Power Lunch - Musk vs. Altman & NYCB 3/1/24

Episode Date: March 1, 2024

Elon Musk is suing Sam Altman and OpenAI. Musk says they breached a contract and got away from their mission to use AI for the good of humanity. Walter Isaacson, who knows Musk as well as anyone, will join us to discuss. Plus another big day of declines for New York Community Bank as the company flags new problems with its internal controls. We'll look at what this latest event means for banks and the markets more broadly.  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. She's Leslie Picker. I'm Dominic Chu. Elon Musk is suing Sam Altman in Open AI. Musk says they breached a contract and got away from their mission for the use of AI for the good of humanity. Walter Isaacson, who knows Musk as well as anyone else, will join us later on. Plus another big day of declines for New York Community Bank as the company flags new problems with its internal controls. We'll look at what this latest event means for banks and the markets more broadly. Today's stocks, though, they're higher. The NASDAQ once again leading the way, hitting a record high. All right, shares of Boeing, meanwhile, following.

But Spirit Aerosystems jumping right now on reports that Boeing is in talks to buy that supply company. Spirit is at the center of Boeing's latest 737 Max problems, as its factory made the fuselage that experienced that door plug blowout earlier this year, Leslie. Pretty remarkable to watch that deal or a potential deal. We'll begin with Elon Musk's lawsuit against Sam Altman and OpenAI. Musk was a co-founder of the company in 2015 but left the board in 2018 and has warned OpenAI has abandoned its original mission. Dear Jrabosa has more on this story in today's tech. Leslie, that's right, that original mission of benefiting humanity.

But investors, they also might want to question what are Musk? own motivations and what might the timing of all this signal? Is that another example of Musk trying to distract from other issues in the Musk universe? It is worth looking at last year a group of progressive Tesla shareholders. They wrote an open letter to the board saying that Musk wasn't spending enough time and attention focused on issues facing Tesla. Now, those issues have only increased over the last year with Tesla down some 20% this year. We also know that Musk is trying to build his own AI company, XAI, with a lot riding on it.

He's using its flagship product. It's chat bot called GROC to sell subscriptions on the X platform. And he has said that autonomous driving and AI will be the most valuable part of Tesla. A report from the post today also says that he's seeking to raise billions of dollars in the coming weeks for a private funding round for XAI. So must picking fights with other AI companies, products, leaders while trying to raise money himself is an interesting and maybe not all that surprising dynamic. He's also been going after another Gen AI product this week and that would be Google's Gemini. Bloomberg points out that between February 20th and February 28th, so over an eight-day period, Musk posted or responded to posts about conspiracies around that launch at least

155 times. So guys, whatever his reasons though, if we're going after Open AI and Altman, it is likely to have broader implications for the AI race at large. We are still early, of course, in the shift. And the winners now, they may not be the winners in a few years. So the discovery part of Musk's lawsuit, that could ultimately alter the landscape, whether it shows, you know, these internal emails from Sam Altman that many others are trying to search for or issues with the Open AI structure, which we've also been talking a lot about. There's a lot that could come out of here. What's, if you're sitting in Sam Altman's seat right now, what is the biggest concern you might have with this lawsuit? Is it the discovery or is it, does it have the potential to actually

have a meaningful impact in OpenAI's progress, just as a, as a, as a, you might have a lawsuit? It's Not as a business, but as just a technology that's out there. You know, it doesn't seem like Sam Altman is the kind of person to sweat a lot. But remember, this is just one of many lawsuits. We were talking yesterday about the SEC investigation, how it's subpoenaing internal emails from that really tumultuous period back in November when Sam Altman was ousted as the CEO and then he was put back in. But I guess maybe it's this whole idea of monetizing open AI.

It started as a nonprofit, but it now is, you know, minority owned by Microsoft. And it's monetizing very, very quickly, especially ever since sort of the November drama. So will this ultimately hurt its ability? And we know that, you know, companies and large language models, they're moving so quickly in this period. It feels like the race is just starting. So any kind of setback now could have broader implications down the road. All right, D. Bosa with a tech check today. Thank you very much.

