Power Lunch - Nvidia GTC Continues 3/17/26

Episode Date: March 17, 2026

Nvidia shareholder Ellen Hazen joins the show to discuss takeaways from Nvidia's GTC so far. Brent crude is back above $100 per barrel.  And Leslie Picker joins to recap her sit-down with Thoma Bravo's Orlando Bravo. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks are building on Monday's rally despite volatile oil prices and turmoil in the Middle East. Welcome to Power Lunch. I'm Kelly Evans. Brian Sullivan is out on assignment and will be joined for the hour by CNBC contributor and fast money trader extraordinaire, it says. Oh, wow. Welcome. It's great. It's great to have it. It's great to have it. It's in all fast money.

I saw Tim, right in the lead in? I know we didn't plan that. Okay. All right. Yeah. Stocks are in the green once again today. All three major averages are higher and shrugging off the turmoil in the Middle East. And it's not just stocks on the rise either.

They have to contend with climbing. oil prices. Brent is back above the $100 a barrel mark at 103, as President Trump suggests the creation of an international coalition to help protect shipping in the strait of Hormuz. We'll drill down on all of that this hour. Plus, InVitya's trillion-dollar ambitions, the chip giant kicking off its day two of its GTC developers conference in California. It's not over yet, folks. They're still going strong. CEO Jensen Wong forecast revenues hitting the 13-figure mark by 2027, a live report from San Jose in just a moment and an Nvidia investors take on where the shares go from here. Plus, cleared for takeoff several airline stocks are rallying after raising

revenue guidance for Q1 and shrugging off concerns about rising jet fuel prices will tell you what it means for travelers and for investors. But let's begin with Nvidia, which built the AI era and now has to prove it can keep owning the next chapter. Management just spoke with financial analysts laying out their vision for the future of AI on the second. trillion-dollar question, Christina Pardson-Evelis, you know, over how much of this is new? How is this being spread out? I know you were just on that call, and it's good to see you. Welcome back.

Yeah, it's actually a big event that's happening right behind me. The analysts stepped out. The journalists are stepping in right now. And to your point, if you just look at the share price, it's barely moving. What, up not even just over 1% since this financial Q&A has ended. And even up 1.5% since Monday since GTC actually started. This is more about product headlines, though. It's about whether NVIDIA can actually defend its dominance as rivals really push into, push harder on cost, speed, and the next generation of AI, which is inference.

That is a huge topic of conversation. So on the demand front, Jensen Wong, the CEO, making clear the $1 trillion revenue figure, which caused the stock to jump yesterday through 2027, is just starting. And he said, quote, we still have about 21. months to go. In other words, he's implying that that number can go much higher than one trillion dollars. And the number doesn't even include the new GROC inference trips specifically for memory or CPU-only racks that he announced just this week in terms of how demand is really ramping up for those CPUs. On capital returns, you have the CFO Colette Cress signaling in video will return roughly 50% of free cash flow through the end of, next year, we should say,

through buybacks and dividends. And that's up from just over 40%. percent from last fiscal year. If you just take the numbers, I looked at their financial statement. So the big question, Kelly, and everyone is just, why isn't this stock moving? That one trillion dollar number isn't that far from many many by-side analysts had already estimated, so where Wall Street essentially already was. InVity actually briefly jumped 5%. If you look out on a week-to-date chart, you see this blip in the middle of the week, but

then shed right back down and lost roughly $150 billion in market cap in just near minutes. products are real, but the problem is the numbers are large, and that's what really needs to move the stock. And the numbers just, you have a market cap of $4 trillion. It takes a lot to really move this company higher. Isn't that true? Christina, thank you very much for everything the past couple of days. Christina Parts Nevelace. Our next guest has a big position in Nvidia. In fact, it's currently her single largest holding. She also has some Mag 7 names like Microsoft, Apple, an alphabet among her top five. Let's bring in Ellen Hayes and the chief market strategist and portfolio manager at F.L. Putnam. Great to have you back. That's a high conviction,

high stakes position in NVIDIA and a stock. I'm sure you're probably a little frustrated at this point, nine months of kind of treading water. NVIDia was such a great stock over the last couple, three years. And it's true that in training, NVIDIA had 90% market share, right? It was the dominant player. Now, as we're moving into inferencing, there are more competitors. They're still looking at 65 or 70% market share, but you have AMD, you have some of the hyperscalers developing their own ships. So I think it makes sense that investors are diversifying their bets because NVIDIA might not be as dominant in this next generation as it was. You sound like one of the bears talk. You're supposed to be saying, but I'm so excited to hold

on to it here. But the thing is that the spending is growing so quickly. Look at how fast the hyperscaler spending is growing up 65%, up another 60%. And as you look at that, the pie is growing so quickly that even if they lose some market share, and that's not a done deal, by the way. They could continue to dominate. Certainly the vision that Jensen laid out yesterday was very much the whole ecosystem, right, from the chips to the applications, to the infrastructure, to the energy, everything, right? And so maybe they will dominate. But even if they don't, you can still have significant growth because the whole ecosystem is growing. When you look at your position, it's grown to be your biggest position. I'm sure it wasn't always, obviously, your biggest position.

