Power Lunch - Power Lunch 12/22/25

Episode Date: December 22, 2025

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.

Stocks are up to kick off your shortened holiday trading week, but the White House knocking the wind out of some big energy stocks. Welcome to Power Lunch, everybody. I am Brian with Kelly, energy and focus, tension with Venezuela continuing to rise and the White House going after Big Wind, the U.S. Coast Guard chasing a third oil tanker as the Department of Interior turns off the power to a number of big wind energy projects. at least for now, some of those stocks taking a hit. Plus, big tech has powered the markets to these record highs, but will those stocks deliver

next year? Our market's guests will lay out his playbook and why he says it will be a unicorn year for investors. Is that an IPO reference? Speaking of big tech and energy, Alphabet making a multi-billion dollar deal in AI Energy, RBC's co-head of Global M&A is here to discuss that and more. Yeah, look forward to chatting with Vito Spurdo here in a few minutes. We have got a lot to do over this hour, but let us begin with your money. Because right now, like literally today, is the time the so-called Santa Claus rally tends to kick in. It's really the last few days of the year and the first couple of days of the new year. Historically, we see stocks pop, and that's exactly what we have right now.

The Russell 2000's up 1.3% NASDAQ up about a half a percent. But that's today. What about the next few days? The next few weeks, the next year. Well, many on Wall Street think the rally can keep running, but not everybody. The F.T. reporting that Apollo boss Mark Rowan is cutting risk and building up cash. He told investors this month his number one job was to have the best balance sheet possible and to position Apollo to make money when something bad happens.

In other words, sounds like Rowan's acting a bit like Warren Buffett, kind of saving money to buy if and when prices go down. Should you do the same or just go all? all in right now. So that's Tim Rabanowitz. He is the chief investment strategist at innovator capital management. Tim, I've got to imagine, listen, that's Apollo. They've got their own thing. But it can't be a bad idea for your clients to have a little cash. What do they call it dry powder? Kelly said when things go down, they can buy them or should they be 100% invested right now? Well, Brian, you always want to be focused on managing risk. That is front and center no matter what we're doing, especially when we look at the outlook season. But

Brian, we also think this year is going to be a very special one for investors where consumers get back in the driver's seat. We're viewing this as a unicorn year. Okay, you have a situation. What does that mean? Well, investors are going to be double dipping on tax cuts. You look at what's coming from the big, beautiful bill. They're going to be benefiting retroactively from 2025, which, by the way, that money is going to be coming in February through April. And on top of that, you're going to be benefiting from less withholding in 2026. So that's a unique environment we think puts consumers in control, spending's driving this economy, and something that's can push the S&P 500 higher, we got a target of 7,600.

Yeah, I wonder, it's gone from the last couple of weeks going, wow, did you know these tax refund checks are coming? Wow, did you know the consumer? Now I'm hearing it from everybody. So I'm not saying it's hard to invest when sentiment can swing that wildly, but do you think people are getting too bold up now about the consumer in the next couple of months. Well, I do think you're starting to see that change. If you look at consumer confidence, it's been down on the train.

It's been terrible. The last print in December looked positive. Well, better. Better. Better. So, you know, we think that trend is going to continue with these tax cuts. And if you look at, you know, different sectors out there, discretionary, staples, these are sectors that haven't done much this year. Outside of, you know, the value plays where customers are value hunting, they haven't done much. So we think this really can breathe some life back into those stocks. And I appreciate, you know, we're just talking, Tim Seymour had some skepticism about Walmart, more valuation. Sorry, you like Home Depot, Walmart, even Target, turning it around. It's coming off that 12-day win streak. But you know what I can't get out of my head? $50,000 is the average price. in a new vehicle in this country? I think a new vehicle. I think that's just any vehicle. Home prices, as we know, are way high up 50 percent, you know, since 2018. So even if we're

getting a little extra money next year, do you think it's going to help enough that it meaningfully changes the trajectory and this affordability crisis that people perceive? Affordability is the number one issue. It absolutely is. It's certainly been a problem. I think that's why we've seen the confidence that has been beaten down so bad. But the other thing we have to keep in mind is we're getting to a point right now where we're still. starting to see the impact of the Fed cuts that have taken place over the last year. Plus, they're starting to make their way into the economy. Hopefully that helps with home prices.