For more on the discussion, let's now bring in somebody and someone who closely followed Musk over the past several years, to say the very least. Walter Isaacson is the author of the best-selling biography, Elon Musk, and a CNBC contributor as well. He joins us now for his take on that developing situation. We asked Dee and Dee brought it up, Walter, about this, the motivations from Elon Musk. I wonder, given what you know of Elon Musk, what you think the motivations really are. Well, you go back to 2012 when all this started, and there's a long, complex, wonderful relationship between Elon Musk and Sam Altman, and it's in the book starting in 2012 when Musk really becomes worried about the potential of AI getting out of control. Demas Hasabas, who eventually sells his

company DeepMind to Google, had come to visit Musk at SpaceX and said, this is an existential threat. Elon Musk is somebody who takes these existential threat seriously and he sees himself as a superhero. So he found Open AI with Musk, with Sam Altman. They make it open source. They make it a nonprofit. And then, of course, the falling out comes when Sam Altman decides it's no longer going to be a nonprofit and it's no longer going to be open source. So exactly a year ago this month, I was reporting my book. And there is Elon Musk summoning Sam Altman to what was then called Twitter headquarters,

saying let's go over these founding documents. How can you do this? And at that point, Musk said we're going to end up having to sue him. So this began 12 years ago and the lawsuit began a year ago. Walter, just how far can we expect Elon Musk to take this? How much, first of all, monetary capital and then psychological, emotional capital is willing to spend in a lawsuit as extensive and as wide-reaching as this one against not just open A.I. and Sam Altman, but almost a concept, if you will.

You know, if you'll read the lawsuit, which I did, is not talking about money, is not even asking for real huge damages. It's saying you've got to open it up like your founding documents, said you would. When they met a year ago, when Musk told Sam Altman to come over to Twitter headquarters and bring the founding documents of Open AI. Altman said, look, I'm not making money out of this. Altman said he wasn't, but he said, if you want, you can have shares in this for-profit. You can make money. Musk turned it down. Must didn't want that. Must said, we got to keep it totally open so that it can't run out of control. That's the remedy sought in this lawsuit. I don't know that the lawsuit will actually go to trial, but he's going to push very hard that you can't take

a nonprofit open source something, which was open AI, and turn it into what they're doing now, which is something pretty much controlled by Microsoft. But, Walter, one thing that Matt Levine points out in his newsletter today is that there really wasn't a founding agreement that it was memorialized in founding articles of incorporation and in some written communications over a multi-year period. So it seems like there isn't kind of that traditional founding agreement, that document to hang one's hat on here. Well, no, you can read the lawsuit.

There is the Articles of Incorporation. They're the emails that go back and forth. This is not an open, like anything, Elon must touch. This is not open and shut. But, yeah, they did have a whole bunch of founding documents. And those are all quoted very extensively in the lawsuit. And a complex part of those documents were when it becomes AGI, it's not part of the opening documents,

but the original documents, but the Microsoft deal said it no longer, the deal with Microsoft no longer stands when it becomes a general intelligence. And one of the things about this lawsuit is that Musk is contending now that GPT4 and beyond has really gotten into the era of not just artificial intelligence, but a reasoning, rational, general intelligence. If it's all about AGI, that artificial general intelligence and the commercialization of it, how much of this battle, this conflict, this friction is about Musk versus Sam Altman, as opposed to say Musk slash X slash SpaceX slash everything else versus a tech titan like

Microsoft and its ownership interest in OpenAI? I think it's largely dealing with Microsoft. I mean, what happened was a few years ago, it became clear that instead of having a lot of AI systems with open source, you can have two companies dominate, Google and Microsoft. And as I said, this began when Demas Hasabas decided to sell a deep mine, this brilliant company he did that did AlphaGo to Google. And Musk tried to break it up. Must tried to raise money to stop that sale.

And then the second shoe drops, which is when OpenAI makes its arrangement with Microsoft. So I think this is about not allowing Microsoft and Google. And he's particularly mad at Google right now because he feels Gemini has, you know, just shows how bad AI could become, if it becomes political. I think it's mainly about stopping the two titans from controlling AI. Fascinating. Well, maybe this will be the subject of your next book, Walter. Something to definitely keep an eye on. Exactly, all in this book. It's all been happening for the past couple of years. Yeah, I remember reading that chapter in your book, and I had no idea. Elon was so involved with Open AI until I read that portion. So thank you, Walter. Much appreciated.

