Power Lunch - Google’s AI Plans, and Covid Emergency Ends 5/10/23

Episode Date: May 10, 2023

Google is holding its big AI event today, with lots of news breaking throughout the day. We’ll bring you there, and ask whether the company can catch up after a slow start in the chatbot race.Plus, the Covid-19 emergency is set to end tomorrow, as far as the government is concerned. We’ll talk about what that means, along with many other health topics, with Dr. Scott Gottlieb. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody, alongside Kelly. And literally she was right here a second ago. I was really alongside her. I'm Tyler Mathes, and welcome everybody to Power Lunch. Google is holding a very big event at this hour out in California, and lots of breaking news within the past hour. We'll bring it to you and ask whether the company can catch up after a somewhat halting start in the chatbot race.

Plus, the COVID-19 emergency ends tomorrow. As far as the federal government is concerned, We're going to talk about what that means, along with other health topics with Dr. Scott. Got Kelly. I'm over here now. Hi, everybody. Thank you, Tyler, and let's get a check on these markets. Dow's off session lows were down 240 points. We were briefly down more than 300. The SMP's down 7, but hanging on to the 4,100 mark, and the NASDAQ is still up nicely about 4 tenths of a percent today. Big Tech alphabet, one of the reasons why. Check out some of the names moving on earnings. Upstart, absolutely soaring, up 53 percent this week. Car Guru's up 20 percent.

20% Carvana up 77% still going back to its results last week, talking about that adjusted EBITDA profitability. But if you take out the last couple of years, if you go back the last couple of years, I should say, the number is not nearly as good. Remember, upstart is still 78% off its two-year high. Cargoor is 30% and Carvana, 94%. Sticking with the Auto theme, AutoZone and O'Reilly, both hitting all-time highs again today. Going back at least 30 years, we've talked about people keeping cars on the road longer. You heard Jim Gellert talking about how well they're performing earlier this week. Shares down fractionally today. And finally, Celsius Holdings, the energy drink maker, Wall Street, talking about this one after

results. The shares are up 23 percent. Wed Bush, Steeple, Piper Sandler, UBSB of A, all raising their price targets this morning. The stock, $132 tie. Drink up, indeed. All right, time for today's tech check, and let's get to Deerbosa at the Google event. CEO Sundar Pichai announcing new AI developments for Google, but saying that AI has been a seven-year journey for the company. Deirdre, what have you learned? Well, it is still going

on behind me here at the Shoreline Amphitheater across from Google campus, but we have had a number of announcements so far. I'll also note that the instant reaction from shareholders has been, you know, muted, I guess. Google shares have been mostly flat over the last hour, but even that could be seen as a victory because the last time Google did an AI demonstration, some 100 billion was taken off its market cap by day's end because of some budget. demonstrations. So the demonstrations this time have been a little more cautious, you could call it. There's some live demos and there's some prescripted ones as well. They just demonstrated what happens when generative AI meets search. And of course

this is such an important topic because search still makes up the majority of revenue and profitability at Google. They announced something called search labs, which is now they're opening up the wait list. You have to sign up for it. But here's sort of the takeaway. No more blue link. pointing to sites that have paid for that kind of advertisement. In the demonstration, those links are replaced with images, summaries, TikTok, side-by-side purchasing options. It's unclear exactly how that works with advertisers right now,

but it doesn't totally displace them, and Google's probably going to argue that it gives brands more tools and more outlets. So we'll continue to watch this guys, but you know, the set of tools that are releasing are impressive. And I'll note, this is a developer conference that happens every year, but certainly it has been geared towards some. the consumer as well this year. Deeter, let me ask a question. If I go to my standard Google search and I put in a search, find me airfares to West Palm Beach, what am I going to see? Am I going to see sponsored content or find me a hotel in West Palm Beach? Am I going to see

sponsored content or is that distinction going to be eliminated? Tyler, I don't know if you're on TikTok, but if you're not, you might just get some TikTok videos or maybe some YouTube shorts. It'll be your introduction, Tyler. But the point being is that you're going to see a lot more in this future vision or this evolution of search that, you know, Google says will still be the entrance or the backbone of the internet. You're just going to see more. You're going to see maybe side-by-side options. You're not just going to get links. You're going to get images.

You're going to get suggestions. You're going to be able to ask, what should I see if I'm going to roam, along with those airfares, places to see, things to buy. And it's going to be not just text, but it's going to be more than that, images, videos, etc. Losing my TikTok virginity, whether I want to or not. Deandra, thank you very much. I want to know what she was going to say about that, too. With companies pouring cash into developing their own AI,

and investors doing the same, betting on any stock that even mentions the emerging technology, which companies will climb to the top and stay there. Gene Munster, Deepwater Asset Management is here to discuss. Gene, no one better to try to separate some of this hype from reality. Duo Lingo, for instance, we talked to last hour. They're all excited about using AI stocks up. Investors love it. You know, Chegg's selling off for the same reason.