Obviously, the Fed doesn't control the longer end of the yield curve. They don't control the 10-year. So we need to make sure inflation's coming under control. But the other thing that we see, and you tend to see inflation that follows wage growth. And we've seen wage growth start to come down. So that makes us much more optimistic on the fact that we can continue to see inflation coming down and really provide some relief to consumers. Obviously, mortgage rates are a big piece of that.

That, to us, is still a big question mark. But there are some other bullish signs out there. Well, you are making a pretty strong bull case for the American economy. You're bullish-ish on the stock market. 7,600 is 11%. Historically, the market returns about 8% a year, throwing the dividend yield. You get to about 11%.

So you're optimistic, but you're not wildly optimistic, it sounds like. You're not saying, oh, we're going to be up 30 or 40% next year, it's four year, because we've been in a three-year bull run. I don't need to tell you, that's been pretty incredible. It has, Brian. And if you look at the breakdown of how bull markets play out, early on, we see valuation expansion drive the rally. That's exactly what we've seen this year, or sorry, the first couple years. This year, we've seen that baton start to pass to earnings growth.

We look at at 2026, it's going to be all about earnings growth, okay, because the starting point is so high. And so the reason I think our target is not, you know, 20% higher from here is because we don't think you're going to get that boost contributing from valuation expansion. It's going to be all about earnings growth, and that's what we want to be laser focused on because we just don't see that. We actually think valuations are going to contract slightly this year. Why is that? Even if interest rates are coming down. Well, they're just so high to begin with, okay? And that's typically if you look at year four of a bull market, okay, more than 100% of the return in year four of the bull market is driven by earnings.

valuations tend to do they end after year four by the way everyone's talking like this is the last year that i don't think they go much beyond four years 38 percent we look at every bull market since 1950 38 percent make it to year four and produce a positive total return wait wait only only 38 percent of a make it to year 50 about 50 percent make it to year for 38 percent make it to year for and produce a positive total return in that year so are we going to be positive this year yeah 38 so it's actually a coin flip whether this coming year will be positive by historical standards. Yeah, it feels a little bit like a Yogi Barrow market.

Nobody goes there anymore. It's too crowded. And I think that to me, I feel like, is the risk for this coming year, which is that everybody I know has made so much money in the stock market, they love it. But they're jumping about next year because the longer something goes on, you just naturally as a human being get nervous. You're like, I can't keep winning. Or maybe they can.

Brian, I was last week out in Oklahoma talking to some of our clients, financial advisors, and there's a lot of them that are just kind of waiting for something to go wrong. It feels too good to be true. There's a lot of concern around this AI spend. Are we going to be heading into a bubble? That's not our view, but there's nerves around it. And I think the big thing we want to stay focused on for next year is those nerves are probably going to produce some pretty big bursts of volatility along the way. A bad earnings report.

You think about Oracle just a couple weeks ago. It spooks the market. It spooks that AI trade, and we think there's going to be some good buying opportunities presented on those spurts of volatility next year. What were the names? Walmart, Home Depot, and even Target, which is one, as you know, Brian, we have been pretty bearish on all year. And we think that trade is going to spread out. This year, when you look at a lot of those consumer stocks, the ones that have been winning have been the ones that have been putting things on sale, they've been really picking up a lot of that trade down those bargain hunters. But again, with the tax breaks, a lot of the money going back into consumers' pockets, we think that broadens out.

More spending on your home, more spending on those core goods. Listen, if the Bears can win a game, you're a Chicago guy now. If the Bears can win a game off recovering an onside kick while down two touchdowns, anything's possible. I'm just annoyed that I bet on the Packers. Tim Urbano, it's Innovator Capital Management, Chief Investors Tradges. Tim, thank you very much. Great to be with you. All right.

Appreciate it. Let's check on yields for you as we're still following the sell-off and Jeff. Japanese bonds as it reverberates worldwide. Like the two-year yield, more sensitive to monetary policy, hit 112 today. And, Brian, that's the highest level for Japan's two-year since 1997, okay? What? The benchmark 10-year, 2.095. That was last seen in February of 1999.

So the renewed sell-off in sovereign debt following the end's continued weakness, even after they delivered that rate hike on Friday. We're talking about the highest level in 30 years and ones that are pushing up yields as well. So it's not just monetary policy here, moving the 10-year-round. They're fighting against these larger forces as well. This could be a good topic for the Kelly Evans newsletter. Thank you. I'll ask her if she has some time to put that together this week.

When you get a hold of her, let me know. Thank you. All right, we have got a lot more to do. And after the break, we are talking energy, the administration going after Venezuela and big wind. The impact its moves could have on the price of crude, energy names, and more. Next. All right, now to a story that is grabbing more and more headlines. Our government is going more and more after Venezuela's money and its oil.

