Power Lunch - Powe Lunch 5/27/26

Episode Date: May 27, 2026

CNBC’s Kelly Evans and Brian Sullivan take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

More stock indexes hitting all-time highs as another big Wall Street firm jacks up its price target. Welcome to Power Lunch with Kelly. I am Brian. Its records both here and around the world as AI and semiconductors and energy power this market move and your money. But there are always risks out there. And we hit both the bull and bare cases with Morgan Stanley's Mike Wilson. And Brian, the odds of a piece deal with Iran are rising, according to Wolf Research, to Ron reportedly ready to restore commercial traffic through the Strait of Hormuz as soon as next month. The major hurdles still standing in the way and what any breakthrough could further mean for oil, inflation and your money.

That's ahead. All right. There is so much to do this hour. But let's start with this. And folks, I want to be clear, this is not TV hyperbole to say that even though stocks are mixed to maybe down a bit right now, you're living through one of the greatest and most unique market rallies of all time. This is not our opinion. Look at this.

There are now 12 companies in the S&P 500 that have doubled since January 1st. Let me repeat that. 12 companies, big ones, whose stocks have doubled in less than five months. Those companies, Sandus, Micron, Intel, Seagate, Western Digital, Siena Dell, Lumentum, on semi, and Corning. Most of those are semiconductor or storage companies caught in the AI melt up. And since January 1st, The entire market cap of the S&P 500 has gone up about 10%, or $6 trillion.

That is more than the value of most stock indexes of other countries combined. But Kelly, I want to be clear, it's not just all winners out there. We checked that as of today, there are actually 198 companies in the S&P whose stocks have fallen this year. It is all about AI and data and energy and storage, and it is truly something to watch. We'll talk more about this in a few minutes with Terowulf CEO Paul Prager. That stock, Kelly, surging a cool 540% in a year. Doesn't even stand out anymore. Wall Street is getting more bullish as well.

Goldman raising its year-end S&P price target to 8,000 from 7600. They joined Morgan Stanley, Yardinney Research, and RBC in betting that the rally still has more room to run. Our next guest is among those bulls we just mentioned. And joining us as Mike Wilson, the chief U.S. equity strategist and CIO at Morgan Stanley. Mike, it's good to see you. And to Brian's point, it's a pretty standout season for the stock market. Do we have to worry about how it comes to an end? Well, we're in a bull market, so we're not worried about the end right now, but they always do come to an end.

And I think, you know, this year did shake a few people out while we saw people take their targets up. We saw some people take their targets down near the lows back in March. March when the war got started. So it hasn't been a smooth ride, I think, as maybe some people perceive. And the thing that has been smooth, what we focused on, and we did not get shaken out back in March, was the earning story. The earning story has never wavered, really going back to Liberation Day. And that's been our call, as you recall, we talked about a rolling recovery from that recession that we think we experienced. And the earning story is all about that. And that's one of the things that has not wavered, even through the war, through all the concerns around private credit.

And let's not forget that back in February, people were lamenting how AI was going to destroy the economy. So there's, you know, there's always something to worry about. And that's what makes a bull market is that the fundamentals have overridden that. And that's why we took our target up, quite frankly, is because as bullish as we were on earnings at the beginning of the year, they've been even better. So we had to adjust that modestly by a couple hundred points. How could anybody have expected? What are the latest numbers? It was like 30% in Q1, even if you take out some special factors, it's, you know, this Q2, Q3, Q4, we're in the 20s. It's hard to even fathom because we're not coming out of recession.

We're not coming out of COVID. We're not coming out of a period when earnings dropped 40 and are rebounding 20. We're just coming from a regular year. Well, that's why I would disagree. And we've, you know, we've documented this for years that we did experience a recession between 2022 and 2025 for most industries. It was very narrow. I mean, as much as people are lamenting about the narrowness today, well, at least the fundamentals are much better now.

So the fundamentals have broadened substantially, right? And this is, I think, the big myth that's going on right now is that while these AI-related stocks have done extremely well, and by the way, their earnings have been the best, let's not forget about all these other industries that are seeing double-digit earnings growth now after three years of negative growth. So we did come off a recession, and that's why we're seeing this operating leverage now. start to really take off. In other words, it doesn't take a lot of revenue growth, okay, to lead to very strong earnings growth when these companies have been cutting costs for the last three years. Mike, you know, one of the things I wanted to highlight during that opening piece was that 198 companies are down in the S&P 500, not quite half, but it's been a pretty narrow rally. Do you

worry that it's that it's too narrow? I know it doesn't matter with the headline number, right? Big cap stocks go up and the whole index goes up, but are you worried it is in some ways, too concentrated at the tippy top? Well, the breadth will have to get resolved, meaning the price breadth, we think, will catch up to the momentum of the fundamental, the breadth of the fundamentals, and that's what we're expecting.