What about Google here? I think, Kelly, this is a big opportunity for Google and Deirdre set it up really well. What was announced, and I just want to emphasize. this was huge news that Google just came out with and what was most significant was that search is going to be the starting point for their generative AI experience. It was unclear going into this event whether they were going to try to separate out different like chatbot's generative experiences with search. And so when I think about that question, which companies are going to benefit by that, it's going to be which companies are going to be able to harness the power

of their bases. Google has, they announced today they have five different products that have over two billion monthly active users. Facebook has, Meta has two billion monthly active users. They have five products over that. And so this is a huge deal today. And I think it really is going to promote a debate about whether or not Google is going to be a big beneficiary here. I'm a believer. Deepwater is an owner, an investor of Google based on what we think that they can do in AI. But of course, this question about the 10 Blue Links that came up in Deere's comments, earlier is that that is a huge dynamic. This new interface that they showed is very different than the search that we all know. And that search is the lens that the world essentially sees

the internet through. And so that's why Google is going slow. As Deere to mention, it's in labs right now, and they're going to kind of test it. It was unclear when that's going to be rolled out. So if you try a Google search today, it's going to look the same as it did before. But big opportunity for Google. What just came into my mind, Gene, is New Coke versus old Coke. What is the risk that Google screws this up and that people don't take to the new Coke? Well, this is the innovator's dilemma. And if they stick with the old Coke, I think that the old Coke is out the door. We have to, AI is going to have this transformative impact, hard to understate how big it's going to be. And so Google needs to turn the page. They recognize

that. People want more. The expectations are higher. And so, yes, there's a risk that they botched this and that's why the stock hasn't taken off right now. But if they get this right and they've been working on this since 2017, this is not like a flash in the pan for Google. They've been steadfast at the AI theme and very clear that they want to enable this. But if they ultimately get this right over the next one, two years, this could have a massive impact. And just to give you a sense about that is that it's right now we essentially go to Google search if we want to navigate, if we want to be informed about something or if want to buy something. But you could start to use Google search for generative opportunities too.

You want to write a speech, you want to do some notes for a different project you're working on. It's endless. And so there is an opportunity, essentially, this new Coke. I don't think there's a question whether or not new Coke is better than old Coke. I'm a big Coca-Cola fan.

But in this case, they're turning the page. And I think it's going to be pretty cool. They did show at I.O. A couple of kind of the flash-y toy department, I'll call them features around what they're doing with photos and maps and Gmail and docs around that. They're all kind of nice. But the real substance of today is there's going to be a new search interface and we're not going to have as many 10 blue links. But if you do want to buy

something, they'll understand that and they'll show you ways to buy things and advertisers will play into that. Well, there's been so much news on the AI for it. We can barely keep up. Microsoft, for instance, today announcing this partnership where it's a strategic partnership with the AI application startup builder AI. The tech giant investing in that company an undisclosed amount and planning to integrate builder.a.i's AI assistant Natasha in its team's video and chat software. Remember, we actually spoke with the CEO and founder of builder.com back in April, and he told us software like his could totally change how individuals and businesses, build apps, interact with AI. So Gene, when you see these announcements and it feels like

Microsoft is out with one like this every day, although Google today apparently is going to have one with character AI. I mean, how significant is this steady drumbeat of open AI and Microsoft kind of building their position and continuing to integrate these services into their core products. What's significant is how aggressive Microsoft has been here. And on their last earnings call, it was clear that they were amped up about AI. It was over the top how bullish they are. And then like you said, they just keep having more and more announcements out.

And I think you can think about AI in basically two different camps. You have those that are being more judicious. That's Google, that's Apple, potentially Tesla with Elon and some of his views. And then you have the companies that are being aggressive with it. Microsoft is pedal to the accelerator of the floor here when it comes to AI. That's what jumps out to me. They're not messing around. And I've always thought of Microsoft as being a little bit of a laggard when it comes to innovation.

They got religion fast and they're going after AI hard and whether or not how this plays out, hard to see. But I think this is going to be a big advantage for Microsoft in the years to come. All right, Gene, we'll ask you to stick around because we're going to come back to you in just a moment. Meantime, turning now to the former Facebook. The company changed its name to Meta. to show a full focus on the Metaverse. New Coke, Old Coke.