The U.S. Coast Guard seizing another sanctioned oil tanker off the coast of Venezuela over the weekend and reportedly now pursuing a third sanctioned vessel. As a reminder, the keyword here is sanctioned. Not all ships are subject to search and seizure by. the United States, only ships that are doing business with sanctioned nations, like Russia, Iran, and more. The first tanker was seized about two weeks ago. It's called Skipper. There it is. That flashing dot, that's the ship right now, is shown by marine traffic by Kipler, and that ship currently being held off the coast of Texas, about 50 miles off the coast of Galveston.

It's cracked down on Venezuelan oil is also hitting one of Caracas's closest allies, Cuba. Without Venezuelan oil, the country faces an increasingly dire economic situation because it relies heavily on Venezuelan oil to make electricity. And now blackouts are growing more common. Let's talk about this and more and get critical analysis with retired Colonel Jack Jacobs. Colonel Jacobs, it's great to have you on, although I feel like when I have you on or when we talk to you, it's because there's something that's very tense in the world.

Do you think it is possible that the United States will go to some full, of a physical war with Venezuela? It's unlikely. It's difficult to envision how we would do that. But we've tried that in other countries down through the ages and have never been satisfied with the results. Were there in Vietnam, did Iraq, Afghanistan, and none of that stuff turned out very well.

I think the most likely event is that we will continue to harass the shipping out of Venezuela to intercept sanctioned vessels and make life extremely difficult for clients of Venezuela for a variety of reasons, not the least significant of which is something that you mentioned, the intro, and that is that we would, the government would dearly like to have access ultimately to Venezuela and oil, Venezuela, as we know, has, if not the most, certainly among the biggest reserves, oil reserves in the world. So that's one of the principal reasons we're going after. And a lot of the other stuff that we see is theater and ancillary to the true objective, Brian.

Well, to your point, I mean, we have these odds on Kalshi now that we can track Colonel Jacobs. It's Kelly here. And it says, you know, what do you think the odds are that, you know, Maduro's out by February. And it's only around 20% right now. 20% before Feb. Maybe they rise to 50-50 by may, the fact that we're even betting on this, I mean, people understand that something is stirring, right? So where would you direct our attention to next? Well, one of the things to keep in mind about all this is the old adage about the dog, once the dogs chasing after the car, and when it gets the car, what does it do with it? Unless there's some kind of plan for governing Venezuela after Maduro leaves to the extent that he does leave, all this doesn't

make a great deal of sense. We have to keep in mind also that one of the things we're attempting to do is influence others other than Venezuela here. I mean, the large majority of Venezuela's oil, as you said, a lot of it goes to Cuba. Exactly. Some of it goes to China. But at the end of the day, it's not a big player in the market at the moment, at least partially because of the stricches that we put on Venezuela. But do you think, in other words, that this is about Venezuela specifically? Is it also about Cuba? Is there a plan right now for what happens if that country is pushed to a brink? You know, I'm just looking at the front page of the Wall Street Journal today talking about it. You mentioned China. Obviously, that's a leverage point as well.

Yeah, there is no plan that has been articulated. It's difficult to envision what happens on day one after everything falls apart, what happens inside Cuba, and we have better relations now with Cuba than we've had since 1959. But we're talking about governance here. Who's going to govern Cuba, unclear? Who's going to govern Venezuela? We know about Maria Machado, but at the end of the day, does she really have the structure behind her to actually govern Venezuela at a time after which Venezuela is actually going to go to pieces? there'll be difficulty in the streets.

So our, what's happening here, a lot of it, like I said, is theater. A lot of it has to do with demonstrating that the United States has a great deal of influence in this hemisphere and also to make life extremely difficult for those who are beneficiaries of Venezuela and oil, Kelly. Yeah, and yet I hear, as you say, you know, you're not sure what the plan is. And so I think the market is waiting for that. Fortunately, oil prices are low, so it's not as if this is really hanging in the balance. But Colonel Jacobs, thanks very much today. We appreciate it.

We have oil prices, as mentioned, moving a little higher, up two and a half percent, but they're on pace for their biggest down year since 2020. In fact, an ounce of silver is now worth more than a barrel of oil. So what does the situation in Venezuela mean for the energy market? Let's ask top oil analyst Paul Sankey, president of Sankey Research. Paul, it's good to see you. And how are you thinking about the events in Venezuela, Cuba, as it relates to the oil price?

