Power Lunch - Power Lunch 5/26/26

Episode Date: May 26, 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.

Tech is booming again and more stocks hitting record highs. Welcome to Power Lunch, everybody, alongside Kelly, I and Brian. Happy Tuesday. Somebody called John and Punch because the chips are taking charge. That's an old TV reference, folks. Mike Ron, joining the trillion-dollar club. Apple trying to do something it has not done since 2009, and it just got a price target hike, and that analyst is here.

Looking forward to that. Plus, big energy news out West. California Resources is launching the state's first operational. carbon capture and storage project, what that means for the state's climate goals, for its energy producers, and the carbon management trade. CEO Francisco Leon is coming up. But let's begin with tech today with a handful of bullish calls across the entire space this morning. Melius research boosting Dell's price target to 380 from 245. HSBC upgrading Marvell to a buy from hold. And over at UBS, a huge price target raise on Micron to 1626 from 535.

That stock and the 800s now hit a trillion dollar market cap earlier on. And that's not all. Apple and Seagate getting some praise from Bank of America. Both got a price target hike this morning. And joining us now is the person behind those races. Wamsie Mohan, he's a BFA senior IT hardware analyst. Wamsi, it's great to see you. Do you want to just comment on the price action,

the trading behavior that we're saying? seeing today and why this additional run coming out of the long weekend? Yeah, I think that, look, the ultimate sort of the thing that's going to decide the direction of the market is AI. And I think that when you put everything through the lens of AI, we're getting more and more confirmative data points that the demand remains exceedingly strong. And I think that's what's really driving a bid for these stocks in tech, which are all enablers and everything that is going into the plumbing of AI or the beneficiaries of AI. And I think that's the primary reason why we're seeing this continued strong rally in these

names, which are already up a lot. Right. So Seagate, you know, I would say, yeah, sure, I have, you know, got to raise the price target there. Apple. So talk about why these two, and is it related? Well, they're related in the loose sense that they're both beneficiaries of AI. So when I think about Apple first, like Apple, Apple, I think for the last year or two has been put in the AI loser bucket by many because, frankly, the performance of Siri has disappointed.

And, yeah, they announced two years ago at WWDC that you would have this incredible, more personalized Siri, and that hasn't yet come to fruition. And so that's been frustrating at the same time. Investors have looked at Apple and said, wait a second, we've not really seen them invest in LLMs or spend a level of capics of hypers. And so it's kind of been relegated to this AI loser bucket. We actually think that's the wrong way to look. at this. Ultimately, when you think about agenic AI, the smartphone is going to be the device

that consumers use to drive a genetic AI. And so our habits around how we use the phone are going to change entirely. That's what we believe. We think that instead of us, opening up the home screen and going into an app, instead we're actually going to be talking to the phone and saying

go book me a dinner reservation or here and then text my friend about the reservation. Is that while Womsey started to It's Brian, because you're bringing up a critical point. I mean, I'm going to say something that many people would disagree with or dislike, Wamsie, which is that I don't view my phone as materially different than it was 10 years ago. The camera's a little bit better.

Maybe battery lasts a little longer. Maybe not. I don't know. When is that going to happen? That vision that you just gave, which is, I think, what we all want. And more importantly, we would all pay to upgrade for when does that happen? Yeah, Brian, look, as I said, right, like two years ago, this vision was laid out. It hasn't yet come to fruition, but Apple's been working tremendously hard at this.

Where is the evidence for that? If you look at their OPEX line, it's stepped up materially now. And why is that happening? It's happening because they're using Google GCP to train these models a lot better. So the next time we hear about an update around theory, we're going to get some of this. We're at least going to get a line of sight into this happening. Now, the complicated question beyond this is not only like where it happens, within the Apple ecosystem is that on devices,

is that going to happen in the cloud? Is that going to happen to the third party, right? So I think the short, easy path is obviously to go to third party, but I think the economics to Apple really start to accrue when they can do it first on device and then what they call private cloud compute, which is on their own cloud servers. So the way that we think this rolls out

is going to be over a multi-year period, but I think about a year and a half from now, we should be seeing materially better devices come out, which require more memory, again, going back to the memory point that require more memory, that require faster CPUs and PUs. And I think that that is in the making as well. So it's not going to be immediate,

but I think we'll see some tea leaves around that ability starting to show in a variety of different ways, whether it is what we're giving developers, whether it's what we're telling, you know, the ecosystem around the capabilities. Wamsi, do you cover Micron? We don't. We cover C-Gate and Digital and Sandisk, but not Micron.

Because I wanted your take on a system. $1,600 price target there. But maybe you can hint at it through Seagate. In other words, we were having this debate last hour. Is a $1,600 price target on Micron deserved because the company no longer deserves a 9x multiple? This is not, you know, the same company that had on-demand orders from 10 and 15, 20 years ago and everything's changed.