While a lot of West Coast money is pouring into AI tech startups, some deep-pocketed investors in San Francisco are getting involved in local politics with the hopes of turning the city around. Kate Rooney has that story. Hey, Kate. Hey, Leslie. Yeah, so San Francisco's issues are no secrets. Some call it a doom loop, which is not good for business. The tech community is getting especially involved in local elections to try to fix things like crime and homelessness, among other issues. many have blamed progressive politics. The recall of San Francisco's controversial district attorney and school board officials was a tipping point for some. That pushed people to get involved, pay more attention, start advocating for big changes in San Francisco. And we're not talking like huge ideological changes.

We're talking about the basics. The candidates for mayor, including incumbent London Breed and Levi Strauss-era Daniel Lurie, are competing for the business communities backing. and the newest candidate, Mark Farrell, is a venture capitalist. He's touting a tougher stance on crime and closer ties to business. He likens the police chief to a failing portfolio company CEO as an example of how he would handle problems here. There is a reason the technology industry was really founded in Silicon Valley and in San Francisco.

We can capture that once again, but it's going to take a mayor that's going to be a leader on all the many issues of public safety and homelessness, but also mayor that comes from the business sector that says, you know what, we're going to use tax incentives to welcome businesses back. We will be aggressive working with the business community, not against the business community. And guys, he essentially said if they were a police chief that embodied the same issues as what's going on here, he said he would essentially fire them. He talked about it as a portfolio company, which is a strong analogy for our audience.

Mike Moritz, meanwhile, of Sequoia and Chris Larson of Ripple are two of the biggest spenders out here pouring over a million dollars each on San Francisco ballot initiatives, guys. It seems like, Kate, if I were in their shoes, I mean, the detriment of San Francisco could have an impact on their own home values. You know, if they're owned the office space in which they're operating, it could have an impact there. So as you talk to them and you talk to VCs all the time, how do you kind of think about the ones that stay and want to fix it versus the ones that say, you know what, forget about it. I'm going to move to Texas. I can't deal with this anymore. Yeah, well, Leslie, that is a dynamic that we've seen play out over the past few years.

There are absolutely people who have decamped and said, you know what, enough with San Francisco. I'm out of here. But there's also some who have sort of quietly come back while people loudly left and said, you know, it's over. There are some venture capitalists who have returned. Part of it is also a tax discussion that there's people who have left for, you know, Florida and Texas for other reasons. But the ones who have stayed are especially invested in needing to fix these cities issues because we have among the highest. taxes in the country. They are paying their share and they want to see it reflected in things like the police force. They want clean streets. They want good education. So it is a lot of the

same things you hear from local San Francisco residents and some of the polls reflect that. So the business community's interest in a lot of ways are aligned with what average people in San Francisco want, but things like tax credits, things like getting people back to the office and especially the downtown area are especially important for business, especially if you're running a tech business, you want people back in the office, and that's been one of the biggest issues here with the lowest office occupancy in the country at this point. Well, as a Bay Area, San Francisco Bay Area native, born and raised, K through 12, I hope they get their stuff sorted out. Kate Rooney. Thank you very much for that. All right, coming up with the show,

NYCB's issues are continuing, shares are plunging, as you can see after disclosing a, quote, internal controls issue, leading many to call for more banking regulations. We got more on that story coming up next. Shares of New York Community Bank Corp under pressure once again, down about 25% right now. This is kind of the epitome of growing pains. New York Community Bankorp made two sizable acquisitions in the last year or so. Flagstar Bank in December 2020, a deal that catapulted NYCB into the top 25 in the country by assets. Again, almost a year ago, NYCB scooped up many of the assets and assumed the liabilities from signature after that bank failed.

