Power Lunch - Markets trading mostly higher despite post-earnings declines from Nvidia & Walmart 5/21/26

Episode Date: May 21, 2026

Major averages are mostly higher on Thursday as stocks aim for their eighth straight winning week. Kelly Evans & Brian Sullivan are joined on-set by analysts covering Nvidia & Walmart to give their takes on the latest earnings reports while investors comb through SpaceX’s S-1 filing ahead of the company’s expected $1.5 trillion IPO on June 12th.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks near session highs at the market brushes off. Some rather odd Iran headlines. Welcome to Power Lunch alongside Kelly. I'm Brian. The market's up again, higher on the week. And if the gains hold, this would be an incredible eighth straight winning week. The NASDAQ 100 now up 16% this year. We'll get more on that.

Iran, Nvidia and more, Kelly. Plus, Walmart, flip side, seeing its worst day since 2023, the big box retailer issued disappointing guidance, raising some questions about the health of the U.S. consumer as high gas prices strain the budget. One top ranked analyst is here with a look behind the numbers. All right. So obviously, folks, there was a lot going on with that Walmart news, with the NVIDIA news, with Iran and oil. But let's kick it off with something else. But important, IBM, big blue, getting bigger right now. Shares popping 9%. IBM on pace for its best day in seven months. All this, on a report, the government is awarding $2 billion to nine different

quantum computing companies. IBM being the biggest quantum computer, the biggest beneficiary of the U.S. government and taxpayer dollars. And that stock then has been one of your next guest's top picks since early last year, calling IBM an underappreciated sleeping giant, poised to cash in on the next wave of AI and quantum computing. But after today's surge, Big Blue certainly seems wide awake. Sleeping Giant, sleeps no more.

is now a giant in his own right. Dan Ives, Global Head of Technology Research at Wedbush Securities. Let's get exhausting being right all the time. How do you handle it? Look, I mean, but to your point, I think it's trying to see around corners in this market. Like when you look like IBM or Quantum, I mean, we talked about that coming. Okay, but what did you, I'm being nice, but I'm also trying to make a serious point. What did you see with IBM that others may have missed? Yeah. Because we never talk about the quantum story. I think also it's Arvin in terms of the CEO. I think it's my view that he is someone that's way underappreciated by investors in terms of his ability, no different than Nadella and others or Jensen to see where the technology is heading.

The bet on quantum, the bet on AI. I mean, I really view this like a transformation that's happened in Armandk at IBM. And I think when you look at this news, this is not the end. It's just like Intel, right? Like this is just the start of these turn rounds. And I think IBM continues to be one that has massive upside. We've all been focusing on the AI race. But it's like I don't have the bandwidth to focus on the quantum race also.

Is the quantum race the same as the AI race? Does it leap ahead of the AI race? Because our guest last hour, when I asked him CEO of D-Wave to explain what Quantum does, he said, for example, it helps them find and test new materials. It sounds to me like something that we would have said that AI was going to be working on. So I'm curious if Quantum cannibalizes the TAM for AI or how would you describe its positioning. Yeah, and that was a great interview. I think what it is said, what it does, it really multiplies

it, because I view the AI revolution, the opportunity here, it's $4 trillion being spent the next three to four years. We're only 15, 20% through that. Quantum is really what I view is a derivative play on AI. So when you look what's happened here in terms of government... So do we need

AI for quantum? Or do we need quantum to push forward on AI? I think quantum ultimately will be the next level that's going to push forward in AI. And I think that, it speaks to our view, whether it's on power, on infrastructure, on quantum, this arm's always happening between U.S. and China, you need to see from the White House, they're going to continue to make stakes. No different than Intel, where they've done raw materials, quantum was going to be the next

day. And I just think where IBM is positioned so well on this front. But to follow up on what Kelly's saying, and we won't get into the energy. If quantum works, the energy demand story changes dramatically. We'll save that for a different day. Where are we in quantum? Is it still a fantasy? Are computers running? What's the Dan Ives you on where we stand? You always like to say what inning we're in.

Sure. So if it's inning, we're maybe in the dugout in warm-ups, getting ready for the first inning, right? In other words, because right now... Game hasn't started. Game hasn't started. If you look at a lot of the projects that's going on in Quantum, they haven't really hit scale.

If you look at I-O-N-Q, D-Wave, Rgetti, what they're doing, phenomenal technologies now slowly, they're going to continue to build that out. But if it works, though, are you convinced this is all going to work? Look, I believe that, like, could there be bumps in the road? Yeah, but I believe over the coming years, like, this is a core technology that, in our opinion, it also plays into the fourth industrial revolution. Because it's not just about Godfather of AI Jensen.