So it's had a great run. If you look it back to it when it was just a gaming stock, it was a phenom. But when you look at it now, out of the Mag 7, what other opportunities would you like to be in? Or is it different than the Mag 7 right now and you'd like to switch? Like where's the next shiny new object in the tech space? So we're looking at the other companies in the ecosystem. So for example, Micron, not controversial. I think a lot of people own Micron, but that's one.

Even Denson talked about it yesterday, right? I think it's controversial to get into it now. I mean, is that? If you look at the growth rate and what the earnings estimates are for next year, I think they're still low, right? So that could still be a good name. You have AMD, right, which is a very strong competitor in the inference base. And you have networking.

You have companies like Arista and others that are also building out the AI data center ecosystem. So I think there are other ways that you can play it. in addition to Nvidia? And look, it's a $4 trillion company. Is it going to double again? I mean, maybe. That's exactly what we asked Dan I was yesterday. He said, it'll be $6 trillion in a couple of years.

Sure. I said, what is it going to be $8? He said it could be six. Certainly the concentration that we're seeing in the index right now is fairly unprecedented, certainly over the last 50 years. And does that mean that it has to revert to the mean? Or can it continue to be more concentrated, given the network economics of AI and the returns

to that, I think it remains to be seen, but certainly you could see it grow. But again, to your point, I think that there are other companies that are smaller that have more runway ahead of them. But again, all of the above, we like TSMC, right? They play with all of them. I don't know if you have a tech mandate. I mean, or it's. No, we're generalists. So here's the one thing that I wouldn't say keeps me up at night. I'm not, I don't do your job, but I wonder about. And it's a framing that Jeff Curry has used, which is that technology and energy rotate kind of in cycles. And so we've just come out of a tech cycle with, you know, but we underinvest in infrastructure. And then we have to, you know, dot com and then the 22,000

similar pattern. We saw oil shoot up. If that's true, by the end, by 2010 Exxon was the biggest company in the world. In 2000, it was Microsoft. Could something similar happen now where we go from having the, you know, the Mag 7 to the rise? I don't know if it's Exxon per se, but do you think history might rhyme? Is it possible that then that there's going to be kind of like a a rebounded market cap going to more of the energy materials, physical goods, infrastructures, kind of trades. Kelly, you've hit the nail on the head. If you look out, not this year, but next year and the year after, the gating factor is not

going to be Nvidia GPU chips. The gating factor is going to be energy. And so looking out a couple of years, I think that those prices will rise and supply will have to come online in order to meet that demand that those higher prices are reflecting. So I do think energy is certainly hand and fist included in how NVIDIA and the whole ecosystem are going to grow. It's inextricably linked. Steve, I mean, typically you need a strong, you look at Exxon and say, well, it hasn't done for me what a meta has done, you know, historically. So I think that's what I want.

But there are boom busts, I think to your point. And in my career, I've seen boom busts in technology. In Micron, all you had to do was chart DRAM. If you knew where DRAM was going, you knew where Micron was going because it was so levered to that. We haven't seen a bust yet. So we've seen it skyrocket. But the circular finance that we're looking at in Nvidia right now, only one thing has to go wrong. And it completely upsets the apple car.

The whole daisy chain of that. Where are you position in terms of laying your bets with, because we heard the Goldman, new David Cawson. No, Ben was on last hour saying he's basically going with the Mag 7 trade. Ellen is kind of, I would say, in a similar kind of boat with some micron and some other. I think you framed it properly. I think if you look at the Fortune 500 companies, the 493, their earnings estimates, growth was around low single digits. That's going to be doubled. And the Mag 7 was at 35 or 40 percent growth.

That's going to be around 15 percent. So I think it's time to start changing. But everyone would still rather be with the Mag 7? I mean, I feel like that's my question from the past. Right. Ellen, any parting words on this whole thing? I think both can be true. I think that earnings can be broadening,

and you can get multiple expansion in some of those other areas, but the Meg 7 and tech more broadly still have higher growth rates, even if the gap is changing. When are you getting out of Nvidia or trimming it? I mean, if you're not doing it now, I know it depends.