In doing these deals, NYCB surpassed the critical regulatory threshold of $100 billion, subjecting it to more rigorous stress testing and oversight. Those plans are typically submitted in April, those stress test plans, meaning banks need to set aside the appropriate amount of reserves ahead of time in preparation for those stress tests. The Fed just released its scenarios in the last week or so for 2024 testing, noting a severely adverse scenario that features a much higher starting level of interest rates compared to previous years. No surprise there, given the trajectory of rates we've seen. And, of course, from there, those interest rates declined more precipitously. The way one analyst explained it to me this morning is NYCB opted in 4Q to bolster its reserves

and criticized much of its multifamily loans and office. loans essentially to address the potential risk in the portfolio now as opposed to a more phased in approach, say over the next year and a half. So by ripping off the bandaid, NYCB revealed higher than expected losses as a result had to slash its dividend. Now, there are still significant unknowns here. Why did the chief risk officer and chief audit executive depart months ago as NYCB was transforming into a bigger bank? Note, NYCB did announce those rules were filled today. But also, why did NYCB discover a weakness and internal controls for loan review? And are there any other issues that may pop up as that review continue? So lots of questions

and that uncertainty is a big part of why you're seeing that stock down 25% right now. Our next guest has been avoiding financials with the exception of JPMorgan. He says any bank which has exposure to commercial real estate assets is going to feel the pain. He is finding opportunities in energy and tech beyond the Magnificent Seven. Let's welcome Tom Heulik, CEO of Strategy Asset Managers and a new face to Power Lunch. Tom, thank you for being here. So you don't think there's any value to be had at financials at these levels that the full extent of potential commercial real estate write downs has yet to really be priced in despite some volatility we've seen in some financials lately.

Well, thank you for having me. The first thing that I'd like to say is that we don't avoid financials in general, but we do hold J.P. Morgan. We avoid companies with a lot of leverage. And right now, you're seeing companies like New York Community Bank, Commercial Bank, have exposure in the real estate sector. They could have commercial, they could have industrial, they could have multifamily, but that's a stress. That's a big stress. And some of these regional banks are experiencing that right now, being over leveraged. Obviously, we've seen equities having a pretty solid week. So from a macro standpoint, we've had a hawkish repricing of Fed pivot expectations. Do you think there's still a gap between what the market is focused on and what the Fed will do? And does that

give you any pause as you're looking to make more investments? You know, there's no pause out there right now. We've been talking to our clients about being positioned for the next generation bull market that, you know, could possibly go on for 10 years plus. How we're positioning our clients is putting them in companies that have strong balance sheets, great cash flow that aren't leveraged. For example, if we look forward at the technology and the AI revolution that's taking place right now, there's an incredible opportunity that's going across the board to multiple sectors, and we can follow up on that.

In terms of the kind of AI space, I spoke with JP Morgan's CEO Jamie Diamond earlier this week, And he said AI is not hype. It's real. I know you're focused on this next phase, the monetization phase of the AI boom. That has certainly been met with fervor so far. How confident are you in the ability of this AI-driven momentum to truly broaden out across the broader market? Well, we're seeing it in not only the technology sector, but we're seeing it in, for example, intuitive surgical. That's one of the companies that we own in our growth portfolio. The ticker symbol is ISRG. If you're not familiar with what intuitive does, they created the Da Vinci robot to assist people with surgical procedures that are very complicated. So they're a global leader in robotic surgery, and the healthcare industry is taking advantage of big integration with AI and big data.

All right, so intuitive surgical, I can see the AI link here. One of the other things that we talk about often is the derivative play with regard to data centers and everything else, but you've got to pick out there that's not necessarily data center related, but is almost a derivative play on data centers with regard to utilities. Take us through that thesis. Oh, thank you. Well, so energy, as boring as it sounds, could be one of the most exciting things. that we have in front of us, not only from an energy independence standpoint, but from a national

security standpoint. We've been talking to our clients for over a year about the importance of energy in the portfolio. Constellation Energy, ticker symbol, CEG, is held inside of our worldwide equity portfolio. It's going to be a major theme to this next generation business cycle and to the data storage facilities that are sucking up a lot of power right now in the electrical grid. Given that positioning, does it matter who is in the White House as you think about things like energy policy and technology investments? Are you changing your portfolio at all based on the election in November? So right now, nuclear has bipartisan support between the Democrats and the Republicans, and that's a positive. I believe that now we're seeing that the importance of

energy independence or the resurgence of energy independence. We need multiple sources of energy. We need nuclear. We need hydrogen. We need nuclear, for example. All these areas are taking shape right in front of us. And if you look at CEG, which is Constellation Energy, they operate the largest nuclear power plants in the United States. And they generate carbon-free electricity for customers in 48 states. This is something that's important, because, you know, it's important, Because when solar and wind go offline, they don't generate power. And when we have data centers, for example, in the state of Virginia, that have 300 data centers in their state, there's a lot of energy that gets consumed there.

