him, because every Fed chair gets a real world test, and he's getting his now. And, you know, I think he's got to assuage the market to some extent without being too coddling. I mean, so much attention on which word Kevin Warsh might say. And then you get a lot of words, say, for instance, on the Strait of Hormuz closure and the whole Iran conflict, and the market just shrugs about that. Do you think that volatility right now is underpriced that there's not enough waiting on the words? Yeah. And it's also the end of August. So things are pretty quiet. Everybody's at the beach.

Yeah. So I think I think the market's going to be pretty, you know, relatively calm the next week or two. But that being said, hold on, doesn't have the late August, doesn't have the ability then to have more volatility because there's fewer people around. that the swings could be bigger because you don't have the liquidity that you would normally have. Yeah. And you can trade from the Hamptons, bro, I'm told. That's true. Yeah, technology. Yeah.

I mean, yeah, I mean, after Jackson Hole, there isn't much next week. So, you know, I think we're going to see more volatility between now and the end of, between now and the midterms. And the one thing that we're watching closely, as we talked about, is the rhetoric that's coming from both sides of the eye. around data center moratoriums? You know, one thing, as a longtime volatility trader, the one thing I'm going to add here is my continual mantra, VIX is not a fear gauge, but it plays one on TV. And what VIX is telling us right now is,

it is the end of August. And so you're pricing in sort of two weeks of no catalyst because of a relatively late Labor Day. Can it be understating it in that sense? Absolutely. But the VIX futures curve is pointed, you know, pretty strictly higher. We've got midterms.

I think right now it's the lull. The question is, to me, it's not saying as much complacency as just sort of what Osang was saying. Two weeks of yawning, but then a couple of weeks after that where the volatility can kick out. So September might be more than back to school. Maybe it's back to some pretty wild rides. Let's see. Let's see. And actually the first step of that dances tonight with Invidia.

All right. Steve Sosnik. It's nice to see you as well, Osang Kwan. Thank you for coming in. Thank you. Thank you. All right, so speaking of the Fed and bonds and rates, let's check the latest rate odds for September. The CME Fed Watch gauge shows a 62% chance the federal hold rate steady.

But a hike still very much on the betting table with a 38% probability that makes this week's Jackson Hole gathering and Friday speech by Kevin Warsh. All the more important investors are going to be listening for any clues on the Fed's next move. or maybe he just comes out. Maybe there's no clues, Contessa. Maybe he just says it. Kevin Warsh wants to be direct. He wants to be short. He wants to be to the point.

Maybe he just says it. But there are so many people showing up in Jackson Hole that can say more. So all eyes are on Warsh, no doubt. But there are other business leaders that could come out and have something to say that potentially are meaningful and move the markets. Meanwhile, Apple is announcing a launch event at headquarters two weeks from today. Here's how the invite looks. It has the tagline, surprise and shine, alongside a glowing Apple logo.

And let's expect new iPhones and Apple watches, including Apple's first folding phone. This will be Apple's first major launch event with CEO John Turnus at the helm. Shares are moving higher following that announcement. They're up by 1% right now. Would you pay $2,000? And I thought the folding phone got delayed, by the way, or at least the rumors are. Would you pay $2,000 for a folding phone? No, I wouldn't, I don't know why you'd want a folding phone other than you have a small pocket and want to fit it.

Because you can have a double the screen in the same pocket size. Right. I mean, that's why. Yeah, it's just not appealing to me. If I put it in my bag, that's where it is. Because you have a bag, I have a pocket. Right. So I want the phone in the pocket because I don't possess a bag.

So apparently you would pay $2,000. I do not carry a MERS. For that. We are just getting started here. We have lots more of this hour. The brain drain we're seeing at Open AI. Should it matter to investors? Kyle Bass coming up.