It's about, you have to continue to think about on infrastructure, on software, on quantum, on power. And I think that it's our view. That's how we're going to get in NASDAQ, 30,000. It just could be these other derivative, please. IonQ up 11%. Some of these names are up 20, 30% today. Not to go on a complete tangent, but, Brian, should energy investors be excited by or nervous about energy? Nervous. So quantum will use, the idea is that, and Dan, correct me if I'm wrong, it will you consume less power to do greater computational effects. So the compute all the horsepower, the energy

used to power all the data centers will narrow out because these computers, if they work, will do more with less. Is that a fair statement? It's a fair statement. I've never been interviewed by Kelly Evans, of course. I'm a little nervous. I'm a little nervous. And with that awesome title combined.

Just because I match your pants. That's the only reason you like the tie. But the one thing I say, but it's our view that, like, right now power infrastructure, it's essentially going to be really a super cycle that's going on in terms of infrastructure, that gas power because AI, because of fuel in the data centers. So quantum's on the other side of that. But for now, it's going to be, I mean, this is really a golden age on the energy infrastructure side that's AI driven.

So the people with all this compute and all these data centers and the energy, they don't have to worry about when they see the rise of these quantum players? Because right now it's still, like less than what, 4% of companies have gone down the AI path. Data centers are still getting built relative to where this is all. And I don't mean to belabor the point completely. while you do want to quickly ask you about NVIDIA and what was said last night, did we clear the bar for the next inning, I guess, if you wanted to put it that way.

Look, yeah, I think when the godfather of AI speaks, everyone listens. And I think what Jensen's talk about is showing, like, demands accelerating. And this doesn't even include China. It doesn't even include physical AI. It goes to our view. We've talked about $6 trillion for NVIDIA's Marcap and maybe ultimately $7 trillion ads is going to play out. It's also bullish for hyperscalers, and it's bullish. for the rest of the tech trade in terms of where this is all going.

And that's why I just think, like, the bears continue to be in hibernation mood, and this sends them further in with what we heard from NVIDIA. All right. Dan, appreciate it. In fact, we appreciate it so much if you stick around. We'll come back. We'll talk some SpaceX in a little while. Dan, Ives, thanks very much. Take a quick look at shares of Intuit, which are down 20% nearly after the earnings and tax

software company. Lifted guidance for the year, but announced it will cut 17% of its workforce. The CEO told CNBC yesterday, the cuts have nothing to do with AI and are just to improve efficiency. Oil prices, meanwhile, are still at relatively higher levels on the session today. How much longer can stocks and the economy handle it? We'll get into that and more with Jeffrey's David Zervos after the break. All right, welcome back to Power Lunch. Oil is now flat to mixed.

It's up a little bit here down overseas, but oil overall was higher earlier today. This is after Ron's new Ayatollah, or more. Importantly, somebody posing as him apparently issued a directive that enriched nuclear uranium must not leave Iran. Enriched uranium is how Iran would build a nuclear weapon. And Israel has made it clear that under no circumstances can Iran have enriched uranium. In other words, can't build a bomb. Basically the ability to build a nuclear weapon. Those reports earlier today sent oil prices higher on the thinking that the end to the war may not be as close as some had hoped.

If it seems confusing, don't worry. it can be. And it's because as we have reported for nearly two months, my sources have told me there are multiple parties asserting some control over Iran. And that is why the comments can often seem contradictory. You've got a peace deal one day, aggressive comments from Iran about uranium the next or reports of it. Because there are likely multiple groups or people speaking on behalf of Iran. That is moving markets all over the place. So folks, as an investor, try to look past some of these headlines into actual market data, like the ship traffic data we showed you for marine traffic.com.

Again, there's a live look. The good news is that it does look like some of the oil tankers in the Arabian Gulf are beginning to move again. Maybe they're just moving around because they have to make water, or maybe they're paying the toll to Iran. Either way, there is something literally shifting in the Gulf, and these headlines matter. because largely as oil goes, so to the stock market and bond yields. Kind of look at that.

They used to go in opposite directions, but lately they've been going in the same direction. And I think that's an interesting point, Kelly. In fact, let's stay on that topic and drill down more on oil inflation and markets with David Zervos of Jeffries, who's here on set with us. It's good to see you again. Good to be here. We're going to drill on oil. I like that.

I see what you did. Did you see that? You know, it was a good one. There's so many different directions to take this, right? You could say from one point of view, the economy and everything is holding up fine. From a different point of view, you've got the president putting some pressure on Kroger, you've got Walmart warning a little bit about the consumer today, and whether this is all sustainable with prices where they are.