Nuclear power could be that clean, safe energy for them. It's interesting. A lot of people don't realize that the best-performing S&P 500 stock in the month of February was AI-related, but not NVIDIA, it was actually Constellation Energy. So that's definitely an interesting point there. Tom Hewlett, thank you very much. We'll see you soon, sir. Dominic, it was interesting that you had Walter Isaacson on before, but I didn't get it.

No, no, you're good. Finish the thought. Oh, great. You had Walter Isaacson on before who went to Tulane or who's down at Tulane where I went to school. So shout out to the Green Wave. All right, there you go for Tulane. Thank you very much, Tom.

We'll see you soon. Plug power. Speaking of energy and everything else like that is not pulling the plug yet. Shares are higher after easing doubts regarding its cash on hand. We've got details on that trade coming up on Power Lunch after this. Welcome back to Power Lunch's stocks gain and the NASDAQ hits a new record money. Also going into bonds, sending those yields lower. Rick Santelli has it in today's bond report.

Hey, Rick. Yes, Leslie. It was all about the 10 o'clock Eastern data. And let's go through the data to see what propelled yields so aggressively to the downside. Construction spending, the weakest since, October of 22, as you see on that chart. ISM manufacturing, the headline number, 16 consecutive months under 50 in contraction mode. If we look at the prices paid component, listen, it was down just a little bit, but it was the second reading above 50.

It made me scratch my head a bit. However, I think the market has it right, because if you take a longer view pre-COVID on prices paid, you can see that even though recently we moved up a bit, we are well past the big double hump there, and we're basically sideways with respect to pre-COVID levels. And finally, here is how the market reacted. You see twos and tens there? They both dropped dramatically at 10 o'clock Easter.

And at a yield of 453, we see that we're down 9 on 2-year. We're down 16-16 basis points on the week. And since 10s closed yesterday and last Friday at the same level, four and a quarter. You see at 418, they're each down seven basis points, but maybe the bigger story continues to be that short-dated treasury yields today on that data dropped much more aggressively, taking some of the inversion out of the yield curve. Dom, back to you. All right. Thank you very much. Rick Santelli with the bond report there. Let's get over to Aiman Javers for a CNBC news update. Good afternoon, Amon. Hey there, Dom, a New Jersey businessman

entered a guilty plea today on seven counts linked to bribing New Jersey Senator Bob Menendez. Jose Uribee, a former insurance broker, was accused of giving the senator's wife or Mercedes-Benz in exchange for Menendez intervening in a criminal insurance fraud investigation. Menendez and his wife have pleaded not guilty in the case. The U.S. plans to follow Jordan's footsteps and airdrop humanitarian aid into Gaza as soon as this weekend. President Biden just announced the effort. It comes days after reports of Israeli troops firing on crowds of people, clambering. to receive food and other supplies from an aid convoy. Iran extended polling by two hours today

in a last-minute bid to boost voter turnout in its parliamentary election. After 10 hours of voting, just 27 percent of Iranians had cast a ballot. Many Iranians shared plans to boycott today's vote to send a message of dissent to the regime. This is the first major election since Iran's nationwide protest for women's rights back in 2022. Don, back over to you. Wow, I'll pick this up from here, Amen, thank you. After the break is the emergence of Bitcoin ETFs, a major concern for all the Bitcoin miners out there, at least their stock prices. We'll explain why when we return. Welcome back to Power Lunch. We've heard a lot about the return of Bitcoin Mania recently, but Ether is soaring just as much up nearly 50 percent just so far this year.

CNBC's Tech Reporter McKenzie Sagalos is joining us now from the ETH Denver Conference, where 20,000 people are estimated to have come in for one of the biggest crypto conferences of the year. Mack, what are they talking about? Hey, Dom. So a lot of people talking about what is being built on top of Ethereum. We're also looking at trading volume. We've got spot and futures volumes for both Bitcoin and Ether that have increased significantly. In fact, inflow to crypto funds year to date is already exceeding the bubble inflow of 2021, according to B of A.