Come back to that. There's a theme here. But the company saying, despite what the Internet seems to think, it is also investing in AI, but not at the expense of the Metaverse, but instead to boost its Metaverse offerings. Let's bring in Julia Borsden now for more. Julia. Well, Meta has drawn some frustrations from Metaverse creators

that people who are creating for Horizon Worlds, it made some headlines stay with the news that it's no longer going to let creators using its Horizon World's PlayScape make dedicated events, which they say is limiting the potential for those who want to invest in their immersive platform. Meta saying that the feature just simply did not live up to its standards. But as Meta stresses its investment in AI, Mark Zuckerberg has said he's still going long on the Metaverse as it's related to AI, saying in Meta's earnings call last month, quote, a narrative has developed that we're somehow moving away from focusing on the Metaverse division.

So I just want to say up front that that's not accurate. We've been focusing on both AI in the Metaverse for years now and we will continue to focus on both. Now the company does continue to invest as much and lose as much in the Metaverse. Losses in its Reality Labs division hit a peak of $4.3 billion in the fourth quarter, declining to a $4 billion loss in the first quarter,

and they forecast that reality labs losses will continue to increase year over. over a year. But Zuckerberg's vision of the Metaverse has been slow to gain traction. Last year, total VR headsets in the U.S. declined by 2%. And now we are definitely hearing a focus on AI. on Meta's most recent earnings call, the word Metaverse was said 10 times compared to 57 times that the word AI came up in that earnings call. Tyler. All right, Julia, stick around and let's bring back in Gene Munster to discuss. I don't know where to begin, but I'm just going to say Facebook. What do you think?

We're going to addictive product. People can't stay away from it. It's growing at a nice clip. 4% year-over-year, 2 billion. Deepwater is an investor in Meta based on the power of their network. We think that there's optionality around what's going on in the Metaverse. AI is going to be the fabric of what they're doing. The one-liner on Meta, Facebook, is that they got a product that people continue to want. And I think that it's very difficult to replicate. So generally constructive and they've got a lot of area that they can kind of pair back, obviously some of that investment in the Metaverse if they do want to do that eventually and get more earnings upside. Do you believe Zuckerberg when he says, you know, we're not pulling

back, we're as committed as ever? Absolutely. I think he's gained some credibility over the last six months. He said he's going to tighten the belt. He's done that more than any other tech company. Unfortunately, letting almost 30% of their workforce go, the typical tech company and let 8% go. And the case of the metaverse, this has been a passion topic for him for a long time. And he was, as the setup was very clear, he's been clear to investors that they're continuing to invest in this. Do I believe that meta is committed to the metaverse? Absolutely.

And I think the simple reason is that you have to ask a question, is there going to be a computing platform beyond mobile? If the answer is no, mobile is the next competing platform for the next 50 years, there's no reason for the metaverse. But if you just think naturally humans are going to gravitate to more immersive, you tech experiences, then it's some form of the Metaverse. And I think that is Zuckerberg's view. They're going to stay on this. I wish they weren't spending $10 billion a year. It's a big number, but they're going to stay on this and maybe we get some signs of life when Apple comes out with

their headset next month. I guess, Julia, I see how generative AI and artificial intelligence across the board helps me do things better. It makes me either a better worker, a better writer, it makes my life more convenient. I am less convinced that a VR headset is going to help me do much better. Well, I think these are two separate things, Tyler. I think the first thing we have to note is that meta has been using AI in its ad targeting and ad measurement for a very long time. This is sort of key to how they get ads to you.

The thing now is figuring out how generative AI is really going to supercharge meta's ad business. That is their business right now. The Metaverse business is one that is one that is, losing money for them, but is something that they're betting on over the long run. What they're saying, though, is that all these investments they're making into AI are going to help them near-term. It's going to make their ads more effective. It's going to make it easier for brands to create content that's going to connect with consumers. But over the long-term, it's also going to make

those graphics better. It's going to make it more enjoyable to have a virtual experience. So what they're saying is that these AI investments are really core to everything that they're doing. But what he's talking about is 10 years from now, whether it's about wearing a headset, or just being in a virtual world and interacting with your friends in a virtual space rather than on a on a WhatsApp chat, they want to make sure that they have the technology to bring that communication, which is really what so much of what Meta's apps are about, bring that communication into that next dimension, whether it's about wearing a headset or not. I have to say having spent a lot of time wearing these headsets and trying them all out, they're really amazing, they're really impressive,

but not something I want to spend a significant amount of my time doing. So the question is how they're going to take all of that technology and use it to make that communication, think about those WhatsApp chains, those messenger conversations, and make them more immersive. And I think that's really what the message, this whole metaverse conversation is going to be about. But, you know, 10 years from now, who knows what the world is going to look like, considering how fast things have changed just in the past 12 months. The headset, say, mess up my hair. It's the whole thing. I don't know. Julia, thank you very much. Gene Munster, always great to see you. Thank you very much for your time and insight today. All right, coming up, a biotech business brief, the COVID public health emergency

officially coming to an end. While some analysts expect this to hurt the stocks, the industry's pipeline has remained strong, especially with the boom from weight loss drugs. Despite all that, layoffs in the industry are climbing, pharmaceuticals, biotech. We'll speak to all of this with former FDA Commissioner Scott Gottlie. Plus, as we go to break, let's get a quick power check. On the positive side today, aluminum shares up 6%. Investors betting on a proxy fight, influential proxy advisor, Glass-Gel urging shareholders to vote against reappointing the chief executive and chair of the gene sequencing stock, joining alongside Carl Icon.