Yeah, I think the market perceives it to be potentially bearish. Obviously, if you were to change regime and then open up. But of course, it's going to be a knee-jerk reaction. The reality of the barrels coming back to the market will likely take much longer. But certainly, the immediate reaction would be negative as regarding the potential for more supply from Venezuela. You know, it is interesting, Paul, that we're talking about possible regime change in Venezuela. We're boarding oil tankers, we're rerouting the oil. to Texas and the price of oil is up, yeah, a couple percent, but it's still at 58 bucks in the

United States. That alone is probably the biggest message, I think, about oil inventories and the state of psychology around oil right now. Yeah, and as you know, Brian, we've thrown everything at this oil price we really have. I mean, you've got in the background here, more talk of Israel, Iran, you know, just to add to everything that's going on. And of course, as you well know, there seems to be a significant issue with Russia, Ukraine. So it is disappointing and it just tells you how much supply is out there. You know what is, I think, maybe the most surprising thing in the markets, obviously the Venezuela news aside, Paul, is that when I look at my screens, I'm looking at a BP, just got a new CEO. Stocks up, what, 18% this year?

Shell is up about the same this year, total energies. The European majors, which people wrote off is dead because they were making all the wrong moves. They have made investors a lot of money this year coming on that. And then also what you see or what you think might happen in 2026. Well, as you know, Brian, there's been a significant rally in European stocks as well. I mean, if you had been along, Ryan Metell, for example, the German defense company, you would have outperformed Palantir this year. So, yeah, they've gone up. I don't think investors are terribly enthusiastic about them. But yeah, there is change there. And I think generally the market has begun to think about the next phase of the oil market post oversupply and actually started buying into the

oils. You can see it in a very levered name like TransOcean rig going up in the fourth quarter quite a bit as people are doing a very contrarian trade, basically, quite frankly. Yeah, Paul, I do find it a bit odd when I stand back and look at all these trades. You have all of the metals flying, which are in various parts of a, we're going back to internal combustion engine a la platinum. That's Jeff Curry's pick. The economy's not in recession. There's demand for everything. We're ending the energy transition to some extent where it's not as aggressive as it was a few years ago. So where's the bid for oil? You know, it seems like that's the last logical part of this story. I hope it's not as a consumer. I'm happy to pay lower gasoline prices. But I understand those who

say it's going up next year. Why is the market perceived to be in a glut of oil and how much longer can that glass? I think it's the supply side. I think that these metals that you're talking about have supply issues clearly. And as you say, there's a lot of demand, massive demand for them. And that's, you know, that's the balance. Whereas in oil, if you think oil is cheap at 60, try natural gas at four, you know, that's $20 a barrel of oil equivalent. So the supply side is abundant here. And I think additionally, people don't tend to think too hard about technology, which obviously relates to the supply side and the ability of these companies to continue. delivering. As you know, U.S. production up still with a much, much lower rig count is telling

you that productivity is strong in the supply side. And it can remain so, because that's kind of an argument against owning some of these stocks. That's the $6 billion question, is when will we see the roll over, particularly in U.S. supply? Absolutely. Because as we've said, there's a lot of issues around the world with, you know, Russia is formerly the biggest producer in the world, one of the top three biggest producers having major issues. The other thing we haven't mentioned, by the way, to think about with Venezuela is refining. Refining was a huge industry. Venezuela actually has the world's biggest single refinery. It doesn't run. It doesn't run. No. I'm first, shouldn't laugh. It's over a

million barrel of capacity. So, yeah, it's another angle. And then I think the other one that confuses me is just the whole Cuba angle and where the administration is going with this. It's been a bit of a surprise that, you know, that there has been this issue going off to Venezuela to the extent they have, quite frankly, but it seems that there's a Cuba angle here as well that you've referenced. Yeah. Well, one wonders if Cuba will help us resolve the Maduro issue. Just to be clear, by the way, Brown, I should say that a source in the State Department

told me that this is about lowering the oil price. I mean, this was obviously off the record, but that's what I was told, the Venezuela thing. So, yeah, it is pretty bearish. Yeah, more oil, but to your point, you do wonder when do the U.S. companies react because the Trump administration also doesn't want to have job losses because things slow down in the Permian Basin. Paul Sanky- By the way, the Texas economy has been the driver of the U.S. economy. So the idea that low oil prices will be great for the U.S. economy is not something that I buy into. I think we need oil more in the 60-plus range to be for a really healthy