So we're probably one of the few strategies you talk to who are willing to kind of go away from some of the AI-related things. We think that's where the opportunity is. Quite frankly, the consumer-oriented stocks should be the biggest beneficiaries, what we think is going to be oil prices coming down throughout the rest of the year.

And that's an area where the earnings have been quite good. I also think there's a little bit of, you know, Tom Foolery, if you want to use that word, to say that depending on when you start, the breath has actually been quite good. So once again, I'd have to go back to Liberation Day as the beginning of the bull market, really the beginning of a new economic cycle. And since then, the breath has been quite good. So it's all about your starting point. And I also want to go back to the beginning of the year. January and February, the breath was terrific. And then we had all these shocks and then people gravitated back to where the earnings momentum was the highest.

So it's all about your starting point. That's why we try to get shaken out. We look at our fundamental work. And the fundamental work suggests that breath is actually improving, not deteriorating. Okay. I'm not being negative. But as you know, there are always risks. What are your clients worried about?

What questions are they asking you? So I think the biggest risk here is that inflation is coming back a bit. And that may, you know, lead the Fed or other central banks to be a bit more hawkish. they already have been. One of the big misunderstandings is the Fed has a couple of tools, right? They have rates, and then they also have liquidity. And liquidity has been very robust this year. But eventually, if inflation doesn't calm down, that will be a risk sometime in the second half of the year, or maybe early next year where they may have to come back into the picture and be even more hawkish. So that's a risk, I think, for later this year. And we also get questions around

midterm elections. We're not that been out of shape about it because the market's already sort of a mixed election, and quite frankly, that's not going to change legislation this year or probably into next year, even if the Democrats win both the House and the Senate. And then, of course, you know, there's anxiety. I wouldn't say nervous this, but there's anxiety around the momentum of this market. Okay, so while the fundamentals are incredible in the AI-related sectors, the momentum and the crowding that's going on now can lead to decent drawdowns and corrections because, you know, those things tend to unwind themselves.

So those are the three big things. I think folks are asking about, and we think they're valid, but we think the bull market continues to the rest this year. Yeah, and I like your point about that a lot of sectors were actually kind of in an earnings. It's so, it's extraordinary the timing of chat GPT, you know, to come at just the moment that it looked like, it looked like the whole economy could have gone into recession. I think that's a good point. And look, I mean, there are other areas, too, that had rebounds. And that's that was our whole call, the rolling recession. We didn't experience a typical recession where everything collapsed at once.

And so it just felt, you know, kind of like it was a malaise. And then you're right. I mean, Chad CTP and AI really kind of saved a day in 2023 and 24. And that's when the market was extraordinarily narrow. And the earnings breadth was terrible. And we were probably too bearish them because we focused on our earnings work. And our earnings work was not good then. Today it's very good.

And that's why we're, you know, we're more sanguine and not as concerned about some of these risks that are still. And they're always lingering, but we're not worried that's going to derail the earnings story. All right. Mike, it's good to see you. Thanks for making the time. Thank you. Mike Wilson from Morgan Stanley. A quick note on bonds and inflation because Bank of America is out with a new note, warning that the last mile on inflation is getting tougher for the Federal Reserve. And they add that getting inflation back to the Fed's 2% target is going to require further cooling and services, prices, and a return to modest deflation in goods.

Now, folks, keep in mind, the next interest rate move is still unclear. clear. But according to Kalshi, there's a 33% chance that a rate hike will happen before 2027, not a rate cut. A rate hike, certainly, Kelly, on the table. Indeed. And after the break, energy infrastructure for the age of AI. Terawolf is betting their future on the power needed to fuel the AI boom. Their CEO is standing by to run us through the game plan. Stay tuned. Power lunch. We'll be right back. All right. Welcome back. Your next guest runs. The company, one of the hottest stocks in America. Shares of Terawolfs sort over 550% in the past year, and Wall Street sees more. The average price target of analysts, $31.20 a share, stocks at just

under 26. CEO and founder Paul Prager rejoins us now exclusively to talk about his company and what appears to still be an insatiable appetite for electricity around AI. Paul, welcome back. Glad to have you on. Is there any indication that companies that need the computing power? the Googles, the metas, the Microsoft's the world, any indication that they are dialing back on anything? Not to my knowledge. You would know, considering Google's what are your client, like you're a client of Google. I mean, but I have to be humble.