On the negative side today, let's talk Paramount, down 5%, cutting 25% of its workforce and shutting down. Get this. MTV News. End of an era. We're back after this. Welcome back to Power Lunch. Tomorrow marks a significant day. in the COVID-19 pandemic, more than three years of a public health emergency come to an end.

The Biden administration will allow the emergency declaration to lapse, transitioning into a new era of how the government will respond to the coronavirus. Moderna and Pfizer led the charge on the vaccine front, as you certainly recall, both down more than 20 percent for the years, those revenues are expected to lessen. Joining us now is Dr. Scott Gottlieb, former FDA commissioner, CNBC contributor, also serves on the boards of Illumina and Pfizer. Dr. Gottlieb, good to have you back. In a practical sense for most Americans,

what does the ending of this public health emergency mean? Probably not a lot of practical impact for most Americans. The administration has taken a lot of steps to try to extend some of the things that I think had the most immediate impact on people's lives. In particular, the flexibilities around getting health care through telehealth. The DEA recently issued a rule that they'll also extend provisions that allow controlled substances to be prescribed through telehealth services. I think the most immediate impact is going to be a decline in Medicaid enrollment because the public health emergency allowed states

to continue to enroll people into Medicaid. That continuous enrollment is going to now end as a result of the lifting of the public health emergency. And you're going to start to see people get taken off of the Medicaid rolls. There's some estimates by the Kaiser Foundation, also by the Department of Health and Human Services that upwards of 15 million people could lose Medicaid coverage over the course in the next year. So that's going to put some pressure on hospitals and providers, not to mention the individuals that lose coverage, but for a lot of the practical effects on health care delivery that people saw as a result of the public health emergency, many of those are going to continue, including free access to COVID vaccines and COVID testing, although

free access to OTC COVID tests is going to end. So let me ask about the Medicaid issue here. If I was one of those enrollees who came in under this public health emergency, am I immediately stricken from the Medicaid rolls or can I protect my Medicaid benefits by resigning up or something? In other words, is my removal, are people going to lose Medicaid coverage automatically with no recourse? Well, right. Well, some people will lose coverage because there were expansions and eligibility so they'll no longer be eligible for Medicaid. But other people are going to lose coverage because some automatic enrollment features that were in place as a result. to the public health emergency and now being lifted. And so states don't do a good job or not every state does a good job of communicating.

Not every provider system does. So people who are eligible for Medicaid, but now we'll need to take the step to enroll. Some of them may not take those steps. They may not know that they need to enroll proactively. And so they're going to lose coverage as a result of the loss of the continuous enrollment, the automatic enrollment. Understood. There's one benefit, Dr. Gottlieb, that you think could last.

It's, if I'm not mistaken, it's pharmacy delivery. And is it related? For my kids, I get these multivitamins for free now from a pharmacy I've never heard of, delivered. And it costs nothing. It's been going every month. It just shows up in the mail. It was through the pediatrician's office. And is that related?

I don't think that in particular is related. What we're going to see continue is a lot of the delivery of care in the pharmacy. So some of that was expanded under the PEP Act. So there were specific legislative steps taken to allow pharmacists to expand scope of what they can do. And we've really also seen a cultural change in people seeking out care at the pharmacy. So people got accustomed to getting their vaccines in the pharmacy. They got accustomed to going into the pharmacy for COVID testing, for flu testing. And the pharmacy started to deliver other health care services alongside those. And I think that's really going to be a cultural

change that going forward, more people are going to look to the pharmacy to get more routine health care. That's a good thing. I think it's going to enable broader access. I think the pharmacies can be doing a lot more in terms of providing direct care to people than they've done in the past. And so a lot of those COVID changes, I think, are going to endure. So let's talk about a couple of the companies, one of which on whose board you serve, that would be Pfizer, two companies, it and Moderna, most closely associated with COVID, the vaccines, the medicines to treat, and so forth. What is this going to mean for the businesses of those companies? Look, both companies, including the company I serve in the border of Pfizer, have put forward estimates in terms of what they think people are going to do when it comes to vaccination in the fall.