U.S. economy because it was referenced by Kelly, the U.S. consumers aren't struggling that badly at the moment with the price of all. Always well said, which is why Paul Sanky, we have you on. Sanky research. Paul, great stuff. this. Thank you very much. All of this. Thanks, all right. Staying on energy, because there's also another story out there, a huge hit to wind energy off the American East Coast. The White House stopping five big projects currently under development. The Department of Interior saying, quote, the DOI, Department of Interior announcing today that it is pausing, effective immediately, the leases for all large-scale

offshore wind projects under construction in the United States due to national security risks identified by the Department of War in recently completed classified reports. This pause will give the department along with the Department of War and other relevant government agencies, time to work with leaseholders and state partners

to assess the possibility mitigating national security risks poised by these projects, end quote. Now, it is unclear, because it's classified, specifically what those national security risks are. Obviously, we are working to find out more, but the impact of projects are, Vineyard Wind One, that is off the Massachusetts coast.

It's half-owned by Avondrad Grid, which is part of Spain's Iber de Roll-up, Revolution Wind, the Rhode Island project run by Denmark's Orsted, the coastal Virginia offshore wind owned by Dominion Energy, Sunrise Wind, another Orsted project. This one off the coast of New York, and Empire Wind One in New York and New Jersey Project run by Norway's Equinor, Orsted Stock, by the way, tumbled in trading in Denmark.

G. Renova, by the way, is involved in some. some of these projects by selling its turbines to them, but that stock is actually higher right now. It's not a big part of their business. Now, it is important to note, this is only a pause, and the pause lasts 90 days. Now, it could be extended, or it could end after 90 days, and these projects continue. Obviously, we are out to all relevant parties. Yep. After the break, Tesla hitting a new record high today, our market navigator is looking at options on the shares for clues about its future trajectory, and we'll have that story next. Welcome back. We're seeing a pretty nice session today. The Dow's up 234, pretty just off session highs.

The NASDAX up half a percent helped by some revival in the AI trade, and the small caps are actually leaving the way with a quarter percent gain. Let's get a quarter and a quarter percent, she tried to say. Dom Chiu, what's in market navigator today? We knew what you were trying to say, Kelly. We saw it on the screen there. So one of the other stocks here that's helping to kind of move things around a bit is Tesla. It hit a new record high today after the Delaware Supreme Court on Friday overruled a lower court's decision to avoid Elon Musk's controversial pay package, which includes 300 million stock options. Tesla shares have been outperforming other MAG7 stocks this month.

So our next guest is bullish on the name still and thinks shares still have plenty of room to run in the new year. So joining us now to make the case is Danielle Shea, Vice President of Options, at simpler trading. So, Danielle, the record high, I guess it's one of those situations where momentum begets more momentum. Why do you think you could see higher, higher prices in Tesla shares in the coming weeks? Well, that's exactly it. Once you see a stock break a previous all-time high, which it did last week, on high volume and momentum, and you still have buyers coming in, that's exactly a situation

where we could keep going higher. So we do have, however, if we could just break through that $500 level with high volume, then I think we will trade up on into $5.20 and then up into $5.50. Now, Danielle, what hotspots are you seeing? Where is there the most activity

around certain strike prices? What kind of open interest tells are out there? What makes you think that you can see some magnetic movement towards some of these, levels? So there's a significant amount of high volume and high open interest at the $500 strike price in Tesla in multiple series. So for that reason, you know, typically in the options market, especially in short-term

trades, I like to use that as a price target. So, you know, we'll use debit spreads, we'll use butterflies, that kind of thing to target that level. But you know, what's the most magical and what I love the most about Tesla is that when it does end up breaking through those zones, you really get that volume and momentum that just keeps going, which is kind of what we saw in September and what we've seen throughout this rally. So, you know, I'm going to continue using the $500 strike price next 520 and then after that, 550 because those are those magnetic zones in Tesla as it continues to trade higher. All right. So we'll keep an eye on

that open interest and all the activity around those key strike prices. Danielle Shea, at simpler trading. Thank you very much. Happy holidays. This is where all the chatter is. Good to see you, Danielle. Coming up, NVIDIA reportedly, ready to ship its second most powerful AI chips to China in just a few weeks. The shifting policies around chip exports, the timeline of those deliveries, and the risks for the company. That's next. Welcome back. Invidia is at the center of the high-stakes trade negotiations with China. And there's a new report that chipmaker may begin shipping its second most powerful AI chips to China early next year,