I think the answer is GPUs are critical, but the real constraint now in the space is scalable power infrastructure. We've been saying it for a while. It's simply very difficult to secure hundreds of megawatts of power. with surefire delivery certainty. And that's why the market is favoring those folks that have that infrastructure capability and a management team that can execute. Is there anything that the market is missing here?

Is it not the demand for energy? Maybe is it the ability to cool the data centers, the ability to provide water, the labor to provide the concrete or the wiring? Is there any part of this story that we're not dialed enough in on? Energy infrastructure is all, and you need a management team that can execute. You've got a lot of folks in the space that are talking about data centers and their ability to go out and contract, but at the end of the day, you need to understand energy. Okay?

And once you understand energy, you need a management team that could go out there, procure contract, and build to a energy. schedule to a specification and to a budget. That is what Terrell-Oof does. So, you know, Paul, we've been having this debate about the memory stocks. Have you become like a memory stock expert? Didn't you used to do Bitcoin? So we started out as a Bitcoin minor, but really, that's not what we were. We were an energy infrastructure company for 25 years. Wow. As the markets evolved in power, we looked to Bitcoin because it was a very flexi load. It still is a very flexible load. But to be honest with you, I hated the business.

I think great. But I like long-term contracted predictable revenue. And that is the business that we were in. We're in a business where we built power plants with long-term off-takers that were high-quality investment credits, long-term fuel supply agreements. We'd build it and we'd finance it efficiently. Now that is exactly what we are doing in the data center business. We have long-term investment-grade off-takers. We provide long-term power supply contracts. We capture a spread. We operate it to the death.

We finance it very efficiently. And we sleep at night. I love the way you're saying this. From an operator, you'd much rather have this, you know, have AI as your client than have Bitcoin just by nature of it. What if all the data centers go to space, though? I don't think that's going to happen. I mean, it's great, but we're a long ways away.

We are a long ways away. Please appreciate that the data centers that we're building today are still highly complicated, highly sensitive, highly curated by the end user customer. I think the notion of going into space with all those variables, it's exciting. I wouldn't want to bet against the guys that are talking about it, but it's not what I do. I like to stay here on Earth. I like the data centers that we have in the United States. We just announced a new gigawatt data center in Kentucky. We're very excited about that, and we see robust demand for that.

What did everybody miss, Paul? Because people were abandoning nuclear power plants. They were abandoning some older natural gas facilities. In fact, you yourself bought one of those. You bought Lake Mariner. somebody really screwed up the ability, and I'm not saying I saw, I didn't see it coming either, by the way, the ability to see out and say what kind of power demand will there be to the point where people abandoned gigawatts of electricity, like let it go, we don't need it. Now we not only need it, but we need it to the point we're willing to pay up for it. What was missed? What did really smart people get wrong? You know, I don't know if they got it wrong. I think they were hopeful. I think there was a lot of emphasis not too long ago about sustainable power and what it could achieve. But at the end of the day, what made the United States great post-World War II is a thing called baseload power. And that, it's a very simple thing to understand. It means you turn that switch on and the lights come on. Baseload power requires ten. in your transmission here requires a continuous source of generation supplied.

The United States once had that an abundance of that. We lost that. And we gave away a lot of time in terms of when we started to. Why did we lose it? What happened? Because it's a pretty obvious concept. And if you got two power plants and one is all the time, one is working 90% of the time, you need another power plant to fill that 10% of the time that the other one isn't working, which means you need to have two plants, whatever they're made from, not one. That to me seems ridiculous. Yeah, I think at the end of the day, people were hopeful that the renewable energy revolution would enable growth in America.

And at the end of the day, that growth in America would be sort of, if you will, steady. The answer is the demand for power in America is, is vast. We're short 50 gigs of power. And the reality is we gave away our advantage in nuclear power and we rightfully looked to modify coal plant usage and gas plant usage in favor of renewable, not appreciating that we could make gas, you know, a very clean resource. So at the end of the day, we stayed in power. We focused on that and we looked for long-term power off-takers. And then in Bitcoin mining, a flexible load. But we are right back to where we were 15 years ago, which is we own the energy infrastructure, we're vertically integrated, and we have the ability

to bring electricity and convert it to high power compute, which is so fundamental to America's success in the coming decades. Love hearing the front lines perspective about, you know, someone who's in the midst of these transitions. Paul, really appreciate it. Thanks so much. Thank you very much for having me. Paul Prager, CEO of Tara Wolf. We've got a news alert on META, Julia Borson, with those details. Julia, what's happening?