I think if we see the revenue growth begin to really slow down and or if we see a big product take up that looks like they're going to lose share pretty quickly, that would make me concerned. All right. Ellen really appreciate it. Ellen Hayeson, joining us from F.L. Putnam today. We'll take a quick break, then coming up, crude above $100, diesel spiking above five,

and supply routes under threat, a commodity trader's take on the next move for oil and how he's navigating all of this. That's coming up on Power Lunge after a break. The Iran War going on for more than two weeks now. I believe we're around day 18. Amon Javers is in D.C. with the latest we've heard from the president this afternoon, Amon, and a big resignation from a top official. We have, Kelly. That top official was Joe Kent. He was the head of the National Counterterrorism Center, which is part of the office of the director of national intelligence.

The president responded to that resignation by saying he'd always liked Kent but thought he wasn't good on safety and security of the United States and said he's glad that Kent has offered his resignation. We also heard the president voice some real frustration in the Oval Office a short time ago, Kelly. He said he was disappointed in NATO, very disappointed in NATO. You remember yesterday he said he had a little bit. list of countries who are going to provide naval support to the Persian Gulf to help the United States Navy clear and open the Strait of Hormuz. He said he didn't want to reveal the names yesterday. Well, today he said that none of the NATO countries are going to be participating in that effort, and he's extraordinarily frustrated with their decisions, given how much the United

States has invested in the defense of NATO countries over the years. We also heard the President Kelly talking about that China visit, which remember was scheduled late. this month with Xi Jinping and Beijing now due to the war, the president says that meeting is going to be pushed off. He said about five weeks. So we don't have a firm date yet. So we'll track that and see if that happens. But for folks in the market who've been watching for sort of U.S.-China trade tensions to peter out as that meeting came closer and closer, that's been pushed off a little bit. Yeah, absolutely. Amen, thanks for now. Amen, Javers, appreciate it. Crude oil prices have ticked higher, since the war began. It's largely due to Iran's direct threats on ships that try to pass

through the Strait of Hormuz. Those same threats have also pushed the energy sector ETF to an all-time high, riding the back of that oil price and other movements of the energy space. Let's bring in Blue Line futures chief market strategist Phil Striebel. I feel it's good to see you. And the oil price has certainly leveled off in recent days. What do you make of that? Yeah, we really watch and it drive this global stagnation theme. One thing to know about crude oil as it's 90% positively correlated to the U.S. dollar and 90% inversely correlated to the S&P 500. So when we get oil prices to start breakdown, we'll see the dollar index should break down and yields will breakdown as well. Then we could get those rate cut expectations arise

and many of the markets will rise along with it. We could already see that oil price is leveling off a bit here today. The 10-day average exponential average true range, sit at about $9.20. So that's a much fluctuation we're usually getting on a day-to-day basis. Today it's only a about $5 here. And with the OVX falling down to about 96, so we have some of the extreme volatility kind of coming out of the market. Traders are really going to be watching three things. Any kind of de-escalation signs, that's where you can grind below 90, 85, 75. 67's the key level before the conflict began. And then you want to look at that hard oil infrastructure here. If any of that's damaged, we could snap back and push back over $100 a barrel.

So, Phil, you finished off right where I was going to lead you. When we entered this geopolitical event war, we were in an oversupplied state and crude. Does that return? So you're talking about a $67 or $65 barrel oil. We still have to replace the SPR, but I know they're doing a smart swap on that, which is going to flatten out the backwardation curve. Where do you see it ultimately settling in when it's all reshaping? Well, we really got to look at the ship movement statistics through the straight, which averaged 150. Now it's down a single digits. And it's all about the rate of change. If all of a sudden we see five shifts passed, then 10, then 50, that was probably the peak on oil. And as far as I'm concerned, you know, we may have already seen the top. You remember on the tariffs, it was like there was no sign in sight. We were at like 150 percent tariffs last April. VIX was at like 40 and people were panicking. And then what happened, it was 150. And everybody's recovery with it. So, you know, the bottom line is, you know, we want to look and see, you know, when things are going to start to pick up again over there.