marking what would be the first deliveries of those advanced processors since Washington signaled they would allow the sales. But the deal is far from done. And will they get a cut? Christina Parts the Nevelas has more. Christina? Well, Kelly, right away, we have to know that the president and the Trump administration is still reviewing the licenses to actually ship these H-200 chips. These are the chips you're talking about that are geared towards China. And you said they're a little bit older. They were first shipped in 2024. Nonetheless, there's this report from Reuters staying roughly 40,000 to 80,000 of these H-200 chips will be shipped to China by mid-February, which would be a huge win for Nvidia because they've essentially said their revenue for China is zero. You have all sell-side analysts that are modeling

modeling nothing for China revenue. So this would be a big win. But the reason why we're saying that this isn't a done deal is twofold. The first is that Chinese regulators have pushed back on NVIDIA chips before in the past. The H20 chips, which is a lower, six times lower than the H200 chip. They've said that there's backdoor security issues, environmental issues. They're concerned about a lot of other things. So that's one hurdle that NVIDIA has to overcome, even if the United States gives NVIDIA those licenses. The second is maybe Nvidia would have to bundle these chips with local alternatives. So every time a Chinese firm goes ahead and buys these H-200 chips, they'd also be supporting local alternatives. So nothing

is concrete yet. Invidia is declining to comment on this thus far. But you're seeing the stock up. I think the stock may not necessarily be up because of this news, but rather some positive news coming out of Taiwan about Nvidia's server racks for next year. It's expected to increase by 129% and these racks are massive. It's not just one chip. There's a lot of chips. They weigh at 3,000 pounds. Some of these racks cost over a million dollars. And they're saying everything is going according to plan. There's no delay. So I think that's contributing to the uptick in the stock. Yeah, I think that's correct. And now, of course, they'll have to see if they can meet those lofty growth expectations for next year with those chip sales and all the

rest of it. Christina, thanks. Appreciate it. Christina Parts in Avelas. All right, now let's get over to McKenzie Sagalos for a CNBC News Update. Hey, Brian. Kilmar Abrago Garcia is back in court today just over a week after a judge freed him from immigration custody. His case became a flashpoint in the Trump administration's immigration crackdown after he was mistakenly deported to El Salvador earlier this year. The judge today will decide whether he should be returned to custody as the government fights to deport him to several countries in Africa over allegations that he has gang ties and participated in human smuggling. Ukrainian president Vladimir Zelensky said today, recent intelligence shows Russia may launch, quote, massive strikes on Christmas. He says Kiev is now focusing on air defense. Zelensky said last week Ukraine supported a potential Christmas ceasefire, particularly for strikes on energy infrastructure.

An outspoken President Trump critic George Conway reportedly filed paperwork to run for Congress as a Democrat in New York City. According to multiple reports, Conway will run for the seat currently held by longtime representative Jerry Nadler, who announced earlier this year he would not seek re-election in 2026. Kelly, sending it back to you. All right. Thank you very much, McKenzie. Alphabet announcing a new acquisition to help power its AI. Will the sector continue to fuel a boom in deals next year?

We'll discuss that with the shares up fractionally right after this. Crypto Watch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. Welcome back. Alphabet is making a decisive infrastructure play to fuel its next phase of growth in artificial intelligence, announcing a nearly $5 billion cash deal to acquire Intersect, a data center and energy infrastructure company. It's a move aimed at accelerating the build out of computing power and the generation capacity required to compete in the global AI arms race. Deirdre Bosa has more from San Francisco. Hi, Deirdre. Hey, so Kelly, this is what it comes down to.

Electricity, power, it is now a strategic input in the AI race at large. And so this is really Google and Alphabet doing what it does best, and that's looking for vertical integration. This acquisition, nearly $5 billion for Intercept, it's Google moving to secure its own supply. So it gets at the key question in the AI trade right now as well. Where do hyperscalers get the energy to power all of the AI demand that they are seeing? So chips here, guys, not the only constraint. It is access to the grid. It is permitting.

It is power. This very much fits into that theme. And I know this is a chart that Brian will appreciate. The impending U.S. power crisis. I'm going to show you it now. The black line is peak supply anticipated. The yellow is peak supply needed. And that big red box is the gap that Google is only starting to try to fill with its own need, fill for its own needs with this deal.

And this is not just Google specific. This is what every hyperscale or even soft bank looking to do deals in this space is all about securing that supply. Right. And I wonder, as they do this, dear Joy, if it's, you know, should we expect a lot more to come on this front? Or is it just kind of like a small bolt-on type of deal? Yeah, I think that there's probably more to come. You've already seen a number of these deals with META and Microsoft. So there's likely more to come.