Or, as, you know, some investors would suggest, is this just pure craziness and chasing a narrative too far? Maybe you can use Seagate to comment on kind of that question. Yeah, I think the gist of your question, Kelly, is really, is the memory trade sort of sustainable and what do we think about it? And I would break sort of memory into two pieces, right? There's the hardest drives like Seagate and Investion Digital, which are extremely well positioned. And remember, although these stocks have gone up eightfold over the last year, the reality is that earnings are still pretty low, estimates are still pretty low relative to the potential. These companies are doing about 50% gross margins. Their incremental margins are between 70 and 100%.

This real room of line of sight into seeing these gross margins continue to expand. And that's what's driven the multiple up in these stocks is that ability. And by the way, these are different from 100% quarter on quarter price increases. These are going up, 5, 6% quarter on quarter. And so those are much more tenable and much, much more sustainable than 100% quarter on quarter price increase. So on the hard disk drive space, we really like both names. And I think both of these management teams are doing an incredible job, not increasing unit capacity, making sure that, you know, they're seeing the customers as they need through technology improvements, aerial density changes, CEC is leading the way with heat-assisted magnetic recording. So we've got a lot of different ways in which these companies are showing their technology power. On the other side of the equation to address sort of quickly the micron side, in some ways, or the memory side, we cover Sandisk.

You know, Sand is, again, like it makes NAND. NAND has become part of the AI data loop. That is a fundamental change. And that I think is something that is really, really important to look at. Well, right now, what's really important is that these companies, all of them are making investors, probably your clients, a lot of money. Wamsie Mohan, a Bank of America, Securities, Microns up 19 percent, joining the trillion-dollar club.

Womsey, appreciate you kicking off the show. Thank you very much. Thanks, Brian. All right, you're very welcome. All right. Up next, could California run out of gasoline? The CEO of the state's largest oil producer joins us on that and his big new carbon capture project in the state.

It's an exclusive. That is next. All right, some big energy news out west. California resources starting to push carbon dioxide into its groundbreaking carbon capture reservoir. While the science is fairly complex, the goal is not. Reduce CO2 that goes into the atmosphere. by up to about 350,000 cars equivalent every year.

As comes, the company tries to grow oil production in a state that badly needs it, and let's be honest, runs the very real risk of maybe falling short in certain parts on gasoline supply. Let's welcome back in Francisco Leon. He is a CEO of California Resources. They are the largest pure play oil producer in California and launching this project today. Francisco, really appreciate you coming on again, without getting too deep, pun intended, into the science. How does this carbon capture work and what does it mean for carbon emissions? Hey, Brian.

Thanks for having me. So absolutely, we started CO2 injection in our elkills field. And it's a first of a kind project in the state of California. It's one of the very few nationally. But it's a proven technology, one that's been working for about 60 years. So the way it works is we will move CO2 from manmade emissions, point sources, and we store it deep underground. We actually are going a mile deep to store the CO2.

For a state like California, which is a cap and trade, which has a tax for point source emissions, this is a real market solution that we need for many industries, cement, power, refining, all the point sources of key industries that we need to keep in the state. This is a way to decarbonize, bring the emissions to a smaller level, and ultimately don't have to pay taxes. Yeah, is this something that the state requires,

Francisco, or is this something that we just realized that with the climate goals that we've got, and arguably one of the most beautiful states of the country, most beautiful places in the world, that just needs or should to be done? It's something that should be done. So California wants to get to net zero by 2045. So that's a law in the state to reduce the emissions, about 400 million tons of emissions per year. So in their planning scenarios, the state has anticipated carbon capture coming as a technology, that helps eliminate those emissions for those point sources.

So now it's here. We brought it forward in 2026, and we're on the first ones to do it. Francisco, California resources, just the name itself calls to mind the tricky state of affairs out there, where the gasoline prices are very high, imported fuel has to fill a lot of gaps. Not that we can start from zero, but what would a more efficient plan look like? Yeah, I think we're in the midst of that pivot back into a more practical energy policy. We're seeing permits come back in oil. We're starting to increase our rig activity.

There's a heavy reliance on imports. We import about 60% of our oil from foreign sources. 75% of the oil comes from other places, not California. So that's starting to change. We're starting to step into it. And I think technologies like carbon capture become the bridge to the future. It becomes a way to make sure that what you have today in place, the infrastructure that's already around and paid for, continues to be successful for years to come, ultimately driving

prices lower for consumers, but without the emissions. I think that's a compromise, and we're proud to be leading the efforts. And where exactly Francisco does California stand when it comes to oil? I mean, you had a merger. You're now the largest pureplate oil producer in the state. You're doing this climate project, this carbon capture project, but there's only so much that you can do, or anybody honestly can do. Refinaries continue to shut down.

So can you give our audience, many of whom may be in California right now, the real state of oil and gasoline in your state? Yeah, we see actually improving situations. Last year, we passed in California. The state passed Senate Bill 237 that reinstated oil permitting, and we've had no issues permitting so far this year,

and we're planning to permit into next year already. So that's improved significantly. Actually, the bill calls for more local production. And it makes sense. Every barrel that we produce in California by Californians is a barrel that doesn't come from foreign sources. In some cases, we're bringing barrels from Iraq. Iraq is 9,000 miles away from the California shores. Local production beats imports every single day.