Now, part of this has to do with a major upgrade coming to Ethereum in a few weeks. that's expected to slash transaction costs by 90% and vastly improve profitability of the companies that are built on top of the blockchain. There's also a lot of optimism that a spot ether ETF could be next. I sat down with SEC Commissioner Hester Perce. She's widely considered to be crypto-stantious ally

among U.S. regulators. She said that it shouldn't have taken a court intervening to force the agency's hand on the spot Bitcoin ETF debate. Here's more of what she had to say. Our role is not to necessarily even get comfortable with crypto. Our role is to say, hey, our job is to figure out where the securities laws are implicated, to try to help people get disclosure where there are securities,

and then let people make their own decisions. It's not our job to tell people crypto good, crypto bad. Let's let the market decide. So, Dom, eight members are really about the coders who are building this ecosystem. so many of them see the SEC as a chief rival, which is why those comments from Commissioner Perce go a long way in a crowd like this. All right. Mackenzie Sagalos there with the latest on crypto out of Denver.

Thank you very much. We'll see you later on. While Bitcoin ETFs have helped the cryptocurrency get back to near record highs, the Bitcoin miners, which are used to be the alternative in terms of investments, haven't joined that surge as much. For instance, while Bitcoin is up close to 50% so far this year, riot platforms is slightly lower on the year. So are spot Bitcoin ETFs competing with these stocks for the investment dollars, your flows? Let's bring in Jason Les. He's the CEO of Riot

Platforms, which owns a larger scale Bitcoin and mining facility in Rockdale, Texas, among other assets. Jason, thank you very much for being here. McKenzie just laid out an interesting kind of dynamic there with regard to the current state with regulators versus the community in cryptocurrency. Do you feel as though the prices of Bitcoin and others are now attractive enough where folks like you and everybody else will feel more comfortable with broader adoption? Yeah, I think the introduction of the ETF is huge for the credibility of Bitcoin. It brings a on-ramp that brings more money into the space that might have been sidelined at the time. And it is a positive signal from regulators. I think there's more work to be done.

I think there are a number of bills in Congress that establish market structure that I think better lay out the rules of the road that could bring even more investor comfort and interest. So that's something that we're very interested in and we're supportive of to add further clarity to the space. Do you feel as though the Bitcoin ETFs out there have acted as a net positive force or are they competing with the likes of Bitcoin itself, the underlying? And then by extension, what does that do for the economics of mining operations like yours? I think the Bitcoin ETFs have been super positive for the Bitcoin mining space,

short-term volatility, notwithstanding. The fact is that this tool is bringing more money into Bitcoin and that is driving the price up. That is the thing that we mine. That is the commodity we are focused on. So that's always great for us. The fact is, in seven weeks since the ETF has been approved, These ETFs have bought up 350,000 in Bitcoin. And right now, the network as a whole only releases 900 new Bitcoin per day.

That's getting cut in half in 450 Bitcoin per day in April of this year. So supplies becoming constrained, new supplies becoming constrained, and more interest than money is going into the market. That's great for us. As far as our stocks go, we have seen an increase in dollar base volume in our stocks as a result of the ETF. So I think we have a halving coming up here, and Riot has a number of ambitious growth plans that we're scaling up our business with. So as the price of Bitcoin appreciates, we should appreciate from that in an outsized way.

How do you plan to do that, given, as you mentioned, a halving event could be around the corner? Right. So with the growth plans we have underway right now, riot is positioned to exit 2024, mining more Bitcoin per day than it is right now, despite the halving occurring. We are scaling up our operations by almost a factor of three, and we are implementing an ongoing power strategy that helps decrease our energy costs and gives us an industry leading of cost to production. Our direct cost per Bitcoin in 2023 was just about $7,500 a coin. Now, that increases with the halving, but with the price appreciating at a faster rate, we think we are in a very good spot alongside everything we're executing on this year. Jason, we often talk about mining operations in the context of oil. When oil prices rise, people tend to drill more, right? They tend to kind of go after a little bit more.

With Bitcoin, there's a lot of chatter these days about maybe a possible correction. It's gone a long way in a very short amount of time. At what point, given your cost per coin that you just mentioned, do you feel as though you'd have to ratchet back on some of those growth expectations? What prices of Bitcoin do you need to see to really stay profitable? None of the price action this year is going to impact executing on the growth plans. We've paid for these. These are growth plans are funded and their execution in rolling out right now.