And again, it's that gap that we just showed you. Every hyperscaler is going to be looking to try and fill that. And putting that in perspective, we bring that chart back up. So one gigawatt, very roughly, is about 750,000 homes, depending on where you live and sort of how much power you use. That's 1,250 gigawatts at the top of the list. So you go down to the bottom. So we're talking about a gap of, what, 300 gigawatts. So that is roughly, what, 21 million homes short of power.

Effectively, we're like an Ohio short of electricity, dear time. Wow. It's just thank you for putting it in perspective. That is just such a massive amount. And that's why when Kelly asked, are we likely to see more deals? I mean, the simple answer is yes, because even this one deal, a $5 billion deal nearly from alphabet barely does anything when you are talking numbers and scale this large. What it did do is make the people who found it interstate.

really, really rich today. So that's it. To do you, Deerbosa, thank you very much. By the way, I'm just going to editorialize very quickly here. Some other stocks and companies to watch on this news, these stocks, some of them are on the move. Hut 8, we had their CEO on last week. That stocks up almost 18%. Cipher mining about 1.5% Terawolf was up earlier. Those are also companies kind of similar-ish to an intersect.

You never know they could be targets. All right. Speaking of deals, your next guest thinks tech and data center. will continue to power global deals next year. But what other kind of companies and industries may also be at play? Let's talk about it with Vito Spurreduto. He is the head of RBC Capital Markets U.S. Global Head, Co., Global Head of M&A. Vito, great to have you on. Thanks for having me.

So what is the deal-making setup heading into 2026? Sure. Look, if I look back a year ago, we thought the first half is going to be a little slower, just as people got used to the administration and the new policy. and that's what played out. And then the second half of the year, we expected a fair amount of activity. It certainly has exceeded what our expectations were

coming into the year. But if you think about the U.S., I call it a great acceleration that just happened in 25. We were basically flattened the first quarter and then ended up about up 59%. Yes, it was driven by large-scale mega deals, but all sectors participated.

I think what we're seeing now is that people have kind of worked through the deals that were in the pipeline and we're starting to see new activity. How is that activity? Is it strong? Is it mid-level? Where do we stand with, you know, the churning ahead of the possible deals? Yeah, I think the activity level is across the board in terms of sizes. Certainly TMT, healthcare, life sciences are leading the way. Financial services after that. I think everybody's focused on, I mean, you just talked about the alphabet that transaction, right? They were an investor in the company ahead of the acquisition.

They are clearly buying greater capacity and energy resilience. And if you think about the AI play, it's no longer about the technology and necessarily the availability of capital, because there's plenty there. It's really the energy constraint, as you just showed from that chart, which illustrates it perfectly. And so folks are trying to buy that greater capacity, greater diversity of energy production. And certainly that's a big play for the sort of the AI-centric opportunities. And then when you look at the other sectors, you've always got the health care companies looking at patent cliffs and trying to figure out how do I continue to diversify my pipeline, add to it

and build to it. You're starting to see the health care companies reacting to how the government is changing some of the policy. And, you know, they're fairly resilient and they're going to get there. Yeah. I think that, you know, it was actually a surprisingly busy year this past year. We just didn't have a lot of those high-profile big deals. And then, of course, along came the WBD one at year end to kind of just put a banner on things. So it sounds like it should be pretty busy.

And do we get finally this IPO wave where it's like, okay, we move from just the private equity back exits to the ones that are a little bit more in these hotspots like AI you're mentioning? I think there's an incredible thirst for the IPO environment to continue to grow. If you look at it, December, this month is going to be equal to what we had in September, which are the two largest volume IPO months of the year. But over $7 billion of the volume this month is from Medline, which is about 8.6. So 7 out of 8.6, and you can tell. So I think going into the year, there's a fair amount of companies on the sidelines waiting to access the markets, and we're looking at some very notable large-scale situations.

But that just improves the environment, because, again, it's just another, opportunity for them to have a different exit alternative. What are they waiting for? I think it's become easier to stay private longer, and so it's really making that decision to access the markets, and do I want to put myself out there in terms of the volatility that I'm going to experience? The size of the companies that are going public has gotten bigger. It's, you know, what we used to experience, like I've been doing this for 35 years,

what we had, you know, 10, 20, 30 years ago in terms of what made sense to go public is certainly not the same scale that you need today. I mean, today you need a much larger scale to get public. And I think private capital and the sort of ease of staying private and having more liquidity alternatives has made it a longer timeline. But certainly we're going to see, I think, a fairly robust IPO calendar going into next year. And if we look at the private equity portfolios, There's a lot of assets in those portfolios that need to be monetized as we think about the lifespan of those companies.