We hit all the big geopolitical headlines with him. And of course, the earnings report that the entire AI trade hinges on will give you what you need to know most going into NVIDIA's print. First, the landmark settlement in the Meta trial. We have that next. Big news for META and the broader social media complex today. META agreeing with California and quite a number of other state attorneys general to settle its federal case over social media child mental health harms. As part of the settlement, META agreed. agreed to pay as much as $16.7 billion. Now, the stock has seesawed throughout the day today.

Right now, the shares are up about a percent. Let's bring in somebody who can tell us what this means for the company. Mark Mahaney, the head of internet research at Evercore ISI. I know you wrote a note about it. Share with our viewers, sort of your big takeaway, Mark, about this settlement and what it means for meta moving forward. Okay, well, I think this has been one of the two major overhangs on meta stock, the other one being the amount of cap-pics they're spending with uncertain returns in AI space. But this legal issue has been a major overhang. And I think they did, you know, by doing this deal, by reaching this agreement with 29 state AGs, I think they've mostly put this behind them. The three areas of their EG's case, there's a school's case, and then there's

1,200 school districts have come together in a case that is going to be also looked at by this same judge early next year. And then there's a series of individual lawsuits. But of the three kind of legal challenges, the biggest one by far is the state AG case. And having decided it and largely put it in a review mirror, I think it's a big relief for the company. Our colleague Julia Borson has reported that the teens use, the teens that would be affected by these new rules only make up about 1% of Facebook's bottom line.

So is it relevant at all if teens now face new standards where they can only be on Instagram and Facebook? And honestly, I didn't know that teens were even on Instagram and Facebook anyway. But does that matter to Facebook at all? Well, yeah, it does matter. So, yes, and there's some shocks in here that, you know, there apparently some teenagers who are on these social media sites past midnight. who knew.

But so there are some of these blockages here. You know, you can't be on between the hours for now of 12 and 6. And then there's some blockages of when messages can be sent out intraday during school hours. A lot of these are kind of healthy, common sense steps that meta has taken. And now probably other companies like YouTube, TikTok, and probably Snap are going to have to take as well. the you know this is there is a it's not immaterial for amount of ad dollars and time spent and engagement in users that would come from this cohort the under 18 cohort so you know there's it's probably a little bit low single digit percent impact to to potentially the revenue so that's

why the market's giving us a little bit of a mixed reaction here one is there are still other cases you know the school's case and individual lawsuits that remain up in the air it's it's uncertain how those are going to be resolved. But it's high, I think it's probable that those will get resolved at a much lower amount than the state AG's case. And then secondly, there's this uncertain outcome in terms of the impact of that, you know, sort of lost usage to meta's fundamentals. Well, yeah, $17 billion over 10 years.

It could be $1.7 billion a year. That's like a day's worth of revenue for META. Anyway, at 17 times earnings, you feel like the stock's been kind of held back by this. You said it was an overhang. So does this free meta to trade at a slightly higher multiple then? And if so, how high? Yeah. No, absolutely.

I think it does. There's just a lot of fear in the stock, kind of similar to the fear that was in Google stock 12 months ago. So, you know, I think an asset like this that can probably sustain 20% compound earnings growth in the future that's growing its top line at 25 to 30% with 30% operating margins while deep in investment mode. you know, I think all of that argues for a multiple that could go 25 times. And I wouldn't be shocked to see something like 30 times. But a lot of things have to happen between now and then.

This is the beginning of the unlock, I think, on meta. This is one of the reasons why it's our top pick in the space. Mark, have you had conversations with the company that revealed to you how much of the settlement and those that potentially are still to come could actually go back onto an insurer? like we know that this happens with a roundup or abuse cases against the Boy Scouts or the Catholic Church that there are big insurers that end up carrying the bulk of settlement payouts. Josh, that's a good question, Contessa. I don't have a great answer for you. I've not talked with the company about, you know, who ends up paying for something like this.