When will there be ship passing through? We got global oil demand at 105 million barrels a day. The EIA has already released or IAA has already released 400 billion barrels. That's only four days of global demand, but it is 20 days of normal Hormuz flows. If the IA has 1.4 billion in reserves, if they need it, you know, they do have plenty of coverage. there to fill in any kind of holes until we can get past this. I'm curious, Phil, what you make of the argument that prices will fall swiftly. I mean, some of us are just a little burned, I think, by the COVID inflation behavior,

where it seems like every month there's just a new reason why they're high. But also in 2022, I think it was 12 days for prices to spike and 148 for them to return to prior levels. Is there a reason to believe this time will be different? Well, maybe. It may take a little bit longer time to get things back on. But again, it's going to be the rate of change. I mean, you look at silver. It went to like $1.15, then it collapsed $30 in a day. Gold fell. This was like

January 29th, like $600 on a day. Markets tend to take the stairs up and the elevator down. Again, oil, a little bit catching things off guard with like airlines and people need to hedge because they just didn't have those hedges in place. Now they scramble to buy calls, lock up inventories, and that's where prices get squeezed higher. I do have a lot of clients that are looking at like June, July put options, the 80s, the 80s, the 80s. not a recommendation, just a thought out there that we could return to some normalized numbers, but it might be something like low 70s to, you know, 60 might be the floor, as opposed to that 50 being the floor, 55 being the floor on up to 65. So Phil, Kelly brings up a good point. Back in

2022, we were dealing with really elevated inflation rates and we had $5 a gallon gas. The market tolerated it pretty well considering, and we fell precipitously from there. But if the government tells you they're selling front month and they're buying back month, it makes sense to me not to buy oil where it's sitting right now because it's going lower. And if you want to do anything, buy August. We've always taken that long-term approach. Whenever you have these conflicts, you do want to stick within like the first 30 to 60 days because of the fact that's when the conflict is going to have its most supply shock. But if it's a lingering effect, then you'll see that curve start to flatten out, and those back muscles tend to rise with it. And it's a lot of

that supply tightness go on. But, you know, the U.S., I mean, we didn't flush with oil. And a lot of different areas are just flush with oil at the moment. So it's just this one situation. And I mean, I think that the administration is really trying to tackle it at the moment. You know, I think that things are going to be brought back and go full circle when we have the Fed meeting tomorrow because oil's up 50% since that January Fed meeting, they're going to start looking at CPI, energy makes up 6.3% of it. You know, transportation fuel makes up 2.9% of it. And they start to factor in these models like Goldman had one that said like if Brent average 110 for two months, well, U.S. inflation is going to be at 3.3. GDP will be at 2.1. And then all of a

sudden you get that recession odds start to come back into place. So a lot of these, a lot of these different things really matter as far as how long this goes on and when will we see oil flow. Yeah, for sure, it does. Phil, thanks very much. Good to check in with you. Thank you. Phil Striebel of Blue Line Futures. The key takeaways from our exclusive interview with one of the largest software investors in the world, Orlando Bravo, the moves he's making under a microscope as AI derails the once hot sector and the risks he's seeing in the private space. We'll see after the break. Bravo's annual meeting is underway in Miami with some of the biggest players in private equity in attendance. As the world's largest software-focused PE firm, Toma Bravo sits firmly in the

center of this debate about AI disruption and the effect that's having across private markets. Leslie Picker sat down exclusively with founder and managing partner Orlando Bravo last hour, and she joins us with the highlights. And Leslie, you've also checked that when CalPERS is there, you've been talking to software CEOs. It's really kind of bringing, I feel like, to the fore this abstract conversation is giving us kind of a case study. No, you're spot on, Kelly. And one of the interesting distinctions that I'm hearing at this event is everybody is talking about the word moat.

What is your moat amid the onslaught of AI competition? And you have, you know, just to the right of me here, there are booths set up that showcase different portfolio companies and they're sitting down with LPs and explaining exactly how their company plans to kind of pivot in this world, you know, where AI is a potential threat, and do they have the proper modes and competitive advantages to kind of fend off that competition? So in the conversation with Orlando Bravo that we had last hour, I kind of asked him, you know, how are you seeing this vis-a-vis the markdowns that are taking place in real time in the public markets? And he basically said he's not marking down his portfolio in the same way that we're seeing software be,

revalued in the in the public markets and he actually thinks that there are some advantages in in the private companies vis-a-vis public companies take a listen in the public markets if you look at it there are many many software companies in the public markets that will be disrupted from AI those companies were going to be disrupted anyway AI will create that disruption a lot faster and some of the decreases in their valuations are very warranted and we would have no interest for example, in buying those companies. So Kelly, he also made this distinction between generalists who are investing in software. And he thinks that they've kind of created and attracted some of this attention, potentially,

you know, with their underwriting standards and not necessarily understanding the world of software as deep as he believes Toma Bravo does. And so I asked him basically, do you think that all of these fears surrounding software and surrounding private credit are going to come to fruition? And he said, look, there were a lot of journalists who have also entered the space that could be creating some problems. So that's something to pay attention to as well. Yeah. And Leslie, I think that even in trying to downplay concerns about the space, he did admit that, you know, when asked about the specific medallia, because this poor company is in the middle of so much scrutiny after getting called up by Apollo the other day.