They're pursuing all sorts of alternatives beyond just the specific sale of the companies. I think the IPO market's going to provide them another opportunity. Yeah, you wonder, because employees also want to be paid, right? And that's a lot of employees that make less money because the idea is they're going to get a big payday when the company goes public. They're waiting for that. we've got 50%, you've been doing this 35 years. Yeah. There are 50% fewer public companies now.

Yes. Than there were in America than when you started. Yeah. Can we fix that or is this kind of the number where we're going to be? I'm not sure it's going to diverge much from that level going forward. 3,800 public companies, roughly. I think it's going to stay at the lower end versus what we had historically. But I do think there's need to be some adjustments to allow companies to

live in a public situation in a much easier context. And I think there's various proposals out there as folks are thinking about it. But today, if you think about it, like if you go back a couple of years ago, private credit was certainly a new entrant in many ways, right? Today it's become a normal part of the financing stream, right? It's a more acceptable. Before it just used to be, you can get it done faster. Now it's a clear avenue.

But I think when the traditional markets are available, the traditional public markets, traditional bank syndicated financing, folks generally revert back to that. And so we're going to get to see it. I think the quality of what's coming public is going to be stronger. And I think folks are making sure that in this environment, as I go out there, I want it to be well received. And so they watch very closely the high profile transactions. Like Versant, January 5th. There you go. I think a lot of people. A lot of people are tracking the value.

Great hosts on some of their networks. They're terrific. They're wonderful. So much value to unlock, really. So we're just unlocking value every day. That's when I wake up. Vitos Perduto, really appreciate it. Merry Christmas. Thank you.

Thank you. Great to have it. Appreciate it. Thank you. On deck is something you will only see here on Power Lunch. The single best of Wall Street's most love stocks this year, and the name will surprise you. That's right after this.

As we head toward the end of the year, it is time to keep score. And now more exclusive content to Power Lunch. It is a list of the most loved stocks by Wall Street analysts this year, and which ones of those are really winning. Here's how we do that. At the beginning of the year, I compiled the list of stocks that were on three or more top picks lists from Wall Street banks. Three or more analysts had to have them on some kind of best stocks the year. We tracked them all year long. And here are the top three heading into the end of the year.

That was supposed to be drum roll. Number three, first solar. It was on three top pixels. It is done great. It's up 61% so far this year. And it's rallying today on Alphabet's buyout of what we just talked about, that AI energy power deal. Next up, a bigger name. Alphabet, the one that was the buyer today.

Alphabet was on at least four top picks list coming into the year, and it performed like a top pick of 63% this year. But the top pick of them all this year, Kelly, was also one of last year's Red Hot Stocks, and we never talk about it. How I Met Your Aerospace. That's right, how I met your Aerospace. How Met Aerospace, the Pittsburgh-based Aerospace Company

has been a rocket ship, not just this year, the last few years. How Met, which is on a number of top picks lists, Wall Street got it right, is up 89%. So unless something really weird happens, it's going to be the number one stock of all the stocks on many top picks lists. So congratulations to Helmet and its investors. I reached out to them, by the way.

They got back to me immediately. Thank you, but no, thank you. It's a quiet company. So did you see which ones, I love this because it tells you, and I can imagine these strategists we always say, oh, that strategist's wrong again. They did a great job with these picks. were there top picks that did not okay get lab get lab i don't even know the ticker g it lab so i track all

this with mike bloom and some people here at the company with this huge facts set spreadsheet and then i whittle them down to three or more most did well but git lab was on three i think top picks lists and it was down like 32 percent this year still but how met aerospace they're quiet You're welcome anytime on the show, by the way. There you go. I love it. We'll be back after a break. Quick flag a couple weeks ago around San Francisco,

highlighted company called cytokinetics. And guess what? They had a positive drug trial result today, and that stock is up just over 6%. Not a huge pop, but we talked to the CEO, Kelly, and a nice win there for people that are, by the way, it's a heart drug. So we hope it does good.

Win for the investors, win for the patience. A lot of winning here today. Thanks for watching, Power Lunch, everybody. Speaking of winning, closing bell starts right now.