Are we close to the end of this thing? And this thing being basically the Iran war specifically and all of these price pressures more broadly? I wish I knew, and I wish I knew someone that did know, and I don't. And I guess what I'm coming to grips with is actually the information that we've learned in the last two and a half months. And how incredibly positive that information is. What is it? That we have had a 50% rise in oil prices. And we've taken out all the rate cuts, three of them, in fact, and put in a rate hike.

So the rate structure, expectations have moved to 100 basis points in the front end. And energy's up 50%, 50%, give or take. And the stock market went up since February 27. Since that happened, since oil was $65 and we had rate cuts priced in, has gone up 8%. That is the information set that you need to carry with you right now. But is it just being, is it in disguise? In other words, is that all, hey, it's great that we're building out AI, but half the public hates it. And half the public is drowning with these oil.

So is it obscuring the story a little bit? I think there's some good and some bad. There's always been with the technology. story, the productivity story, the growth, and, you know, people getting booed at graduation ceremonies talking about AI, got to be careful with it. I didn't mention that one. Or be careful with the University of Rochester earlier today. Or be careful what colleges you speak at. Yes, that's true. I think all of them are you got to be careful with. But frankly, look, look, look, I think the counterfactual is how I'm going to look at it. I'm going to look at

it through a rosy set of glasses and say, if we never went in, we never went into Iran. And oil was still 60 to 65 bucks. And we were talking about Kevin Warsh being sworn in tomorrow in Washington, in the Rose Garden, or maybe inside if it rains. And the rate cut in June was on the table. And the rate cut by the end of the year, another one was on the table. And the rate cut in 2027 was on the table. We would be well north of 8,000 on the S&P. That's the information that I'm taking away from what we've seen in this price action. We've had two really negative shocks, a negative demand shock from the higher rates, a negative supply shock from the higher energy. And the market just, okay, I'm only going to go up 8%.

I guess I get to play the bad guy. Let's go. David, I'm your father. Walmart is down a very ominous 6.66% right now. Yeah, I know. But it's still up 25% over the last 12 months. I want to be very clear. Don't at me, folks.

Walmart's down today making comments about higher gasoline prices, saying that basically the average fill up was under 10 gallons, meaning people are just kind of putting in what they have to. They're not filling up. Does that change your thinking about anything? No, I also looked at the GDP now forecast out of the Atlanta Fed, and it's got a four handle on it for Q2. It's popped up. So, you know, we have had an incredible growth story now, not just for the last year or two, but for the last three years, we've had incredible growth without, Brian, without a lot of job creation. That is productivity. We are seeing. We are a major productivity shock in our system.

We are able to produce more goods and services without a lot of hiring and without a lot of firing. You're going to get booed off the stage right. But you've got to admit right now. I don't know why. I mean, I have an idea. Like, I have a thought, right? But it's not for this show. Okay.

As to why there's almost like people want to be negative. They want things to be bad. And yet every firm, some of your competitors, they're raising their price targets in the S&P. They're making, there's a firm called Goldman Sachs. I don't know. I think they just raised sort of their output models, right? I know you laugh at that. But everybody's raising, and yet there's this weird aura of negativity over the market.

Well, we've had a consumer, I mean, the consumer confidence data has been weak for ages. People are, there's a lot of angst. And maybe, Brian, you're right, it's something else going on in our system. There's political angst, there's emotional drivers that have people very, upset about the direction of geopolitics, about the direction of politics in general. I think there's something to that story. But the bottom line is we are growing, and we're growing well above what most people would consider to be potential, and we have been for three plus years with an unemployment rate that's been rising and only recently has kind of stagnated a little bit. So this is productivity,

and we just have to hope, and I think we will get this, that the creative destruction that comes back into the labor market from that higher productivity doesn't create a political swing that stops the productivity and AI itself. By the way, it's not just AI. You're right. It's deregulation, it's certainty on the tax code. It might be COVID. Remote work. It could have been, I think it did start. I think that really accelerated it. But I think some of the changes in the one big, beautiful bill did have an effect on productivity. They made a very pro-business outlook get even more pro business. Rick Santelli wants to get in here. Rick, your two cents on what you've just heard in terms of rates, productivity, Warsh. Well, you know, even though inflation is what on a 62nd month