Hey, Kelly, meta shares moving higher on the headline that the company is doubling down on its subscription plans globally for its flagship apps. They've talked about the idea of doing subscriptions in the past. Now we have some of those details and the pricing. Instagram, Facebook, and WhatsApp are beginning tests of news are going to have subscriptions for $4. for Instagram and meta and then $3 for WhatsApp. And they also say they'll be also testing for meta AI, offering a subscription for meta AI. And this is all part of a larger subscription business.

They're calling Meta One, Naomi Glite, who is Meta's head of product announcing this and giving some of these details on Instagram today, saying that for paying $3 or $4 a month, we'll give subscribers access to extra features like profile customization and story insights. G said more is coming. This also comes as meta wraps up.

It's annual shareholder meeting where Mark Zuckerberg talked about the importance of AI agents and the opportunity to monetize that down the line. Back over to you. So, Julie, this seems like a really big story. Is this a required payment or would this be an extra layer? You can still use free Instagram or you can pay and get those added features. Exactly. Instagram and WhatsApp and Facebook will continue to be free, but the idea is that these are for super users.

There will be new subscriptions, they say, for businesses, creators, and meta-AI users, and they're working on those. But what we do know now is that the flagship apps, Instagram Plus, Facebook Plus, and WhatsApp Plus, those subscription services will offer extra features like profile customization, super reactions. if you want to give your favorite creator an extra special thumbs up, as well as story insights to see how your stories are performing. So I think the idea here is, Brian, that we know that they want to find additional ways to monetize. They want to make sure that people who are willing to pay have that option to pay if they want to have extra connections,

either with their fans or with the people that they're following on these platforms. Julie, I know you're actually like on TV right now, but you can't see our screens as much, but the stock has moved on that. I mean, stock turned, I think Kelly was down to. 2%. Now it's up 2%. So 3 or 4%. Not a huge move, but the market clearly likes it. And you wonder if that will push Mark Zuckerberg and company to try more because you know, it always starts with. It always starts with Netflix being $5 a month. The option.

So Brian and Kelly, it is worth noting that Naomi Gleit said more is coming. This is just the beginning. And they're creating this new umbrella for the subscription business, calling it meta 1. And you will be able to pay for one-off subscriptions to their flagship apps. They're going to have more subscription options coming. But the fact that they're creating this new umbrella for it indicates there will, there will be more to come. All right. Great. No, Julia, thanks very much. Our Julia Borsden there. After the break, are we finally on the path to a U.S. Iran deal? Our next guest thinks so, but says it could be a skinny one. He'll explain that and what it means for your money when Power Lunch returns. This rate's going to be open to everybody. It's international orders.

nobody's going to control it. We're going to watch over it. We'll watch over it. But nobody's going to control it. That was President Trump at today's cabinet meeting. He added that the U.S. is not talking about easing sanctions on Tehran. The comments come as oil prices continue to move lower with WTI now below 89 a barrel. Look at that. We're down 5.5% today. That means we're probably down about 9% in the past week.

Tobin Marcus is head of U.S. policy and politics at Wolf Research. Tobin's good to see you. You just wrote that you think a skinny deal between the U.S. would be good enough for markets. What's a skinny deal look like? Kelly, thanks for having me. So when I say skinny deal, I mean that the deal on the table is principally about ending the war, reopening this rate, whatever inducements are required to make that happen. With the hardest questions, which have been the nuclear issues, punted to a later phase of negotiations meant to take, you know, 30 to 60 days, a lot of the biggest

sticking points have been on the nuclear file. And I think by deferring that, we're able to do what markets want to happen, which is get the war ended, get the straight, you know, starting to reopen, all that's going to be a gradual process of its own and just defer for now some of these questions that have derailed things on the new their side. So the oil, I wonder if today's a little bit of a glimpse of what kind of when the situation ends, the markets look like. Consumer stocks are up, discretionary staples, the price of oil is down. Could we see more of that?