And again, on some, they say some firms, they've marked the credit, the credit, not the equity down to zero. So they said, you know, and Orlando acknowledged, he said, it's a fine company doing a wonderful job, beginning to gain share again. He said, we made a mistake. We way over extrapolated the growth into the future. And he said our investors have known that for years. So this is, I think people, again, on a learning curve with this stuff, it was great in the 2010s when everything was making money. Now investors, I think, are going to have to be a little choosier and see what happens here in the next, you know, few quarters as this shakes out. Yeah. And there was a different rate profile back then as well.

Rates were near zero in the 2020, 2020, 2021 buyout era. And you saw a lot of big software deals get done at that time. And now the space looks completely different. So part of, you know, and at this event, there is standing room only. There's very high attendance. And I think part of that has to do with just investors out there really wanting to understand what exactly is happening. Are the fears overblown?

How should we be thinking about the various delineations within software? where those moats are, as I mentioned, that word moat again. And having an event like this where people can kind of sit in a room and really understand those 78 portfolio companies and where they're at and their growth trajectories relative to the valuation is an important discussion to be having right now. Yep. Leslie, thank you. Appreciate Leslie Picker. And again, ironic, Steve, because it comes right as the SEC may also consider doing away with quarterly reports by public companies. And I just, I don't, I understand that we need more public companies, but I don't want them to go semi-private. I want more information, you know.

Yeah, I think, you know, the skew I look at this is that stock price is the ultimate truth. And the reasons why it's not the opacity, the opakness of these companies that really get in the way. It's if we, if we had learned that there were as gates up on these companies, and there's a lot of other things besides reporting, because when a company reports, they put themselves out there in the best possible light. Right. So you find out information, They want you through other sources, not through generally reporting. Think about the smaller company. Million dollars for regulation, for accounting purposes and everything else.

So all it does is help the larger companies. The larger companies can dress up the window, so to speak. I'm not saying it's anything nefarious. Do you think there's a problem that we don't have enough public companies? And what do you think they should do to address? Well, the reason why we don't have the same amount of public companies is because it's become so onerous to be a public company. So I think the problem is not the regulatory environment or the reporting environment. I think it's the people, if you want to say 401Ks can't be thrown into private equity,

I agree with that because they don't understand they're not buying a liquid asset. So that's the pension. Exactly. Those are the pensioners. But I also believe that in private equity, you have to understand what you're owning because everyone is hitting private equity as if it's all the same private equity. Most of these firms that are getting beaten up in the market have single-digit, exposure to software.

Well, it depends on how you define software, probably. But it's also true that the biggest and the best ones who have been in this game for the longest probably have better strength. I mean, a lot of the names that we can even look at because they have a ticker are not necessarily going to be the places that are going to see the most problems. Right. And then one thing, just if I could add on this, when you're looking at the financial crisis, the financial crisis happened inside of the banks where they were 30 to 1 leverage.

Now they're happening outside of the banks. Completely different story, not systemic. Hopefully this is, you know, beginning of the, better software stocks trade every day. I go, well, what's one fewer day maybe to worry about all this? True. So get to McKenzie Sagalos now for the CNBC News Update. Hi, Mackenzie. Hey, Kelly.

Israeli officials have reportedly told the State Department that Iranian protesters will, quote, get slaughtered if they protest in the streets. Even as Israel publicly calls for a popular uprising, that's according to a State Department cable reviewed by the Washington Post, which says the Israeli assessment adds that the regime is not cracking and will fight to the. After five attempts were blocked by federal judges, the Trump administration is reportedly considering a new strategy to block offshore wind production. The New York Times reports the White House may pay French company total energies nearly a billion

dollars to stop two projects. In return, total energies would abandon its wind farm plans and commit to investing in fossil fuel production. And Arizona's Attorney General filed criminal charges against predictions market Kalshi, accusing the platform of operating an illegal gambling business in the state and unlawfully allowing people to bet on elections. In a statement, Cali she says it's different from sports books and shouldn't be overseen by a patchwork of state laws. CNBC and Calci have a commercial relationship that includes a CNBC minority investment.

Kelly, signing it back to you. Mackenzie, thank you. There's still a lot to come on that front. I think this fight over sports gambling, Mackenzie Segalos. After the break, geopolitical turmoil, searching oil prices, but markets are taking it in strike. In fact, our next guest sees 15% more upside from here. He'll explain next.