above the Fed's target, what I really think that many are forgetting, and let's pull that chart for 10-year yields starting on January of 2025. There's two things on this chart that are important. The first thing is, is that on the very right side, Tuesday's close, was the highest yield closed, January 25. But you see the lowest level on that chart? That was the day before the conflict. That was end of February, what, February 26th, 27th, okay? We had a 3.94% yield close in tens. That was a cycle, low close. So all this talk about inflation and the Fed, you know, hair on fire on inflation. I get it. But that dynamic is solely, solely due to what's going on in the Middle East. if you look at what the markets are doing, and I know a lot of those blue blood firms have

had their say, but not many of them thought stocks would behave the way they have since the war began. And I think the reason is, and it goes along with what David's saying, is that the underlying part of the U.S. economy that's outside the jurisdiction of what's going on in the Mideast is cooking in Greece. And in terms of yields, we might have been significantly lowered yields than the 4% breach that we had at the end of February. So I think that's very important. The other thing that's hugely important when everybody's hairs on fire is what the Fed may or may not do. Here's two charts.

July Fed Fund Fut Futures for two months and DeS Fed Fund Futures for two months. You see the difference there. The July line is basically not looking for any activity. The Dees, five meetings away, is going down. And when it goes down in Fed Fund futures, the percentage of easing go up. barely over 50%. Five meetings down the road. Five meetings down the road is not what that contract is designed to inform us on.

It's basically one to one and a half meetings ahead. There's accuracy there, and only when you get close to meetings. To talk about five meetings down the road in any type of concrete fashion will be like telling me that the Cubs are going to win the World Series in 2030. And maybe they are. I won't say that. Rick, thank you, Rick Santelli. Dave, do you want to respond to it?

One thing I don't quite understand is when, you know, they say on the one hand, you know, look past the Iran war. Okay, but inflation's still stick. How much of this are we supposed to look through? And how much when Warsh comes in is he supposed to sit down and say inflation is the Fed's ultimate responsibility, as he said this whole time along, and therefore he's going to tighten? I think you can put a lot back to inflation expectations, which in the tips market, tell you long-run inflation expectations really haven't budged. You can look at most of the survey data, which tells you it's really a short-term spike in inflation. So I don't think you have a de-anchoring of inflation expectations going on here. You've got more pressure coming in from real

rates, almost, than you do from the inflation expectation component of nominal rates. Real rates being what, growth or deficit? Real rates, you know, we can break a nominal rate into real plus inflation, and we can look at that in the tips market. And a lot of the yield rise has actually been real, which to me suggests people are levering and borrowing on the future that they see is more rosy. That's the hyperscalers kind of saying, let's come in. By the way, our primary issuance, debt capital markets at Jeffries, on fire. We're doing loan deals. We're doing high-yield deals. Everything's ramping. Now, equity was great. Equity capital markets have been, you know, that's been a great story all year. Debt was kind of like, you know, the private credit story,

which was, you know, we haven't talked about that in a while. Yeah, we can, by the way, but I don't time you're like, but now it's like it's all back. It's all back. And the dead guys are coming in. An incredibly important story. I think the COVID story. It's something I've been thinking about a lot lately is that tens of millions of people work from home all are part of the week.

Tens of millions of people. So the price of gasoline going up, the importance of it, while critical to a lot of people, I get, I'm not minimizing the gas prices are at four-year highs. They were higher in 2022 than they are now. But there's also a lot more other inflation since 2022. But I think the energy. price shock story is less, you can't compare it to pre-COVID periods because now millions of people don't have to drive to work if they don't want to. So it puts more money in their pocket. I think

people are saving a lot more money not commuting than we know. Also, we produced a lot more. Back in 2017-18, we were at 7 million. Now we're at 14, 15 million. I mean, we are, to use your word, drilling, and we have a lot more. Look, I think there's two. If we have time, two really important points on the COVID thing and one other on the oil, one on COVID, one of the oil. On COVID, you have to remember, a year after we shut down, so if we go to March of 2021, we got back to the same level of real GDP. We were making the same amount of stuff. We went down, we went back up. Same level, eight million less people were working. That is productivity. That is the definition of productivity. We were able to make the same amount of stuff with eight million less people. Why don't we ever talk about that? So we learned. how to not use as many people. And we started really, really running with that as a business concept. Do you think that's why firms are still shutting jobs? Because they kind of discern in that moment, hey, maybe we can do more with less.

And then they will hire. And they're competitors that were really reliant on a labor force that needed to interact with each other all the time in person. They didn't make it. So you had a selection bias that happened. The second thing I would just say on oil, and this is really important, Brian, because you have such good contacts there. The ability for the administration to get oil prices down fast when they want to, when this all ends, is right there. And I'll give you one word, sanctions.