We're going to have a decision by the FDA probably end of June as to whether or not we reformulate the COVID vaccine. I believe they will make a decision to do that based on the current variance. And there'll be a recommendation for people to get vaccinated to get boosters in the fall, those who are vulnerable to COVID. So I think that there will be a cycle of vaccination, at least for the foreseeable future, probably a smaller group of people. And both companies have put forward estimates that that anticipate that less people will be getting vaccinated. But certainly people who are older individuals, people who have preexisting health conditions, there'll be strong recommendations from public health authorities that those individuals should continue to get vaccinated for COVID. Much like people get a routine flu vaccine.

I think this is going to become something like the flu where vaccination is going to be encouraged. And people who are the most at risk are going to be strongly encouraged to continue to get vaccinated. Now, again, that will be a smaller market than we saw in the past in terms of the total number of people who get vaccinated. vaccinated, but it probably will be a durable market going forward. So want to talk to you about the weight loss drugs, Dr. Gottlie. Let's save that for another time because there's a lot to get into there. We just had some news breaking. It's affecting shares of perigote, I think, are higher. It looks like we might have over-the-counter birth control. What are the ramifications of this? Well, this has been probably, I would say, a long time coming. This has been something that's

been recommended in the past. It hasn't been a political issue. So there's been bipartisan support for This big opposition in the past has actually come from providers and from the FDA itself, largely because they were worried about the impact on what we call help-seeking behavior, the willingness of women who are seeking out birth control to go and get counseled from a physician for some of the things that they need to take into consideration, and whether or not they can get all the information they need about the risks from the label itself. And in fact, if you listen to the hearing today, FDA advisors express continued concerns about that, whether or not women who are contraindicated, for example, for oral contraceptives, women who've

had breast cancer, whoever history of uter or bleeding, whether or not they'll heed those warnings from the label and forego the treatment or seek out advice from a physician. So that's going to be the critical issue that comes up as to whether or not the FDA feels comfortable. But I think this has been something that's been broadly supported in the past. There's been really no political opposition that I've seen or no noticeable political opposition because this has come up when I've been at FDA, and I felt we had a right-of-way to try to pursue this. The opposition, again, from my estimation, that I saw was from provider groups, from physicians themselves, and from the FDA review team, which had concerns about the labeling

or whether people could comprehend the labeling. The political climate, of course, has changed a great deal in the past couple of years. Who knows whether there will be opposition? There would be more steps along this path, wouldn't there, before these medications would be available in the CVS or the Walgreens on the shelf for me to pick up and carry home? Not necessarily. Based on the recommendation from the advisors today, and it was a pretty strong recommendation,

FDA now has to make a decision about whether they go forward. They could ask the company to go back and revise the labeling to address some of the concerns that they raised and maybe perhaps ask the company to do additional testing, what we call labeling comprehension studies. But they could go ahead and approve this based on that recommendation. And again, I think this has been a long time coming. This will happen sooner or later.

I do believe that there's a strong public health case to be made about broadening access. You want to make sure that people can get adequate information from the label to know whether or not they are properly indicated for this treatment, given some women are going to have preexisting health conditions that could contraindicate them. All right, Dr. Gottlieb, thank you very much. We can spend the next half hour talking to you. We appreciate your time today. Thanks a lot.

Let's pivot back to the markets now, which Dow's about 100 points off the session low. decline is moderating. By the way, shares of Alphabet could be part of that as they continue to edge higher as Google unveils more details in its developer I.O. Conference. And after the break, Rick Santelli promises a special surprise during yesterday's show. So we are heading live to the floor of the CBO with a special guest after this. Welcome back to Power Lunch, everybody. Bond yields lower today after that CPI report. Rick Santelli is standing by at CBO. Hi, Rick. Hi, Tyler. And of course, special guest, Mr. Global macro himself, Ira, how many years have been a member of Chicago Exchange?

46 years. 46 years. In the 70s, when you walked on a trading floor in Chicago, he's the guy you wanted to emulate. Okay, let's go right into it. Recession. It seems as though the New York Fed looking at three months versus 10 years spread, and they're saying the chances have gone from the mid to plus 50s into 68% chance of recession. Your thought?

Well, really, it's a metric. I don't really care about it because, as they said, what's a recession? when your neighbor loses a job, depression is when you lose your job. This is too hard to ascertain in this time, especially with this law and upon me. So I don't really have. And nowadays, just because, you know, recessions coming doesn't mean equities couldn't rally right to the point where you get the release of a negative quarter of GDP. No, because the equity market is a totally, and the Fed keeps to me making this error that that's what they're measuring financial conditions. Well, that's nonsense.

The underlying financial conditions by anybody's metrics are tightening. But I believe that what the Japanese have been doing with their currency and the amount of global flow of currency out of Japan's around the world changes that dynamic. Follow the capital. All capital is fungible. All right, inflation, CPI today. I thought it was the year-over-year headline under 5%. What did you think about it? Well, it definitely moved the markets because we're driven as Stan Druckenmiller's talked about even, that the movement from the artificial intelligence algorithms that are pegged to headlines created an enormous amount.