So, yeah, there may well be some insurance liabilities here. But I'm not certain of that. What I do think about going forwards is this is this is. obviously kind of a shot across the bow for product managers kind of across the digital asset space. I mean, you better think hard about the potential impact and how it could be perceived by youth and parents going forwards. It's great to talk to you, Mark Mahaney of Evercore ISI. And be sure to tune in to fast money at 530 later to 530 today, where Florida Attorney General James Uthmire will join Brian. and Sullivan for fast money.

Or you could tune in to five because that's when the show starts. Okay, let's do get the whole hour in, right? You don't want to miss the first half hour. Yeah, you got invidia earnings. Right. But at any rate, the Florida AG did not join that settlement and we'll find out why and how he's thinking about that now. Don't miss tomorrow as well.

California Attorney General, who led this case, Rob Bonta will join CNBC at 10 a.m. Eastern to discuss why California and other states settled, especially when there was so much push, as Julia reported earlier, for more money. from the plaintiffs. In the meantime, you got a market flash right now on SpaceX. Morgan Stanley analyst, Adam Jonas, says the stock is, quote, attractively valued, arguing that investors are not fully pricing in the scale of SpaceX's ambitions, which also includes a $100 billion spaceport project in Louisiana. SpaceX shared this video of Elon Musk touring the site with Louisiana Governor Jeff Landry. Jonas has a $300 price target on SpaceX.

stocks at $138. So, Contessa, again, I'm not a math major, nor was I. I don't play one on TV, but 300 is more than double 138. Yes or no? Yes. Thank you. Well done. Thank you.

You're very welcome. All right. Coming up, is the exodus from OpenAI a concern or whether or not the stock goes public, another executive leaving? Wow. We'll give you the headlines coming up. Open AI is losing another key executive as the company prepares for its blockbuster IPO. Kate Rooney has been following the exodus. Who now?

Yeah. So, Contessa, it's the latest in a string that we've seen of high profile executives that have left Open AI recently. This time, it's a gentleman named Chris Malone. So he's led basically their infrastructure side of the business, the buildout of what is hundreds of billions of dollars that OpenAI is spending to go out and try to harness as much. computing capacity and as much power, as many data centers as they possibly can. Chris Malone left. We don't have details of the circumstances or why, but it does follow a string of departure. As we mentioned, Denise Dresser in the past, she left a couple of weeks ago. She was the chief revenue officer, Brad Lightcap, very, very close confidant of Sam Altman, left under different circumstances. He was an early employee. And from what I'm hearing from sources was seen as

somebody that was very good at scaling the company, but maybe not the person to lead it in the next chapter. There's examples where Fiji Simo, for example, had health issues. So there are different circumstances for every executive, but it does paint this picture of a company pre-IPO that has a lot of turnover, a lot of volatility in the executive ranks. And it did catch a lot of investors that I'm talking to off guard. And so this is another example of it in a very foundational important side of the business at a time when they got to get as much compute as possible. And so potentially negative news, although investors have come to expect this that I talk to. They say, if one thing is certain, if one thing is constant at Open AI, it's that there is turnover, there is that volatility.

They're comfortable with it as long as the company can keep performing, keep growing revenue, and keep competing here. But it is the latest in what is now becoming a theme. Meanwhile, the intention of Open AI, Ananthropic and all of these other big AI companies to grow is clear. Microsoft co-founder Bill Gates has published an essay on his own website, saying, hey, we're moving too fast and sort of ringing alarm bells. And then he sat down with the New York Times and had this hour-long interview with some provocative comments about AI and how grave a threat this could be to jobs and human life. What's been the reaction in Silicon Valley?

So one of the most interesting things, Contessa, about that, I think is Bill Gates, obviously history as a founder of Microsoft and a techno optimist, somebody who's spent decades really champion technology, the fact that he's stepping back and saying, this presents more danger than potential upside, says a lot. I would also say his line about self-regulation. I think he said something along the lines of self-regulation of the most dangerous tool ever invented, is sort of how he framed it. And that's been something that the industry has been pushing for and saying it could be like FINRA, if you think of the brokerage industry, that in some ways does sort of self-regulate. that has been one of the examples that CEOs out here have pointed to to say, you know,

we move too quickly for actual government regulation to work here. We should do this on our own. That is getting a lot of tension. The fact, attention that Bill Gates is saying, actually, that's not a great idea. We should not let these people police themselves, given the danger. I mean, he talks about bioweapons. He talks about things that would be catastrophic and also have been aligned with what CEO of Anthropic has talked about, Dario Amade.