If you pull the sanctions off of Venezuela and you pull the sanctions off Iran, and the president toyed with the Iran sanctions statement Monday, and the market saw that, you start to talk about sanctions going away, wham. It's over. I know we got to go, guys, I got to say. something on this. That's got to be the end of the war. I'm going to give you my view as sort of the energy guy. Number one, if the right people somehow get in charge of Iran and the people get free, I'm not saying they will, but let's hope so, because the people of Iran deserve freedom,

and not to be killed tens of thousands en masse by a cruel and brutal regime, which needs to go away. 100%. Iran can go to 5 million barrels of oil a day. UAE's at 3.1. They just left OPEC. They're probably going to go to 4 or maybe 5 million barrels. Then as well, it can go to 2, 1⁄2 in the next three years. I could easily make a case for $45 to $50 barrel oil in the next 12 months. No problem. I'm not saying it will happen, but those are the numbers the people I'm talking to are talking about behind the scenes. And those are the women and men that are moving the oil market. And if you pull the sanctions out, the investment goes in. The investment goes in to get that ramped. And you could go well north of that in Venezuela, I think, over the long run.

It's exciting. It makes the show great, a little glimpse of what may be to come hopefully. David, thanks. Really appreciate it. Always a pleasure. I like the McLaughlin group a little bit. Anybody remember that? I remember. I love to. All right. So is Walmart's latest earnings maybe putting a little bit of a red light or at least a flashlight on the consumer? We touched on it with David. We'll talk more about it coming up. We just talked about it a bit. Let's dig a little more into Walmart. The stock is down 6.6%. The retailer issued a little bit of a worse than expected outlook. Gas prices, a big part of that story. Walmart's CFO John David

Rainey joined us earlier to break down some of the pressure that is weighing on their shopper. We sell a lot of fuel in the United States. The average gallons that a consumer is filling up with has fallen below 10 gallons. It's the first time that's happened since 2022. So it does show that there's a little bit of pressure on the consumer right now. Joining us now with his take on Walmart's earnings, the state of the retailer and maybe the state of the consumer, is Greg Mellikey, a senior managing director at Evercore. ISI, you walked into, I mean, we were just talking about this. We needed you in the last group. Gasoline prices do matter. They're the highest they've been since 2022. By the way, nationwide, we were at 550 in some areas of the Midwest. We're higher four years ago than we are now. What's your read on gasoline and Walmart? Well, it certainly matters. And Walmart just flagged why that is. It starts with the low-end consumer and that it builds into the middle. And I think what we're

seeing right now is in the last few weeks, a crossover. We're basically the tax cuts, the big refunds is everybody getting, the year-over-year tax refund benefits crossed over the increased gasoline costs the third week of April. And it seems to coincide with when we started to see some pressure from hearing across retail that maybe things weren't as good as they were back in March and early April. But shouldn't that be the opposite, though, if people are getting the refunds. Shouldn't they spend them? They spent them and it allowed spending. Retail sales were strong in March and April, early April, up over 5%. Because they got their refunds right away. Or they did that like, prepay the refund at H&R Block, whatever it made.

You got it. They got that early part of the refund. I think now as we go forward, the real tug-of-war will be how long does gas stay this elevated versus what are the ongoing benefits of the tax cuts? And the tax cuts are about $125, $130 billion. So remember, there's still that ongoing that comes out of people's withholding. So we're not in the view that it has to collapse from here, but we do think there's a little bit of a softening from where we were back in March and April. Is it broad-based? You know, you're picking this up across kind of different companies and in different places? I think we are. It's been a value-focused consumer now for well over a year. And I think what you've seen is that you maybe would have had a bigger acceleration. We think retail sales

could have accelerated over 6% if you hadn't had the Iran conflict perk up again. And oil prices go to where they went and then gasoline prices. So I think what happened is that was sort of masking for the first six or seven weeks, what could have been an even stronger March and April period. The question now will be, what's the real supply side effect of the ongoing tax cuts in terms of helping from your earlier segment? I think that's really the key thing to watch here. If we get jobs growth, then I think the consumer will be fine. But it is still a value-focused consumer, for sure. Have we seen, and Walmart's the big dog, along, I think, with Amazon and Costco on the retail side.