I thought it was kind of funny, and if you watched the gold, the gold, of course, popped up to 2056. And people out here who think that you can buy gold if you think inflation's going up or sell gold if it's going down. History dictates, it just doesn't correlate. It does not correlate. And everybody by every metric, gold ought to be at 1580 to 1630. And this ought to be bothering a lot of people because even as the Fed and other essential banks raise race, gold fails to break. Will it? It might.

And I'm not a gold book. It's a sterile commodity. Interest rates have been moving up over. they're moving down now. That is always a killer. And finally, debt ceiling. What do you think about the debt ceiling issue? Well, it's an interesting discussion. We keep being held hostage to all these times

and the politics of it. You know what? I'm with Sand, Drunken Miller and others. Chris Wayland have talked about. I'm not interested in the debt ceiling. You got an issue of debt, but because, you know, we don't know what that means anymore and its impact, but as interest rates start rising and the cost of carrying that debt, that's the significant factor.

I got you. And real quickly, central banks, you think Bank of Japan is where you're supposed to pay the most attention. Yeah, because their policies for the yield curve control, which we talked about in 2016, we can go back. It's driving a lot of capital around the goal. I couldn't agree more. Tyler, Kelly, back to you. Reagan, Ira. Thank you, both.

Let's get to Courtney Reagan now for the CNBC News Update. Hi, Courtney. Hi, Kelly. It's good to see you here. Is your CNBC News Update at this hour? Congressman George Santos pleaded not guilty to money laundering and fraud charges. in felony court today and has been released on a $500,000 bond. Santos had been charged by the Justice Department on 13 counts.

The New York Republican's next court appearance will be June 30th. He is expected to hold a news conference later today. Paramount Brands is expected to lay off about 25% of its U.S. staff as MTV News shuts down. In a staff memo, CEO Chris McCarthy, said despite Paramount's, quote, success in streaming, we continue to feel pressure from broader economic headwinds. This round of cuts comes four months after Showtime, off 120 employees. And the NBA announced today that Mike Kishefsky has been appointed special advisor to basketball operations. Coach K won three Olympic gold medals as head coach. He will

provide counsel to the league office and NBA team executives. The NBA's president of league operations said, quote, we are honored to have Coach K join the NBA family in a statement today. Kelly and Tyler, back over to you. He can only be of service and help there, and he knows many of the players and I suspect many of the owners and executives. Thanks, court. ahead on Power Lunch. CNBC is out with our 11th annual Disruptor 50 list. Yesterday we heard from the green tech firm building autonomous tractors. Today we're taking a look at a company using automation to disrupt a different industry. We have the details next.

CNBC is out with our 11th annual Disruptor 50 list where we highlight private companies chasing some of the market's biggest opportunities. Let's take a look at number 25 today. Zipline sounds fun, but it's not what you're thinking. The logistics company just recorded at 600,000. autonomous delivery last week, and it's on track to hit a million deliveries by year-end. They got their start making critical medical deliveries in Rwanda, but have since branched out into various sectors, including food, retail, and transportation. Joining us with more as Zipline CEO Keller Renato Clifton.

Keller, congratulations. Welcome. Thanks for having me. Where are you making these deliveries? Is this right here in the U.S.? You've already made 600,000 of them? Thepline actually operates in seven countries today. We originally launched in Rwanda in 2016. We started focusing on health care logistics, delivering crucial things like blood transfusions, vaccines, infusions, transfusions.

But as you mentioned, today we've also expanded into quick commerce and partnership with Walmart in the U.S. and then also food. I can understand where the utility would be in the case of medicines and medical products and so forth. I wonder how you jump the bridge to commercial uses and whether the devices, some of which I see there, are most useful in less densely populated areas. And I guess the question then is, what is the use case in an urban area like New York City or Chicago or D.C.? or even a suburban area? Yeah. Yeah, those are excellent questions. So, I mean, first of all, you know, all of the health care deliveries we do are commercial. Most of Zipline's distribution centers today are actually gross margin profitable.