He has got a lot of criticism for being. what some label a doomer. And some of the industry have said, hey, listen, this is a negative. You know, you've got to figure out your messaging and be more balanced. He has taken a lot of heat for that, I would say, and has had to push back on that. He wrote on Twitter for the first time in a very long time defending his stand saying, I am balanced, but we've got to be realistic about the risk here. It's just so interesting when the people who are responsible for growing the technology that ends up now, they say, threatening humanity or warning against it. So, Kate, thanks.

The trust issue. Appreciate it. Definitely. Thanks, Contessa. All right. Well, speaking of Microsoft, by the way, if you look at the top five, this is our RBI, random but interesting, the top five AI-adjacon or AI-related stocks of the past month, the number one performing stock, Contessa, Microsoft. It's up 29.5%. This is one month, by the way. Oracle, up 28.5, Super Micro, Marvell Technology, and E-Rock. It's a power provider, up nearly 20%.

By the way, Oracle, getting an up to... upgrade today. The analyst seeing an opportunity after one of the most sort of extreme dislocations and drawdowns on the stocks. There's your top five AI adjacent, AI related, whatever word we're using stocks in the past month, all that ahead of Nvidia earnings tonight. All right. Meantime, the rhetoric between the United States and China heating up again is the summit next month and the economic relationship. Is it getting a little more frosty or is it cooling off? We'll talk to Kyle Bass. about that and more. Next. All right, in less than a month, President Trump and Chinese President

Xi Jinping set to meet in Washington, D.C. But the relationship between the world's two biggest economies growing more tense, Beijing blasting the Trump administration's new sanctions campaign against Iran accused in the U.S. of disrupting the global financial order while vowing to defend its interest. The question now, could Iran become the next flashpoint between Washington and Beijing, given that China buys almost all of, or maybe all of Iran's oil. joining his house, Kyle Bass, Rochefort Asset Management founder and co-CEO. Kyle, good to have you on and I see you're in D.C. as well, kind of an appropriate place to be today. Listen, Treasury Secretary Scott Besson, in announcing Operation Economic Outcast the other day,

was talking about, you know, Iran's trading partners. It was clear he was talking about China. So how does China react to this? Yeah, I mean, your supposition is correct. China buys almost all of Iran's oil, 90% place. It's about 15% of what China imports daily for its energy needs. And so, look, the way that this works is the Iranians sell oil to China and R&B. And then cash houses in the UAE have been the ones changing the RMB for dollars for the Chinese.

So if you saw last week, the UAE came out and said they're going to cut Iran off. I know it took the UAE a while and many attacks to realize that they should cut Iran off. But I think you're going to see Treasury Secretary Besson and his sanctions team headed up by Gene Lang. You're going to see them make an example of a bad bank this Friday. So I think you're going to see Iran only has about 30 million barrels of oil left on the water. These enhanced sanctions will absolutely strangle Iran. The people that say that they need Iran's cooperation or we're not going to go after China, they don't know what they're talking about. I think you're going to see some real, let's say, constriction of our sanctions on Iran and then and then on China.