Yeah, absolutely. I mean, you know, one big question is going to be how much of, that has already been traded in advance at the time that we finally do get a deal announced. And we had a lot of optimistic trading last week, starting with the headlines that a deal might be coming on Wednesday, then another round of optimism over the weekend and further optimistic trading yesterday and today. So, you know, it's not coming as a shock to people that we may be on the way to a deal. But certainly we'd expect further downward moves in the front end of the oil futures curve, further downward moves in yield. So I think there may not be that much further to go on

that and positive equity reaction. I, I'm just trying to. I'm just trying to do. tracking the ship movements and the move in those forward contracts, Tobin, to your point, and I'm looking at the December contract for WTI crude, which is just over 70. It'll probably be below 70 if this continues in a couple of days, heck, maybe a couple of hours. That's how the future's market works. That said, and people have kind of come at me online, they've been like, oh, you're too optimistic. Is the market being too optimistic here? Yeah, and I think when you look further out into the future at, you know, those December contracts are into 2027, I think the risks are more two-sided because I do think it's a real question how quickly we're going to get actual

flows resumed at scale even after deals announced. You know, it's going to take time. Their confidence will need to be built between the two sides. And then you'll need to have confidence built between, you know, the sort of implementation of the deal and commercial operators. You need time for upstream assets to get back online that have been damaged during the war or shut in. You need time for vessels that have been rerouted elsewhere to go back into the Gulf and pick up cargoes. So I do think that's going to be a gradual process that's going to sustain a higher trading range for oil over the medium term. You know, the current price for December seems reasonable. But it's not obvious to me that that's, you know, headed for a cliff the same way that the front end is.

You know, I'm surprised, Brian, that people think you're too optimistic when the market is clearly telling you that, you know, the worst of this is over. And Tobin, look, I got an email today from my milk delivery company saying the delivery charge is going up by a dollar because of diesel prices. So I don't like that any more than anybody else does, but it's modest in the grand scheme of things. And now the market's already kind of looking past this. I wonder if the next issue is actually Russia. Yeah, I mean, I don't know that the Russia situation has been going on for so long that it's hard to see that deteriorating much further in a way that's going to matter to markets. Although, you know, conflict has been intensifying there somewhat. We also don't think a deal is, you know, coming anytime, assumed to permanently in that war and sort of further push down prices.

So, you know, I think once this situation does get resolved in this rate, you know, there's going to be a long set of questions about how much and to what extent it's flowing through into inflation and what that's going to mean for central bank policy. You know, I think that's, you know, there's more downward movement on oil, I think, than the long end of the Treasury yield curve, which I think is kind of stuck in a bit of a high rate. It's one of multiple factors that's contributing to hotter than hoped for inflation that I think is going to curtail.

Well, that's interesting because I do wonder, does oil lead? the bond market or does the bond market lead oil? It looks like oil is leading for now. You can comment on that. But also, Tobin, I, listen, I've reported for two months that there are multiple people in Iran that basically assert control over some or all of the country. How confident are you that if and when we do get a, we've reached a deal stage that some rogue IRGC general in Iran is not going to screw it up. Yeah. So I think that there certainly is some level of fragmentation within the regime. But it does seem like we're seeing a collective decision-making process around the different rounds of this deal, which is part of why the back and forth has been fairly slow,

that I think is going to result in a reasonable level of consensus around adhering to it. You know, tellingly, we've not really seen rogue actions by, you know, more hardline IRGC generals to blow up the sea spire. And where there have been things, mostly they've, have been contained. Obviously, we had to exchange a fire on Monday. You don't love to see that while negotiations are ongoing, but it did not spiral out of control. So, you know, I think they will feel, based on where I would guess the deal is going to land. I think that the Iranian regime is going to feel good enough about the outcome that you're not going to see a really strong backlash from people who, you know, wanted to push it further and are just satisfied with the

outcome. All right, Tobin, Marcus and Wolf Research, Tobin. Really appreciate your views and always a great job on the research. Certainly a must read on Wall Street, Tobin. Thank you very much. Thanks for having me. All right. Coming up, the Marvel that is Marvell. And I'm not just talking about Jeff Kilberg, but he is here to lay out the take on one of the other hottest stocks in America. For check time, and today we're taking a closer look at one of the big semiconductor names reporting after the bell. That is Marvell technology.

Stocks down a little bit today, but whatever. It's doubled in value in just four months' time. We got a lot of questions. Let's get some answers. Jeff Kilberg, founder, CEO of K-KM Financial, also a C-NBC contributor. Marvell, welcome, by the way. Thank you, Sally. Marvell does not get the love that NVIDIA and Broadcom and others get.