We started with health care products because there's an incredibly high need. There's a high willingness to pay. And it was easier to get regulatory permission. You know, Zipfline works with civil aviation authorities in each of the seven countries where we operate. When it comes to, you know, rural, suburban and urban, the vehicle you see behind me that we've been operating, this kind of a platform which we've been operating for the last seven years was really designed to serve enterprise use cases, healthcare use cases, and serve rural areas. The product that Zipline launched just five weeks ago is our home delivery service. And that is a system that is designed

to serve 99% of addresses, including in urban and suburban centers. By the way, when you mention urban, people always think of New York City and Chicago when they think urban. The reality is most cities, even in the United States, don't look like Manhattan or Chicago. They look more like Phoenix or Denver, L.A., you know, Houston, Dallas, like those places, this technology can have a huge impact in terms of delivering 10 times as fast, half the cost, and zero emission. Do you have FAA clearance, Keller, for doing this on a commercial scale? Because I'm, like, taken aback that I haven't heard about this. If you guys have already been out in the marketplace doing this for, you know, salads and pizzas and all the rest of it. And I think the concern about

urban areas is more just about, you know, pinpoint accuracy and the density with which drones might be flying overhead. Yeah, we operate three distribution centers commercially in the U.S. today, and that's expanding. I think sometimes people are surprised, though, because we didn't necessarily start in the places that people expect technology to start. You know, our first distribution center in the U.S. was in Charlotte. Second was in Bentonville, Arkansas. But the reality is, you know, we think it's really important to design these kinds of systems to be less obtrusive than the way that we're delivering today. There will be 4 billion instant deliveries made in the U.S. just this year. And we're using a 3 to 4,000 pound gas combustion vehicle driven by a human to deliver something

to your home that weighs on average five pounds. That's really expensive. It's loud. It creates pollution and it's surprisingly slow. And so we actually think it's inevitable that this is going to shift towards systems that are quiet, less subtrusive and actually good for the environment, right, like zero emission. And we can do that we'll making them 10 times as fast. It's fascinating. Fastening stuff. Congratulations again. Yeah, Keller, thank you. Keller Renato Clifton joining us from Zipline. All right, folks, as we head to break, CNBC is celebrating Asian American and Pacific Islander Heritage Month throughout the month of May, sharing stories of business leaders in their community. Here is Ida Loo, global head of city, private bank. It's really important for allies and those not in the Asian community to understand some of the values and the cultural nuances and the cultural beliefs of Asians, right?

For an example, we're brought up to be super humble, to be modest, to not tout our accomplishments, to work hard to keep our heads down, to be quiet, to not boast, to not brag. Those are sort of the opposite things that you need to have to be successful in corporate America. But just knowing that and knowing that there's differences culturally is half the battle to understanding more about the Asian heritage and the Asian culture. Welcome back to Power Lunch. I'm Dominic Chu with a market flash on Rockwell automation. Those shares are falling right now, roughly 3% on a Wall Street Journal report saying that the Biden administration is investigating whether the company is exposing U.S. infrastructure, to a potential cyber attack through its China-based operations. Now, a company spokesperson did tell CNBC, they have not been notified of any investigation into its business practices in China. And then adding, quote, there has been no report or other indication that these practices and protocols have been breached or that any of our products have been intentionally compromised.

Nonetheless, that stock, Kelly, Tyler, falling on that report. I'll send things back over to you guys. Dom, thank you, Dom Choo. Coming up, Airbnb, Twilio, and the New York Times all lower after earnings. Our trader reveals which one she thinks is a buying opportunity. A fresh three stock lunch on deck. After the break, stay with us. Welcome back.

Time for three stock lunch. I just bit my tongue. We're trading three names, all moving to the downside post earnings. We'll start with Airbnb falling 10% on its cautious outlook for Q2. Despite beating on the top and bottom lines, it warned second quarter comps could be unfavorable compared with the year ago, as pent up travel demand grapples with cost pressures. CEO Brian Chesky saying on our air this morning, our hope is that prices don't go up, especially in this economy.

Here with our trades. Today is Victoria Green. She's CIO at G-squared private wealth and a CNBC contributor. Great to see you, Victoria. Would you be a buyer of Airbnb here? I am. They've got some great supports. You've got the 200-day moving average around 110.

You've got two recent lows at 109. So, yeah, today's a bloodbath. But generally speaking, we're constructive on the stock. They have the highest free cash flow ever. I know they're saying comps are going to look bad, but we think the stock offers a lot of value. You're seeing travel come back in the cities. You're seeing travel come back internationally. And of all of these travel stocks and these direct booking stocks, they have the widest moat and biggest scale. So yes, there's more competition.

But I look at it like this way. Let's say people are getting squeezed and you're a large family looking to travel. Maybe you drive, not fly. But there still offers, if you have a kitchen where you're not eating out every meal on vacation and you have a little more space, it's certainly more cost effective still than a hotel for a large family. So I do think it might be a little rocky. I like our supports. I like where they're going.

I think it's a well-run company. And for me, it's still a buy. Yeah, and a profit, believe it or not. A similar story for Twilio, I suppose. Week guidance is the cause of the shares heading down, despite posting a first quarter beat. Management citing headwinds for its communications business. Guided second quarter revenue, though, below street expectations.