Welcome back to Power Lunch. Despite the ongoing conflict in the Middle East, the stock market holding up resiliently, I guess you could say, S&Ps down 2% since the Iran war began, underscoring how investors have looked through this period of geopolitical tension. Even if that gives way to a bigger sell-off, some say it could create opportunity. Ed Yardini put it this way on Squawk Box. Historically, geopolitical crises have been buying opportunities. And I was thinking this could come up with a 10 to 15% correction, which again, I view as an opportunity to buy.

Our next guest has got a similar point of view, looking through the uncertainty, bullish on the markets, the stocks could rally 15% this year. I hope I characterized it correctly. Matt Orton is the chief market strategist at Raymond James. Good to see you again. I mean, is that kind of your point of view that geopolitics in some ways, or at least this time around, just creates noise that lets you buy into what, you know, in the long run is a rising stock market?

It's always great to be here, Kelly, and that's exactly it. I think when you see these periods of uncertainty, which frankly, we haven't had that much of downside on the market so far during everything that has transpired over the past two weeks or so, you want to lean into dips because the fundamentals that are both underlying this economy in the market itself, incredibly strong earnings growth, record profit margins across the S&P 500, even small caps, finally having earnings growth that's likely to exceed that of the S&P 500 this year. Those are really good underlying fundamental. So when the market gives you a chance to get in at a better level and actually buy low, that's what we should embrace as investors. But the key is being selective because not everything is created equally. And you want to lean into longer term, durable, secular growth trends that are going to be disrupted as much by some of the uncertainty that we have playing out. I like where you took that where it's a broadening out of performance.

and the companies that are the 493 of the S&P 500, their earnings growth projections are going from 6% to 12% or maybe even higher in some cases. While the large cap is going from 40% all the way down to 50, we said this to the first guest that was on. Does that make you encourage, which it does, but what my pushback would be 40% of the market of the large cap, the market goes where they go, not where the others go.

That's exactly right, but a lot of the large-cap companies still have that positive second derivative with respect to where their earnings growth is taking place. You look at some of the big tech companies. You'll look at an alphabet, for example. Their earnings growth is still incredibly strong and continuing to accelerate higher with a very, very diversified businesses. So again, it comes back to this idea of selectivity, right? You can still own some of the large-cap companies.

They can tread water, frankly. And as long as the rest of the market continues to see that very, very strong earnings, growth, you can have the market push higher. But to your point, Steve, you need at least some of the market leadership that we've had in the past to start to work again. And I think it will. And whether it takes this crisis to play out or the next earnings season to see an ROI that some of these companies are getting on the massive cap-ex investments they're making, I think we're going to see that play out.

And I think that will be the catalyst to start getting this market to move higher, including some of those larger names. You see, the biggest opportunities are select tech, industrials and high-quality small caps. and your biggest concerns are the consumer staples and the financials, which we've been having a lot of debate about the past couple of hours. Why the financials? So financials have been concerning simply because of private credit. We could spend a whole segment going into what's right and what's wrong about the messaging with private credit. But I think for some of the higher quality managers, the concerns are overstated.

But when I look at the price action of the banks, the BDCs, insurance companies, it's not constructive. And so that's not an area that I think we need to wait into. But when you look at the flip side of other sectors like technology, semiconductors, names like TSM, which are some of my favorites that are down over 10% from their all-time highs, but are going to benefit from all of the things that we see playing out, including the numbers that Jensen was talking about yesterday at GTC. You also look at some of the memory names, the optical names that are going to require big investments. Tech is still a place to be. You just have to be selective with where you want to go. And industrials benefits significantly from this big KAPX super cycle. that we're in. So I like electrical equipment companies. I like a lot of the companies that are

early site developers for data centers. These are places to be in industrials and maybe avoid some of the early cycle cyclicals that could be impacted by higher energy prices in the short term. Yeah. What do you think, Grasso? Yeah, I do like the broadening out theme. I think that there's a couple of things that the big, beautiful bill, I think adds a tremendous tailwind that no one talks about, right? Full expensing. And I think the lower permanent tax rates really, help the companies that need it, but we do have a couple of refi walls that Kelly and I were just talking about for the smaller companies, that could get in the way. And I think it depends on where

rates go. So if we believe we're in a sideways, no one's saying higher. If we believe we're in a sideways rate environment, how does that affect your scenario if rates don't come down? Because obviously that inflates all risk assets. It does. And that's perhaps a reason to avoid some of the more sensitive consumer names in the market. You've seen a huge run-in consumer staples that I don't know is quite justified by the actual fundamentals. Maybe you strip out Walmart and Costco from that because the lower end of the consumer is going to be more impacted by higher rates.