What are you watching for tonight? Well, I think it's very interesting because Marvell, which did take in an investment from NVIDIA, $2 billion just in late March, we will see this verification because what's the bottleneck right now, Sully? It's not about getting the chips, not about the cliques. it's about how fast it can operate. So if we see Marvell kind of lay out the land that the data center build out is actually happening, the physical layout, they will have the ability to move higher. But you're right, it's sensational up 150% in three months. And this engine,

this engine we've seen, you're a big car guy, so this engine we've seen, is it time for the radiator to pop here? I don't think so. I think there's still more room to run because people are underinvested. We missed this trade. We didn't get this trade in our growth the ETF. But do you, would you do it? You're waiting for earnings? Would you buy it now? Or sometimes people, you know, they go, well, I could own Nvidia or I could own something that broad comes to. Do I need to own this

one? It's on our list. I want to see if we own it. Right now, the implied volatility meeting, the move off to today's earnings is about 13%. So about a $25 move, Kelly, we're going to see trade around $201 right now. So there may be opportunity here, but at the end of the day, I need to see what their forward guidance looks like, but also kind of what the state of data centers

infrastructure looks like. What did you say the implied move was? 13%. About 25 bucks. Wow. Okay. So that, yeah, that could be a big one. So maybe you wait, take a breath, wait and see and then make your move. What about the small caps, which are record highs today, record highs to the last couple of months. They're positive 11 of the past 13, but we heard some commentary from Oliver Renick last hour. The options market's a little bit more bearish about its prospects. I think it's been a little of a snapback, right? There's some underinvested folks in the small caps. We're seeing the S&P 500. If it goes positive today, it's going to be its 20th new all-time high in the first 100 days, happy 100 days of 20.

trading here in 2026. But the small caps is interesting because I think when you see this type of dispersion in the marketplace, Kelly, look at this sector as we're seeing energy leading yet again, even though crude selling is coming down to $88. But when you see that dispersion that provides opportunity in these smaller cap names, who are more interest rate sensitive. So we'll see what Kevin Warsh does. It's only been a couple days on the job. But nonetheless, I think there's optimism about lower interest rates back half the year. But we're still trying to understand the inflation picture and all the moving parts. But that's been the bid in small caps. I want to move from SC, small caps to SK, SK Hynix, South Korean chipmaker.

Yes. The newest member, congratulations, of the $1 trillion market cap club, the South Korea ETF has been absolutely, I mean, it's trading like a bonkers, great word. I was going to say something else, a family-friendly show. Trading like a semiconductor stock, what do you make of the South Korean ETF? Luckily we do own EWY. So we've owned it for the last two years. been on fire. Just when you think about trimming it or selling it at the January in the new year,

we didn't. And why, Sully? Because that overweight concentration, if you look inside of EWI, there's two stocks, Samsung and HK. So that 50% makeup of that ETF has really been the catalyst. So it's interesting to see. Two stocks are half? Two stocks are 53% if I do the math. Wait, hold on. Hold on. Hold on. Hold on. Two stocks. Sorry about lacrosse national championship. Yeah, that was a rough one. Prince. Not for Princeton. There's a great. It was a great season, though. It was a great season. Two stocks. We talk about concentration here, because 10 stocks are half the NASDAQ 100 or whatever it is. That's right. Two stocks are

53% of that ETF? Yes, sir. But I think when you own an international rotation model, which we have, we have multiple countries, but owning South Korea has just been a home runner, a grand slam. This is epic proportions. So we have not seen this type of move. So what comes up, we'll come down. Not yet. We continue to see year after year, Banner year. Wow. We were talking about kind of just this market broadly and some of the comparisons people make for good or ill to the 90s because really it's hard to find another time you've seen a meltup of proportions like this one that makes companies not just, you know, that the stock price moves, but that the valuations hit a trillion dollars. We did not see that with Pets.com. Does anything about that give you caution? It does, but you know, Greg Fleming from

Rockefell, he was on the air earlier this morning. He talked about the new normal. I think he hit the nail on head because what you think about this new normal, there's 14 trillion, excuse me, there's 141 trillion companies. So that in itself, I think, allows for momentum. And what have we seen in this marketplace? If it's acute reaction to trade tariffs, a cute reaction to Iranian wars, it's an overdone momentum pendulum swing. They oversold too much, you overbought. So I could argue when overbought tariffs are you look at Micron. Look at these overbought relative strength indexes. But until we see something significantly changed, that's when you're not going to see people take profits. Pings get fat hogs get slaughtered.