Down 14 percent the stock is right now. Worst day in six months. What do you think? This one for me is not a buy here. I'm still a sell. Look, this stock is down 80% to its 22 high, 90% off its 2021 high in the 440s. I just can't buy it here because their core business is maturing. You're seeing slowing sales, potentially slowing of customer base and what their customers are spending. And when you see a business mature and they're trying to bring on new product lines and they're trying to expand and bring things into it to continue to get that fast-paced growth,

they're going to have to spend money to get them integrated. They're going to have to pick up, even with their staff reduction of 17%. I see them just pressured on margins, pressured. And they said their core business is going to have headwinds, and that's just not something I can get behind a stock like that when they're saying they're going to have slower growth. All right. Let's move to the New York Times then.

Adding nearly 200,000 digital subscribers in the fourth quarter, but admitting its advertising business faces some steep challenges, economic uncertainty, shares are down 7% Victoria. It's its worst stay in nearly a year. They're up 12% since Jan 1, but I'm very curious what you do with this stuff. I can't buy out here either. I'm still a seller. Look, their ad revenue was down 8.6%. Yeah, they added 190 subscribers. So that was down from the 240,000 they added in Q4. And they mentioned, they said,

well, our rate of cost growth is slowing. Not that their costs are going down, but our rate of cost growth is slowing. So they're still seeing expansion and costs. They are struggling to get ad revenue in. And I see sometimes this might not be as sticky as subscription as they would like it to be. They're trying to build up this bundle, and that has been successful for them. But if people get pressured economically, they tend to look at some of this discretionary spending as a place to cut. Or advertisers look at how many eyeballs are looking per reader and per viewer. And I think the stock just may struggle to continue the momentum we saw it having Q4, and we may see slower and slower subscriber growth and slower ad revenue. And that's just a bad combination for a stock.

All right. Bad combo. Victoria, we know. Which one you would stick with, though, Airbnb. Thanks for your time today. We really appreciate it. Victoria Green. I still get the times every day. The paper. The paper version. We get two papers every day. You get papers? It feels like the highlight of the morning. They don't come until 9 a.m. though. All right. Yeah. Yeah. Because nobody gets the paper anymore. All right. It's almost closing time, but we have a lot of stories we want to get to. We will see how many we can fit in in the time we have left.

Power lunch is back in two. We've got a little more than two minutes left in the program and a bunch of more stories. we need to know about, so let's not waste any time. The clock is ticking there. First up, why flyers are fuming, according to JD Power Customer Satisfaction with air travel way down, second year in a row, key complaints, higher ticket prices, crowded planes, limited options, and scheduled delays, I have to believe. Biden's now going to make them compensate us for those delays, going to make ticket prices go up even further, probably fewer flights scheduled, people even angrier. But compensate when it's the airline's fault. Is it the airlines fault if there

no baggage handler's there? Is it the airline's fault if the cleaning crew isn't there? Is it the airline's fault if there's weather delays? I don't know. We'll see. Seems tangled. It's not like a tangle. Meanwhile, forget your shopping plans. The New York Jets will host the Miami Dolphins in the NFL's first ever Black Friday game. They square off 3 p.m. day after Thanksgiving with the game airing, get this exclusively on Amazon Prime. Amazon CEO Andy Jassy tweeting, quote, it's going to be festive. The full schedule will be released tomorrow night. This seems to be a beautiful sort of promotional tie. They get a big NFL game on Black Friday.

They can drive customers to Amazon. I wasn't even thinking about that. Genius. Genius is why. But how many people if they're using the streaming service on their TV are going to say, well, you can't buy something? Go buy Christmas presents. All right, Ireland made itself into a haven for multinationals with its 12.5% corporate tax rate.

The move does seem to be paying off. It is now considering starting a sovereign wealth fund with all that corporate tax money that it is raking in, putting a $1.5. little away for a rainy day, and there are some of those in Ireland. Quite clever. The only thing, again, very clever move. We'll see if it works. The only thing is you wonder if other countries go, wait a minute. So you were like a low cost European tax dodge and now you get to have a sovereign wealth fund built on top of it. Go Ireland. Yeah, I guess so. You could make the argument. 12.5 percent and their tax revenues are rising.

That's a case that lower rates sometimes may bring more taxes. Another sign, consumer spending could be softening, according to Bank of America. Total card spending fell more than 1% in April compared with last year. And as far as the labor market, B of A, saying unemployment rising faster among higher income households. And their pay growth is the weakest. That's the one to take away from this higher income pressure. And Disney reports after the bell today. Are we going to get in all these stories?

I want to. Can you believe this? 20 seconds left. Florida head wins streaming uncertainty. The ongoing writer's strike. Stock still positive for the year. And we've got 13 seconds left. To promote Tillman for Tita, he will be joining us on this very fine program tomorrow.

Thanks for watching Power Lunch. Closing bell starts right now.