Fair statement, Greg? Fair. Okay. What have we heard from those or other retailers you follow and cover that may add to the, Walmart story or maybe counter the Walmart store? Well, those big three are about 24% of U.S. retail sales. Wow. One fourth, three companies. So basically, and we think they're going to continue to grow several hundred basis points faster than overall retail. So what does that mean? They all win basically because of a strong value proposition, a wide assortment for your Amazon, and convenience,

which is really where Walmart's been leaning in. And I think you can see in the Walmart results today how they'll continue to be part of that winning group, which is by having traffic growth that accelerated to 3% that's showing not only, it could be even some higher income consumers that are signing up to their Walmart Plus membership and saying, you know what, a great way. I mean, everybody loves to save money, right? So if I can buy Cheerios for $4 a box instead of six, why wouldn't I join Walmart Plus and have it delivered?

So I think that's what you're seeing across different income groups. And I think that will continue in terms of them gaining share. What would your kind of stock recommendations be that? I mean, this feels like the kind of time when you might not want a lot of exposure to this sector in general, although we saw T.J. Max's stand out again. We see Walmart doing well. I mean, today notwithstanding. Costco selling off, BJs is down a little bit. Target had that good comp. So what do you do now? Well, so we upgraded Walmart a few years ago, basically on the turn that they're getting from their digital businesses and all this so that could drive traffic.

We took it out of our top five list a couple months ago because it just got a little too expensive to us. Now it's starting to get more attractive. So our top five is led by Amazon, which is still in there. But I would look at some other defensive growth names like O'Reilly Automotive or even Sherwin Williams. So we're trying to be eclectic and pick our spots across retail. But that is, to me, Walmart is still a winner. Costco's a winner. That's outperform rated. It's just they've had such a nice run the first few months of the year that I think if there is a second or third opportunity, I would say, you know, back up the truck on them.

All right. Greg, appreciate it. Thanks. Thank you. Coming in today. Greg Mellick with Evercore ISI. Well, three, two, one, blast off. SpaceX officially filing for what could be the largest IPO in history.

That man over there, Dan Ives with the cool kicks, is back with a look inside Elon Musk's investor pitch, a high-stakes vision of Mars, money, and the future of humanity. After this. SpaceX has officially filed for what could become the largest IPO ever. And if the hype matches the valuation, it could make Elon Musk the first CEO to lead two separate, trillion-dollar public companies at the same time.

Joining us now, our all-star panel, Wed Bush's Dan Ives, is back. Entrepreneur shares founder, Joel Schulman, who runs an ETF with SpaceX exposure, joins us as well, and along with our very own Sima Modi. So welcome to all of you. Dan, just start with you, kind of go around here. SpaceX revealed that it had, what, $18 billion in revenues last year, $5 billion of losses. Why should this company be worth a trillion and a half dollars? Yeah, and it's obviously a good question.

I think investors, it's looking around the corner. In other words, data centers in space, Starlink. This is really going to be the foundation for the new category of space that really they're creating from an investing perspective, no different than tech starting in the late 90s. So it's my view, this is just the start because what Musk essentially is done here is create what's going to be a new category that I believe we're talking about many trillions of dollars that are spent. And there's no competitor that you could look at. Like, what about them? What about it? They've really become the foundation hearts and lungs of the U.S. space.

Joel, one question, if this is an $80 billion IPO or I'm sorry, a $75 billion, whatever, that is. Would, do you have to see the company be made part of the S&P 500 upon launch, basically, in order to raise that much capital? How important is it that the major indexes kind of fast-track its debut in order for it to meet those IPO targets? Well, you hit the nail in the head. I mean, the NASDAQ, which has about a half a trillion to a trillion is tracking, obviously, you know, the NASIC 100. And if it's going to be immediately listed within the first two weeks on the NASIC 100, and there's a 5% weight for Tesla right now, which corresponds, which has about a one to half trillion dollar valuation. So if we assume SpaceX had a 1.5, 1.75, 2 trillion dollar valuation, it's 6%, which is $30,000. Which is $30 billion. of buying power, forced buying power right out of the gate in the first two weeks. Then you've got the S&P, which has about $15 to $20 trillion in terms of ETFs and corporate mandates and mutual funds. And that's going to be another 300, and that's a 2% way for SpaceX, which is about $1.5 trillion.

So that's another $300 to $400 billion buying power over the six months. So you've got about $30 billion coming within a couple of weeks, and the $300 to $400 billion over the course of six months with the lockup. So that buying power looking at, and you mentioned something on 80 million. Jill, here's my question and the reason why I ask. And this is a good question that's come from the audience. There's a lot of debate about this online. Are the indexes giving SpaceX a huge favor by fast track?

There might be people in the S&P 500 who are like, I don't want, no, no, they had 19 billion to vote. I don't want exposure. Are they the ones who are pushing to create this forced buying of the IPO? Is this forced buying of the IPO? Or is this people lining up desperate to get a piece of it? I think it's both. I mean, we're living proof. Our ETF, which you mentioned, has we have a 23% weight.