At the same time, when you look down market cap in the small-cap space, there's a lot of companies that aren't dependent on where the spread for interest rates is because they're already free cash flow positive. They have earnings growth. Or there's other big secular growth tailwinds you were talking about pharmaceutical patent Cliffs. Acquisitions in biotech, that's less dependent on the interest rate environment because large pharmas have $30, $40 billion with cash on balance sheet to make acquisitions. But interest rates will matter, especially for lower quality companies.

So this is an environment to skew up quality with a lot of companies. You can still get growth and high quality at the same time. I mean, it still becomes a little bit back to those, you know, whether it's private equity or whatever. This does put, as we said, rates stay high, a little more pressure on those models. Matt, for now, thanks. Appreciate it. Thank you.

Good to have you here. Matt Orton with Raymond James, Chief Market Strategist. Turning now to the Fed with 24 hours before they announced their next interest rate move. Let's take a look at how our Mock Fed Council would be voting this month. You can see we have about 23 hours in change to go. And this time around, it's a split decision with three members voting to leave rates unchanged and three members voting to cut. Julia Coronado, Roger Ferguson, and Claudia Somm are once again in the hold camp, while Don Peebles, Bill Lee, and David Zervos are in the Dovish camp

sticking with their votes to resume cutting rates. And in fact, to cut in Zervos and Peoples camp by half a point, and for William, Bill Lee to cut by a quarter point. Speaking of the Fed, tune in tomorrow for our coverage while Jim Karen, David Kelly, Sarah Malik, and Tim Urbanoitz to react to the decision and break down the rate cut path. And Grasso, where would you be if you were in the market? Oh, I'd be cutting.

And I think what we've learned is Europe actually rates. rates back in 2022 into a supply issue, not a demand issue, a supply issue. Australia raised rates this morning or overnight or whatever. So I think they haven't learned anything from economists are always looking backward, but in my opinion, traders trade out on the horizon. If you think about it, you can't raise into a supply issue with oil because back when Europe actually raised into that, they had to do an emergency cut of 300 plus basis points to make up for the raise that they did. This is a short-term volatile point in a very segmented part of the economy. Some might say it's a tax.

It's not only a tax, but think about that basket of money that you're spending for those baskets of goods. If energy takes up all that money, then all of the other ones are disinflationary. So this spike could be disinflationy for the rest of the economy other than just energy. And if it's pushing us, as most say, towards that R word, a recession, which I don't know how close it's getting there. But if it's getting us in that direction at all, you should be cutting rates, the soft labor market, rising energy bills. Anyone who feels that we should be raising rates already owns assets. It only hurts the people who don't. I'm excited to hear from Chair Powell on this tomorrow to see what tone he strikes amid this, you know, balance where he's don't want to sound too much like the incoming baby chair.

Let's get to the bond markets. See Rick Santelli's reaction to all of this with the Fed move coming. And Rick, the 10-year actually one of its first kind of decisive moves in a few weeks here down towards 420. Currency is reacting as well with the dollar index, a little bit softer today. What do you think? Yeah, we've had some small movement. Yeah, the Fed's not going to do anything tomorrow. They shouldn't do anything tomorrow.

And I'm one of the people that I completely agree with Grasseh regarding oil and interest rates. But I don't necessarily agree with Steve on the long-term outlook. for interest rates because the market has mind of its own. The Fed has the long end. The market has the rest. Let's look at two-year, tenure, and boons on a chart starting, well, on the 12th. And the reason I started on the 12th, well, the 12th is when the two-year made its intraday high 376. But boon deals and tenure, they made their high on Friday to 13th, 428 and a whisker under 3%.

And if you look at a year to day to tens, something should jump out at you. Friday to 13th, we did not make a nice. new high yield closed for the year. But if you look at boon yields, going through a multi-year normalization of that big negative interest rate mistake they made, look where it's hovering. It closed just the other session at the highest yields going back to July of 2011. And you're right, the dollar index, well, it peaked out right on Friday to 13th. It had two intraday moves above 100, only one closed above 100, and it is moving down. Right now it's very very close to the lows of the session, and it really does underscore how oil is playing the tune.