If you happen to know the name of that bank, feel free to break it right here, Kyle, because we are curious what might happen. Even if we don't know the name of the bank, maybe you do, but you won't say. What could we do to a bank to make them an example enough where the behavior in question will be adjusted, changed, or anything? Yeah, so, Brian, you know that, look, the entire world's priced in dollars. Nothing is priced in any other currencies. The other currencies are the solved for. And so when you have the economic tip of the spear that our Treasury has with OFAC sanctions, you know, if we properly engage those specific financial institutions and we remove them from the dollar system, it is a catastrophic blow to those institutions, Brian. So here to four, we have been.

reluctant to go after any of the SOE banks in China or any of the 12 joint stock banks in China. But I think what we're going to do here is say, you know what, you just have to stop dealing with the regime of Iran, who is the global, you know, a sponsor of terror, state-sponsored global of terror. And we are going to, we're going to squeeze a little harder. Now, think about this, Brian. In dollar terms, the economy of Iran has collapsed. Their currency is hyperinflated.

It's $2 million to the dollar, and just a few years ago is $40,000 of the dollar. And now we have a scenario where GDP per capita on Iran is below sub-Saharan Africa. So we've already taken Iran down to below sub-Saharan Africa wealth. And now we're going to really squeeze the IRGC here and cut the blood flow off to the tumor. Well, as we've seen in sub-Sahara Africa, all it takes is some warlords with a little money just to keep the chaos. going. In the meantime, you have President Trump suggesting that reportedly he may do another round of tariffs on China up to 7.5% all ahead of Xi Jinping's meeting. How crucial is this meeting? And especially given the fact that we just saw trade talks with Canada, high level, didn't go anywhere.

In fact, it made things worse, not better. Yeah, look, on Canada, Canada just wants to keep its right to transship Chinese goods into America. They make a lot of money. on those transshipments. So Canada's got to get this act together. Secondarily, you know, look, we've had a daint in a hostage exchange situation with China since October of 2025, since China, I guess, played its rare earth gambit last year. And the president has directed or had directed his cabinet secretaries not to inflame the Chinese situation while we tried to get our house in order. And they tried to remove themselves from reliance on the So we're both trying to get out from each other's thumbs here.

And this, what seems to be an escalation, this is us dealing with Iran. And as you know, there's an axis of bad guys out there between Russia, Iran, China, and North Korea, amongst others. And so unfortunately, at some point in time, our sanctions on Iran are going to bite China. And I think we're going to see some of that here soon. Okay. We had breaking news just a few hours ago with our Amin Javr's reporting. from Washington, D.C., that Chinese hackers had targeted the Fed, Department of Defense,

a bunch of government agencies, high-level agencies. We don't know to what extent they actually got in, but that they were attributing the intrusion to China. How problematic is that? Yeah, I mean, look, we all know that, you know, Iran has been able to turn off some public utilities in other countries, the first few examples of the state-sponsored action. and really hitting, let's say, infrastructure in Western nations. We know the Chinese have been in our systems for water and power and basic utilities,

given a Volt Typhoon and the other, let's say, widely publicized hacks. And so, yeah, are we worried about that? Yes. But is our team as good or better than theirs? I think our team is better than theirs. And so if the president authorizes kind of the U.S. to go on offense, the Chinese should be equally as worried. You know, I wonder, going back to Iran, and we're speculating here, Kyle. You talked about currencies and the economy.

Iran's got about 80 million, maybe your plus or minus barrel sitting offshore. They could sell that oil. Pretty much then, if we can block their sales, they're a petro state. That's pretty much what they got is oil. They don't have a lot else. Is there a point of which we can squeeze? ease the economy enough that the people sort of rise up and demand change? Because unfortunately, what we've seen is whenever the Iranian people start to demand change, the government violently

puts them down. It killed tens of thousands of their own people without even thinking about it. These are bad people. Not the Iranian people, the leaders that are in charge, the bosses. Agreed. So I'll correct your supposition there, Brian. There's 30 million barrels left on the water, which is not very many. And you're right, they're a Petro state run by Theocratic Mad Men. The difficulty here is there are, you know, 260,000 IRGC members, and they are decentralized. They're all over Iran, and they all have their own authorities. And so it's very difficult after we remove the top two layers of theocracy there and the governance structure in Iran, it's difficult to get the rest of them without putting boots on the ground, which we're reluctant

to do. And so, Brian, the answer to your question is that when your GDP per capita drops below $5,000 and below sub-Saharan Africa, you're already in real trouble. The question is now, can we squeeze them financially enough to really hurt them? And you saw, look, the U.S. Treasury and SentCom, as you know, confiscated more than a billion dollars worth of stable coins that the IRGC has. The IRGC also has a lot of money in London, and I don't think London's cooperating with us. I don't think the Great Britain's cooperating with us enough. And the GCC banks are just now starting to cooperate with us. So this is happening real time.