The interesting thing about how Bitcoin mining economics work is the competition will enter and leave the space based on the price. So when the price is decreasing or the economics are constrained by something like a having, a lot of the less efficient players will leave. and that increases the margin for the low, more efficient operators like Riot who remain. So what happens in the short term is not as important to us. Our long-term commitment and dedication to Bitcoin has resulted in our business growing substantially over the past several years. And because of our long-term belief in Bitcoin, we're going to going to continue investing and scaling up the efficiency we have. All right. Jason Less. Thank you for being here. Appreciate it. Thank you for having me.

Still ahead, pulling the plug shares of plug power with a big intraday turnaround, now up 8% when it had been down earlier. Pippa Stevens will tell us what's driving those swings when Power Lunch returns. Welcome back to Power Lunch. Crude oil rising above $80 barrel for the first time since November. Pippa Stevens here with the details. We might finally be breaking out of this range that Titi has been in for so many months now. first time above $80 since November, as you said, with Matt Maylee over at Miller-Tabog, saying that the $80 level has been extremely important resistance. And if WTI can stay above that level, it is very bullish for crude and energy stocks going forward.

So maybe today some momentum with geopolitical risks still there, not totally priced into the price of WTI here. And then also all eyes right now are on the possible extension of those OPEC cuts of 2.2 million barrels per day. Now, that was a decision outside of the OPEC group entirely. And so each individual country is expected to announce an extension of those cuts in this coming week, likely into the second quarter. And then, of course, June is the next OPEC plus ministerial meeting. So that's when we'll hear an update on what their production plans are for the second half of the year. And then quickly, plug power on another roller coaster ride today, as it always is.

Shares are in the green right now. Earlier today, they were down more than 10%. The company issued its 10K last night. It removed that going concern language. And so that, of course, is a positive. However, that was thanks to a $302 million raised in equity sales. After earlier this year, Tom, you're shaking your head, they announced that up to $1 billion at the market offering.

Not necessarily what you want to hear as an investor, but some momentum there looking forward. Okay, well, there's certainly a bit of dilution happening in some of those equity raises. All right, Hippas Stevens, thank you very much for the update there on Plug Power. Still ahead on the show, Boeing is reportedly in talks to buy back its former fuselage maker, Spirit Aerosystems. Our three-stock lunch trader will give us his thoughts on the troubled airplane maker. That's coming up next. Welcome back to Power Lunch.

Let's get over to Christina Ports in Evelas for a market flash on what's happening with Nvidia, Christina. Well, shares are up over, what, 3.5% right now driven by several factors. First, you have a big price target increase from Dioa capital markets going from $535 to $900. They think Nvidia shares have at least like 14% upside, not just because of their AI GPU chip demand, but because of Nvidia's entire ecosystem, which includes. includes its CUDA software, Ethernet storage, list continues, and the recent increase also

in imprinting demand, which could keep Nvidia relevant in the years to come. Other drivers for Nvidia stock uptick came from earnings out last night, so you saw Dell management saying they saw five quarters of backlogs for their AI servers, which means more orders for GPUs from Nvidia, as well as AMD. HP was a little bit of a different story with a top line misdriven by deterioration or networking, along with Nvidia GPU supply constraints. In other words, it's struggling to get their hands on Nvidia chips because they're in such hot demand.

That's a positive for Nvidia shares, $2 trillion market cap right now. But potentially a negative for HPE, which we'll get into in just... The positive from Dell. It's all very mixed up right now. Yes. It's all connected, though.

It's very complex. Christina, thank you. Thanks. Time for today's three-stock lunch here with our trades is Quinn Taitro, founder and president of Jewel. financial. Up first, we just talked about it, Hewlett Packard Enterprise, which Christina just mentioned. Quint, what's your trade on HPE? Yeah, Leslie, thanks for having me. HPE got to sell it here. It's just not for me. Missed top, you know, beat the bottom. And they've got some positive comments,

which is helping the stock on the AI infrastructure in the future. But, you know, it just seems like maybe they've missed it here. And I think the street is taking notice. So you're just not going to be in a winter here. So it's just not for me. Even though it's got low single-digit multiples, the growth is not, is not great. So there's no rush whatsoever. I think we need a, we need a real stellar quarter to turn things around. It's not a buy. Definitely not. All right, Quint, let's talk about the other stock we just mentioned, which is Dell Technology. shares of this tech company are soaring after beating earnings expectations, citing rising demand for what else? AI servers. So Quint, what's the trade on Dell? They kind of do the same thing.