But over the last couple of days, we're not paying as close of attention. I personally think a lot of the effects of Iran, at least in the interest rate complex, maybe running its course. Kelly, back to you. Okay, we'll ponder that, Rick. Thank you, Rick Santelli. Coming up, our market navigator is looking at robotics as a sector benefiting from AI. His top pick is the name that has soared 1,300 percent in the past,

year. That's next. Welcome back. Let's try to navigate these markets in our market navigator segment today with the explosive growth of AI giving a boost to the robotics industry. Our next guest is looking at a few names, including one stock that has skyrocketed over the past year. Joining us, Zeno Mercer, head of robotics and AI research at VETify. I think it is. You know, it's good to see you. Tell us about, and I have to look it up, even though Steve's already made a bunch of money on it. Ondis. OnD.S. What's going on here? Yeah, on the same. Well, you know, that's kind of take a step back. It's important to understand that the robotic space is having an inflection point.

It's both an offensive and defensive space, offensive because robotics are going to start entering every industry on the planet. Almost think of it as an industry of industries. It's defensive because physical AI can't, you know, do physical work. And there's a lot of fears around the disruption there. Now, Ondas, Inc. is a perfect example of where autonomous systems are heading, both improvements and new modalities of roeaties of robots. at individual robotic layers in the air, on the ground, connecting it all, but also the system that glues it all in the place. And as an example of why they're seeing this growth right now is because over the last decade, plus they've been assembling M&A and putting together this package that is perfect for the moment.

And the moment is look at tapping on the geopolitical stage. We're at war. We're seeing increasing types of threats like drones. And modern problems require modern solutions. So, you know, they're a $5 billion market cap company that just landed a partnership with Palantir. And it's, you know, really the right moment, right time. Yeah, you also like IPG photonics, which maybe we can come back to that one next time. But it's a reminder.

There's already a lot going on, a lot of money to be made in the space if these companies can now build on this performance. Zina, we'll leave it there for now. Thanks. Appreciate it. And more power lunch after the break. Welcome back. We have some news on Amazon. Kate Rooney. What's happening?

Hey, Kelly, so there's some headlines coming out that are moving Amazon stock. It's up more than 1% on news that CEO Andy Jassy has reportedly seen AI double his prior AWS sales projections looking at $600 billion by 2036. This is according to Reuters. They're talking about internal all hands where Jassy reportedly said, quote, I've been thinking for the last number of years at AWS. He says call it 10 years from now. could be about a $300 billion annual revenue run rate business. He says now I think what's happening in AI that AWS now has a chance to at least double that. We did reach out to Amazon, no comment yet, Kelly.

But it is welcome news. You can see the stock reaction for investors who had been skeptical about some of the CAPEX numbers. It was $200 billion as of last quarter. And $50 billion, up to $50 billion, lately in this investment in Open AI, Jesse has really been pounding the table about the opportunity in AI, especially for AWS. So investors have wanted to see some momentum, wanted to see it reflected in sales. So this is welcome news for the skeptics that Amazon would benefit long term from AI. Absolutely. Kate, see right there just for a second.

Just bringing in Steve. The 52-week high, Steve, is still 258 from November. Well, if you think about who's running the company now, it was the former boss of AWS. So if you're thinking about that's where the growth potential is going to be, you have the perfect person manning the ship right now who's making all the decisions through that prism. A question if we can show Nvidia shares, but Kate,

I thought the idea was that they were using a lot of their own chips. And so what's the, do we know the mix in terms of who's part of this chain if they're building out something of this scale? Yeah, they have tried to really tow the line, Kelly, of still partnering and staying on really good terms with Nvidia, because right now they still need Nvidia chips, but at the same time,

we're going to diversify a bit, we're going to build our own and partnering with companies like Open AI and trying to entice some other companies for especially for inference, which is not training. It's sort of running AI saying, okay, we may have more efficient, less expensive chips to compete eventually with NVIDIA, but they're not seen as a major competitor today. This is sort of a forward-looking thing and they are trying. As some of these equity investments, you see the strings attached of, hey, you got to also use our chips. We got to go see, but do you think this gives a little more mojo to the stock? Because we've heard a number of people a little more positive on

the Mag 7 last recent days. I think for Amazon, it gives Mojo. I think for Nvidia, I would not be looking at the chart. I would not be buying it. If I would you rather, I'd be a buyer of Amazon. All right. Kate, thank you. Kate Rooney. More power ledge after the break. Welcome back. Keep an eye on shares of SoFi,

which are selling off after Muddy Waters has taken a new short position with a strongly worded letter. Steve, those shares are down 3.5%. But we have 10 seconds and people want your stock picks today. Yeah, think about it. I always like to go with a shiny object are. For me, it's quantum. and IONQ, that's where I'd be looking for the growth. Off to the next thing.

Thank you for joining us and for the time. Steve Grasso, that's it for Power Lunch. Closing bell starts right now.