It is. Whether it's 30, whether it's 80, your case actually even makes the case for a quicker change, because the 30 is going to run out a lot faster than 80 million barrels of oil, which means Iran runs out of new sources of money. I think my fear, Kyle, and you said it, And I've been saying it for months, too, that Iran is just a collection of almost to contestant's term, warlords. The leadership was taken out. How do we know that some of these people are not worse than the people that we took out?

That's the fear. Like, some of these people may be worse. One of the guys that's, quote, in charge of doing air quotes of Iran right now, is on Interpol's most wanted list for a massacre in Argentina in 1994. Yeah. I mean, Brian, it's, I'm certain that there are plenty of, uh, bad guy IRGC members. The problem is there's 250,000, 260,000 of them. And, you know, Iran's a country of roughly 90 million. So, you know, it's really a, it's less than a 1% problem there, but they have all the guns and they have all the military assets. So, you know, to, to create a regime

change is going to be difficult. But you have to remember our objective here is not necessarily regime change, although I think we'd like to see it. I think that, There's 900 pounds of highly enriched uranium that can make 11 or 12 nuclear bombs there. And I don't think we're going to leave without it. Kyle Bass, thank you very much, Kyle, for joining us with your insight. Pleasure. Let's get to Frank Holland now for a CNBC news update. Good afternoon, Contessa.

Testimony in the Lindsay Clancy murder trial ended today in a case that has gained national attention. The Massachusetts mother was charged with killing her three young children. She pleaded not guilty, claiming she was suffering from postpartum psychosis. If convicted, she faces life without parole. If found not guilty by reason of insanity, she would likely be committed to a psychiatric facility. Closing arguments are expected tomorrow. A Maryland court today blocked an attempt by Democrats to redraw congressional maps ahead of the midterms. It's another setback in the party's nationwide attempts to counter Republican redistricting.

But the judge paused that ruling to allow for an appeal to the state Supreme Court. The White House reportedly plans to introduce a new round of agreements on drug prices with several biotech companies. Bloomberg reports the companies will agree to provide discounts on drugs to state Medicaid programs that will correspond with what they charge for those drugs in foreign countries. Terror relief is also reportedly part of those discussions. Contessa, back over to you. Frank, thanks for the news. It's the earnings print that Wall Street is holding its breath for. Invidia.

So what does the street need to see from this company to keep the AI music playing? That's next. We're fewer than two hours away from Invidia reporting. one of the most highly anticipated events of earning seasons. Those shares are trading off by about a percent right now. And the chipmaker's PE ratio is barely over 20. It's the lowest level going into earnings since 2016. Joining us now is Tristan Guerra, senior research analyst at Baird.

He holds a $500 price target on NVIDIA, implying Tristan, 135% upside from here. So what's the key metric that you're watching tonight that could see? swing you from that price target? So I think what people are going to see is that AI demand, rather than slowing down, is actually going to be accelerating. We've seen that trend in the past couple of months. It's very recent. I think it's going to translate into a usual beat and race this afternoon,

but I think it's going to translate into further acceleration, both in the second half of this year and next year. which ultimately, I think, is going to bring some multiple expansion back in the stock. So we had a little bit of a phase slowdown at the top line the past few quarters. And rather than further deceleration, we're going to see a Gentic AI being a major trend of bringing an acceleration both at the top line and EPS. That's what we're expecting. You mentioned the demand. And in your note, you're talking a little bit about GPU lead times near 40 weeks.