And people are clamoring to get in. I mean, we've raised about a billion dollars in the last month from retail. This is retail. People, $500, $1,000. People want in, and they want in sooner rather than later. And they've been locked out of private equity for, you know, up until recently. Yeah, it's always been the area. for accredited and institutional investors.

And so retail wants in on these types of plays, and it won in sooner rather than later. So I think it's both. And I think we're going to see that coming right out of the gate. I think it's going to be a hot IPO right out of the gate. See, Momodi, how important is this Elon Musk guy to all of this? Okay, so SpaceX, as we know, is hugely reliant, Brian, on Elon's Musk. So much so that in the company's S-1, they list Musk's reliance as a potential risk.

Here's a line of the S-1. We are highly dependent on the continued services of Mr. Musk, our chief executive officer and chief technical officer and other key personnel and a loss or reduced involvement of one or more of these individuals could adversely affect our ability to execute our business strategy. Guys, as listed in the S-1, Musk has 85% voting control. He owns 41% of SpaceX shares. So it's a significant amount of control. As to how this could transpire, and it could effectively help him control board elections, limit activist investor. engagement, curb, shareholders' ability to make strategic changes or leadership changes. And it's certainly a trend that we've seen across Silicon Valley. A number of these founder-driven IPOs over the past 10 years, Mark Zuckerberg of Meta really

normalized this idea when it went public. But others followed. Snapchats, Evan Spiegel, Palantir, Alex Karp, using this type of dual structure to retain voting power. And, Dan, a question for you. I'm wondering how you think SpaceX's IPO structure in a way was informed by his experience taking Tesla public and some of the issues he faced with the board around 2018 and the whole opportunity to take the company private?

Yeah, I think it was a learned experience. And I think investors have learned too because those that bet against Musk and Tesla, I mean, that was proving a historical wrong bet. I do think the structure of SpaceX, look, Musk is the hearts and lungs of SpaceX. But it's also our view a year from now, 2007, an 80, 85% chance, SpaceX and Tesla, ultimately merged, which just further adds to, you know, what I view is the Musk Foundation. And I think that is what investors want, because when you're buying SpaceX, you're buying Musk. But that's no different than when you're buying Nvidia, you're buying Godfather of AI. And they've become

synonymous with these companies. I mean, there's also an incentive, Brian, as you know, and he's created in this S-1, which is he has to reach certain targets, right? A million people on Mars and also a $7.5 trillion market cap seem pretty crazy. But, I mean, is that, Is that possible? Joel, is it crazy? Crazy's good sometimes. Crazy's good. Yeah, I mean, certainly it's a reach.

I mean, when you think about Elon Musk, I mean, is your panel indicated? I mean, the company is really dependent upon him. And in fact, I'm also an academic at Bafton College, a professor there, as well as a fund manager. And we study entrepreneurs. And when entrepreneurs are good, there's nothing better. And arguably, Musk is the greatest entrepreneur we've ever had. I mean, we've got to remember that Rockefeller, who is previously considered the greatest entrepreneur of all times, made most of his wealth after the age that Elon Musk is right now at age 54.

And so 80% of Rockefeller's wealth came in at that point. Musk arguably is at the beginning of perhaps a nine-inning game. And given the choice between Elon Musk running the business or somebody else who's more bureaucratic, 100% we want Musk. Yeah. And I agree 100% with Joel what he's saying, because, you, Musk is the core hearts and lungs of SpaceX.

And when you, when you understand what's happened on the factor for engineers, why they go there, it's part of the Musk ecosystem. And I think that just, it's going to further expand from Tesla to other adventures. You know, people say,

well, but what if something happens to him? But I guess then everyone just sells, and that's the end of the story. Look, and I think if you go from carp to Palantir to Nvidia to Zucker, I mean,

we've become more and more dependent on these CEOs, but it goes back to like those that bet against Musk and Tesla that proved to be a historical wrong bet. Got something handed to them, but it's a family show. Dan Ives, Simomodi, Joel Schumann, really appreciate it, everybody.