Yeah, they do the same thing, Don, but they're executing and they're not talking about it in the future. They're talking about it right now. So this is a good glimpse into how not efficient markets are. Stock up 30% before I came on the show. Clearly, this was not priced in. Dell seeing incredible server demand from the AI space. But again, it's more about the guidance, 40% backlog increase over Q3. And they're increase top line to $95 billion, full year seven and a half, which means we're talking about 16 times forward earnings if they were to hit that. That's a fantastic fundamental picture. 30% not going to chase it, though. So if you're lucky enough to own this stock coming into today, obviously you want to hold this. But this goes right at the top of my list. And anytime we get

a pullback over the next quarter and they start selling this name, I would pick up shares of Dell. Wow, yeah, and up 31.5% right now. And finally, Boeing, we're going to pivot a little bit. The company in talks to buy troubled supplier spirit aerosystems, the same company it split off two decades ago. Shares of Boeing down today. Quint, what's your trade on Boeing and how incumbent on it? Is it this deal getting done or some kind of deal getting done? Yeah, it's irrelevant to me. I mean, a troubled company buying a troubled company does not make a good company in my opinion. And unfortunately, I mean, yes, Boeing is an unbelievable brand, an unbelievable kind of company per se. But the headline risk right now for Boeing is just too great for me. I've never been a fan of this company. They have a tremendous amount of debt. And again, just when you start getting comfortable about orders or, you know, the Dreamliner

being delivered, there's something that comes out that seems like that, you know, just wax the stock. And so, again, fundamentally, way too much debt, negative book value, it's just not attractive to us. And just because they're going to buy a supplier that potentially is troubled as well, it does not interest me at all. We don't have a position. We would not take a position in the name. And quite honestly, I'd be a seller if I owned it. All right, Quint Taitre with the trade there for HPE, Dell, and Boeing. Thanks very much.

Have a nice weekend. We'll see you soon. Thank you. All right. Coming up on the show, the highly anticipated Dune Part 2 hits theaters today. Will Timothy Chamalay and Zendaya be enough to save the faltering box office? We're going to discuss when Power Lunch returns after this break. All right, we've got a minute 45 left in the show.

Several more stories we want to get to you right now. Let's get right to it. Shares of Sweet Green are soaring today. They're up 27% after the salad chain reported healthy. Get it healthy, Q1 revenues. CEO Jonathan Neiman said that the brand will continue to focus on menu innovation, great restaurant operations, and the infinite kitchen to capture demand and drive traffic. This is one of those demographic plays for me, I think, only because I haven't, I think I've

had it once or twice. It is good. It's pricey, but there's going to be a lot more focus on healthy eating. No search pricing, though. There you go. Don't eat it, apparently. Norfolk Wendy's. Exactly.

Dune Part 2 hits theaters today and is expected to give a much-needed boost to the box office. Warner Brothers is projecting a conservative 65 million debut for the sequel. There haven't been any major blockbuster releases so far in 2024. The domestic box office is down 18% compared to this time last year. Dom, are you seeing this movie this weekend? I don't know if I can see it this weekend, but I will see this movie. I am very much about the blockbusters. And this one, by the way, I wasn't, I saw the original Dune series, right?

But I am not one of those power followers, but I know a lot of folks who are very diehard into the Dune. Dunehard fans. Yes, Dunehard fans. There you go. All right. Well, the CDC says people who test positive for COVID no longer need to isolate for five days. The new guidance now matches public health advice for flu and other respiratory illnesses. Stay home and you're sick, but return to school or work once you're feeling better.

And you've been without fever for 24 hours, a big deal, especially for schools, Leslie. And daycare parents. There you guys. Which we both are. Yes. All right. Thank you very much for watching Power Lunch. Closing bells start right now.

great weekend.