How do you distinguish whether that's genuine orders or whether companies are sort of double ordering to get ahead of other competitors for the same technology? Yeah, that's a very good question. So if we look at what need times were, which is really a measure of delivery and availability, it was barely a month and a half, two months ago. Now it takes more than seven months to get hold of a NVIDIA GPU. It's not because of supply issues. It's all driven by Agentech AI. It's a completely new layer of demand that's incremental to what we've seen over the past couple of years. It's about enterprise ramping small GPU cluster, up to 28 GPU clusters, so they can ramp their proprietary AI agents.

and those can do a lot of tasks internally at an increasing number of companies. So this is purely demand, and it really is a very good indicator of demand re-accelerating, but also a little bit of a diversification away from the hypers, because if you look at the concern on Nvidia, it's really about hypers, ultimately slowing down CAPExpan growth, notably in 28, and you're going to see enterprise really picking up steam. And that's really the long-term lag of demand in AI that is going to continue to benefit Nvidia.

All right. Well, right now, Nvidia is trading at $211. And again, your price target is $500. We wait and we watch Tristan Gera of Baird. Thank you, sir. Thank you. Make sure to tune in tonight to Mad Money 6 p.m. Eastern Time as Jim sits down with NVIDIA CEO Jensen Wong. You won't want to miss that. All right, coming up, Europe is facing an energy

crisis again. We're going to focus in on one country that says they may not have enough natural gas to make it through the winter. That's next. All right, as you can see, it's a power insider for you. The Netherlands now says it will not meet its target for natural gas storage levels heading into the winter. Statistics show gas levels at about 45% full. By contrast, they're about 73% full this time most years. But what exactly does that mean? Well, it doesn't mean the Netherlands is going to run out of natural gas. But it does mean that if the country has a very cold winter, natural gas levels could become an issue.

The country could try to buy more shiploads of liquefied natural gas, but much of those cargoes from American companies like Schneer and Venture Global are, likely already committed to other buyers, probably in Asia. You may know that we've been covering the story for five years, because since the Nord Stream pipeline was blown up, it's been a nervous time for gas levels in Europe. But the cotton has been saved by relatively mild weather. That is until this summer when it's been very, very hot. So gas levels get drained to run whatever air conditioning they might have. And while heat, no doubt, is dangerous. People have died this year. Cold is far more risky to humans with anywhere from seven to nine times more death from being too cold than being

too hot. So you better root for another mild winter for Europe. Hello El Niño. Or the Netherlands may have another scary time. It's the first time contested in five years. We've seen levels this low. Problematic and very expensive for the people who live in the Netherlands for their power, even in normal years. So we wait and see it. Energy poverty between heating and eating. It's a real thing. We have more Power Lunch right after this short break. Welcome back to Power Lunch. We have a market flash on Nike. The stock is hitting its lowest level since August 2014.

The shares are down 2% today. They stand at 3873. Nike's lost nearly 80% of its value since that closing high. And Wall Street just isn't rushing in. 13 analysts have buy ratings, according to FACCet. But the rest say hold or sell. That's 28 analysts that say hold or. sell, Mikey. Nike was a $179 stock in October of 2021. So basically five years ago, it was $179.

It's $39, lower than $39. Now, we're talking about one of the great, not American companies, great companies in the world. What is wrong with Nike? We're going to talk more about on a fast money tonight. Katie Stockton will chart it, but at some point, a stock, you assume, has to keep stop going down. Right. We have other retail news on Abercrombie and Fitch as well. Their shares skyrocketing after reporting this morning. That stock is up more than 30%. Look at that, Brian. This is what Tim Kwas talked about yesterday's huge moves. Yeah. I mean, it was double the analyst estimates here. So tale of two retailers. They say that tariff refunds were a big tailwind there. That help. Teen fashion up, shoes down. Thanks for watching. Power Lunch, everybody. And closing bell starts right now.