Thank you very much. Getting out of Pippa Stevens with a CNBC News Update. Hey, Brian, the Trump administration this week onboarded more than 80 new immigration judges as it pushes to speed up deportation cases in its illegal immigration crackdown. The administration has fired dozens

of immigration judges over the past year. Officials tell CBS News the new crop will bring the Immigration Corps back closer to the 700 judges in place before the president returned to office. Live Golf is taking its updated business plan and investor pitch out to potential investors today to secure $350 million in funding after the end of this season. That's according to people familiar with the plan. Parts of the proposals seen by CNBC are targeting qualified investors and aim to quote fully recapitalize Live and and drive a path to profitability. The move comes weeks after Saudi Arabia's public investment fund

pulled the plug on funding after this season. And in preparation for Memorial Day, soldiers placed American flags at every graveside at Arlington National Ceremony Cemetery today. The tradition called the flags in ceremony goes back to 1948. 1,500 soldiers fanned out across the military burial ground, placing about 250,000 flags. Brian, back to you.

All right. Thank you very much, Pippa Stevens. All right. Coming up, the international market that your next guest says you should be looking at to play the AI trade. That's right. AI overseas. It's next. And welcome back to Power Lunch. I'm Dominic Chu with your market navigator today. Although U.S. markets have been outperforming lately, is it time to take a look at emerging markets again. Our next guest is looking at one Asian market in particular that he says could be the best of both worlds when it comes to international and. and tech investing. So joining us now for the case is Todd Gordon, founder of Inside Edge Capital. He's also a CNBC contributor. So Todd, let's talk a little bit about why that EM story is coming back to light for you, even with all the attention on tech stocks, Nvidia in particular, and the outperformance we've seen in America. Hey, Dom, yeah, for sure. So I like to be, you know, we're visual investors. So what we can do

is you take the emerging markets chart, divide it into the S&P, and you can see relative outperformance. S&P U.S. stocks have been outperforming emerging for the last 16 years, but if you just draw a simple trend line, that's starting to reverse in favor of emerging markets, right? So emerging markets is heavily Asian. In fact, it's 25% Taiwan, 22% China, and 21% Soco, which is South Korea, which is what we're going to talk about. So there's a lot of heavy chip and tech companies you're going to know about. So within that emerging markets, We're going to look at South Korea and KOSPI, okay? Now, South Korea is really at the center of one of the biggest choke points,

Dom, of this AI trade, which is bandwidth, right? So DRAM, HBM, high bandwidth memory. So what we're seeing is we're seeing a pretty good rotation into those names. It's not a winner take all, but in fact, there's multiple participants. There's going to be multiple winners here. We're looking at rotating into some of those areas of the market. All right. So, Todd, let's talk about whether or not a lot of investors here,

traders don't have access to the South Korean markets. per se, there are ETFs that track them, country ETFs, there are other types of ETFs. What exactly are you doing to gain that exposure? Sure. There's a new one out from Roundhill. It's called DRAM, ironically. And it's got a huge amount of exposure to South Korea, which are the producers of these choke point memory parts, right? So we'll talk about that in a sec, but just to talk about how strong the South Korean economy is right now, Goldman has had to up their forecast three times this year, up to 130% of growth this year in terms of earnings. Plus, there's a lot of tailwinds in South Korea.

Believe it or not, we have a weak dollar in the last couple of years. The Bank of Korea is quite accommodative, and there's record account surplus. So there's a big appetite for South Korean equities. This DRAM ETF that came out is 25% Samsung and 24% SK-Hinix. So you get half South Korean exposure just by buying that new ETF. We're looking to add to that to our portfolios for investors. All right. Todd Gordon, Inside Edge Capital with a case for not just dynamic random access memory anymore, Kelly. It's now an ETF ticker. I'll send things back over to you. Indeed, it is. A sign of the times. Dom, thanks very much. More power lunch right after this. Eli Lilly today announced that its weekly weight loss injectable drug is showing significant results for obesity patients, part of its phase three clinical trials. The drug targets three major gut hormones, doubling it triple G. Popular weight loss drugs in the market like Zepban and Wegovi. only mimic two hormones. Shares of Lily Kelly are slightly higher,

but the data is huge. 85 pounds. If the current wants to make you feel a little meh, to quote Joe Kernan, how are the supercharged versions going to make you feel? Really, meh? I'm very curious about that aspect. Anyway, let's go across the Atlantic now to the Cannes-Con Film Festival that is taking place today.

Hellgrind is a sci-fi movie made by Higgsfield AI. We're showing you a glimpse of it now. It cost less than $500,000 to make 400K of which went just toward compute power. The movie is playing at the film festival, and we will wait for reaction from the creative community, Brian. As I think, again, these areas, the backlash against AI generated everything, movies, music, and so forth, is growing. Yeah, it's not good. It should be its own category. Yes, that's a good point. Its own category. Anyway, thanks for watching, Power Lunch, everybody.

Closing Bell starts right now.