That understood, since you're here, because people always want to know, what do you do with Intel? You still hang on to me? I haven't even checked to wear the price. You're Mr. Intel now. You made a great call in your ETF. Well, look, we look through your lens in our essential 40 ETF. We look through your lens. This was essential to the U.S. economy.

It was a U.S. domiciled chipmaker. So right now, it's over 6%. We do have the ability to trim it when it gets to 10%. But it's been a sensational move. But if you've missed the boat on Marvell. If you missed the boat, you know, look at an Intel. We also look at AMD, ASM, Well, it's kind of, you know, pick your chipmaker, pick your kind of AI exposure.

But Intel, we are not selling yet. We will be considered. But just when you wanted to sell it, Kelly, went down to 102, boom, it came right back. So up almost 250% year to date, it is sensational. But we're going to stick with this trade. Momentum is on our side. Now there it is around 120, even a slight dip today, but still remarkable. Jeff, thanks so much.

Thanks, Kelly. Thanks, thanks, Kelly. Jeff Kilberg. Let's get over to Pippa Stevens now for the CNBC News Update. Pippa. Hey, Kelly, the Israeli military today told residents across southern love. Lebanon to leave as it ramps up operations there. The military said it will, quote, work with extreme force against Hezbollah in the area.

The warning comes days ahead of the next round of scheduled talks in Washington between delegations from Israel and Lebanon. Russian State TV says the lower house of parliament passed a law authorizing the Russian Central Bank and other financial institutions to repeal drone attacks with their own defense systems. The law also allows staff to operate those anti-dron systems without. the involvement of Russian special forces. Ukraine's military has increasingly relied on longer-range drone strikes as the war drags on, stretching Russia's ability to defend the skies over its vast territory. It's one of the most complete T-Rex skeletons ever discovered, and it's going up for auction. Sotheby says the 67-million-year-old dinosaur, nicknamed Gus, is headed to the auction in July for between 20 and 30 million dollars

for what the auction house says is the highest ever estimate for a dinosaur fossil. Brian, that's pretty cool. You know, you got to hope that ends up in a museum. Yeah, because I'm thinking, Pippa, like, if some rich person bought Gus, what's a T-Rex, Kelly, 50 feet high, 70 feet high? Maybe more, I don't know. You need a big foyer? Yeah, exactly.

Gus requires a lot of space, maybe even some extra care and maintenance. Have you seen my T-Rex that I'm on? My kids would like take a bone off and go running around the house with it. That would be not that we would have a way anyway. Pippa thanks. Does it fit on the jet though? Definitely not. Wow.

Let's help Gus goes to a museum. Coming up, we are getting closer to the historic SpaceX IPO. But there's one looming thing that you may not know. We don't even know what we don't know, but we'll know it next. Welcome back. Before SpaceX filed to go public, it took on a $20 billion bridge loan. And that payment is due in just over a year. The company plans to use IPO proceeds to fund growth, though, not to pay down that debt. Joining us at CNBC's Leslie Picker to share more about, you know, as investors get excited or, you know, gear up for being marketed the big IPO. How big a deal is this loan? So what they say in the use of proceeds is that they're going to use the proceeds from the IPO, which is expected by, pretty much every measure to be the biggest we've ever seen, to fund growth, to fund the build out of their AI infrastructure, to build out their space program and so forth. But if you dig

deep into the S-1, you see there's been some creative financial engineering that's taken place with regard to its balance sheet cleanup. And this was the result, if you recall, the month before they filed for, or I guess it was two months before filing to go public, they acquired XAI. In doing so, they were able to restructure some really punitive junk debt that was largely legacy from the Twitter buyout into a bridge loan, $20 billion, much more favorable interest rate than they were paying for the junk debt. As a result, they were able to cut interest costs by a billion dollars. They were able to pay back the banks that had been holding this, you know, for so long. It was the longest hung loan in history. So everybody kind of won on that side of things. Now, the

question you might be asking is they're going public. So they must be using these proceeds to pay back the bridge loan, which it says in the fine print of the S-1 essentially needs to be done about six months post-IPO. But in the use of proceeds, they say that they're going to fund growth. $80 billion is what they want to raise. $20 billion is the loan, which, as you say, is really because of the Twitter buyout or whatever. But the market cap of this company could be $1.5.1.75 trillion. Does a $20 billion loan matter in that scheme of things? So the question is what they're able to get, how much of it goes toward funding growth? And you could also say, well, some of that debt is due to the building out of this AI infrastructure. So if they say they want to build out

the AI infrastructure, maybe it's just kind of paying back some of this bridge loan debt that they have or refinancing it down the road. That's one question. We also don't know how big this IPO will be. Give us an estimate, though. Just wild guess. I've heard anywhere from 50 to 75 billion, I was told, was kind of a safe ballpark range to discuss. So they might only raise 50 and have a $20 billion loan. Exactly. And a lot of banks are involved. And a lot of banks are involved.

They're going to get a lot of banks. You're going to make a lot of money on this IP. Well, you bring up a good point because the banks that are on the lead managers of this IPO are also the same banks that are arranged that very favorable bridge loan as well. So they're generating fees from underwriting the bridge loan. they're generating fees from underwriting the IPO. I'm telling you, the banks are coming out just fine in this situation. SpaceX is coming out just fine, given what it paid for interest costs before. I mean, I guess what XAI paid for interest costs before.

And then the consolidation, what they would be paying in the go forward had they not done this financial engineering. So they're doing okay. But it's important for the people who are buying into this IPO to know what's going on with the debt, what the story is, and what the use of proceeds might be that you're contributing to this. I was a savier, smarter man, I would say the X-Factor. Yeah, good one. Is a guy named Elon Musk. How does Musk factor the ex-f-I don't know, anyway?

Yeah. How does Musk factor into this entire thing? Well, it is. Look, we say his name and they put a picture up. I believe Musk had said, I've never lost my investor's money. And I think there was a period of time when everyone was looking at the Twitter debt. And if you recall, let's go back to 2022 when he did this $44 billion leveraged buyout of Twitter. And the business plummeted and interest rates skyrocketed and the banks that orchestrated it were stuck with this debt.

They could not sell this debt for a long period of time. So I guess there's no sour grapes on that front. I mean, when Elon Musk says he's not lost his investors' money, this is the kind of stuff he's talking about because he was able to basically repay that debt. an accelerated pace by combining the companies. And now they have this bridge loan that's at a very, very favorable interest rate. The question is when they have to pay that back or refinance it. And that's important for people who are buying into the IPO, just to be aware of and understand the history. Mortgage, you've got a 3% mortgage.

You're like, I'm not going to pay that down right away. Right. That can wait. You know, it can wait until next year, maybe, or? Well, technically it matures in September of 2027 and with the option to extend, My understanding, though, is that, you know, that's kind of if they don't go public and have this influx of cash or do some sort of refinancing. In the event of an event like that, it needs to be six months. I have the exact wording from the S-1, but I won't.

I won't bore you with that. Page 122 for those people who want to go read it. I'm imagining you going page by page. Literally. I can't do this, folks. Page by page. Leslie, thanks. All right.

Coming up, caught a crude reality. We're going to tell you about a concerning oil trend emerging. that has not happened in 40 years. We'll tell you about it next. Our insider time, and today we're talking about the Strategic Petroleum Reserve because it could soon do something it has not done in more than 40 years. Take a look at this chart from the EIA, the U.S. government, showing weekly crude oil inventories inside the SPR. Well, the SPR right now holds about 374 million barrels of oil. That's actually the lowest level since March of 2023.

but the withdrawal rate has been high. And if the withdrawal rate continues at this level, the SPR will fall to its lowest level since 1983. Remember, we took a lot out back in 2021, 2021, 2022, 2023. Really, 2023. There was a ton taken out. And now we're taking out record rates and more for more insight like this. Sign them now for my new weekly energy intelligence piece called Power Insider.

To do that, just scan that QR code. on your screen. Well, it's not a great sign. There's more power lunch after the short break. Don't go anywhere. Amid those mixed reviews surrounding its first fully electric vehicle, Ferrari might have been looking for a blessing from the very top. None other than Pope Leo.

You can see him there checking out Luce, Italian for Light. That's their new model. He got behind the wheel. And yeah, maybe Brian, he liked it more. If shares of Ferrari or slightly higher after yesterday's drop on this car's debut. I think it's always good to get a bar. blessing, particularly on that car. What do you say?

It looks like the Nissan. Leif. The leaf, yes. Thanks for watching. Power Lunch, everybody. Closing bell starts right now.