So we're seeing the changes of the ideology of the state towards a more balance, more pro-California view, as long as we can reduce the emissions, lower the carbon footprint. I think we have a pretty significant room to grow our market share locally. Yeah, I wonder if you're correct about that in the sense that it's hard to imagine a real, you know, ground support galvanizing around California being more of an oil producer, but your technology could maybe help with some of those concerns, you know, not to add, but does carbon capture really work? I mean, is it expensive? What do we know about it? It always feels like that idea from 15 or 20 years ago that's supposed to be the Holy Grail, but

and practice seems to have a fair share of problems that go with it. Yeah, no, we see it working. It's here today. That's what the importance of today's announcement is actually CO2 flowing. We went through the EPA permitting route, which very few companies. We're actually the second one ever to get this permit. So it's a high, it's a very rigorous project program to get permitted. But the technology is actually not that complicated. It's been in use in terms of capturing CO2 from the ground, are also from man-made sources for about 60 years. Other states use it for CO2 flooding.

But the moment is here. In terms of the carbonization, in particular, the power side of the equation, baseload, firm and clean is what the market needs going forward. If you don't believe that, look at recent news on geothermal, enhance geothermal, on fuel cells. We think carbon capture competes very, favorable against its technologies. Again, when you're looking for clean electrons, there's very few ways to do it in a reliable, consistent way, and we think carbon capture is the way forward, and our project

is a proof point that the technology is here, and we're able to permit and have this project in California. Yeah, I remember growing up in California, Francisco, my 13th birthday, and we had it at a place called Raging Waters in San Dimas, California, which is made famous by Bill and Ted, by the way, and it was hard to breathe. It actually hurt because the smog, you could see it in the air. So nice to have that gone. Wow. These kind of projects and more may be helping. We need energy, but we want to do it cleanly and have 13-year-olds be able to breathe cleanly. Francisco Leon, California resources. Really appreciate it. Thank you very much. Thank you. All right. So speaking of oil prices are

actually down right now, about 3% of 9365, even as the U.S. hits Iran with some limited strikes. Now, President Trump hosting a cabinet meeting at Camp David today, working to finalize some kind of Iran peace deal. But apparently the ship owners in the Gulf, they are not waiting around. As we showed you last week, many big oil tankers have already been on the move, shifting positions from either being at anchor or kind of floating around near Dubai and the UAE to loading or preparing to load oil near Iraq and Kuwait. That's all those red dots. There you go, Kelly, on the far left of your screen, that is the marine traffic by Kipler map. Remember, all those red dots of the left, Kelly, they used to be near that point,

that narrow point with the UAE. They've moved back up. They've shifted to where they might load oil. They may not. Things can change. Oh, but you're saying by going to the shore, they could load oil perceivably be bringing that into the market. They moved to be like, we're ready, we're here.

It's unclear if they will, and they still got to get out of the Strait of Hormuz, but they're moving. Wow. And as we've reported, these ships are moving. Still a lot. Look at all the red dots on the right side of the straight on that point, they're kind of just sitting there waiting.

But still, some movement is maybe why we're getting the oil price down a couple of bucks today. Bingo. So looking to bring that to market. Coming up, gold on track for its third straight losing month, its longest such streak since 2022. Our stock's stealing its shine, and if so, is the gold rush officially over? That's next. Gold's luster has started to dull a little bit. After a monster start to the year, the precious metal is now on track for its third straight

losing month, which is the longest stretch in four years or so. Is this just a rough patch, or is the gold rush over? Let's ask Steve Grasso. He's got an opinion. He's CEO of Grasso Global. And Steve, what do you say? It's good to see you. Good to see you, Kelly. So it depends. This can really confuse a lot of different people because when you think about it, and I know you've discussed this at nauseam, gold is supposed to be an inflation hedge, gold is supposed to be a geopolitical hedge. It's supposed to be in everything to everyone. But when, the markets rally, it's not supposed to rally. We've seen it rally with the overall markets. And I think you have to look at it through the prism of gold really starts to rally when the Fed gets involved,

not the lead up to when the Fed gets involved. So if you look at the course of history, whether it's the dot-com bubble, whether it's the financial crisis or COVID, real yields went negative and gold spite. You need that element to it. But now the latest thing that's going on with geopolitics is that it's the sanctioned countries that are

getting around dollar-denominated assets. Right. And think about this. One last little bit on this. So if Russia was sanctioned or Iran is sanctioned, they can't move Bitcoin around.

They can't move equity. around. They can't move dollars around, but they can move gold around. So that's why you sold. But, okay, so let me jump in here. So Turkey has been a culprit in selling gold in the last few months. Obviously, it's, I think it's either trying to support its currency or gave up. Do we do, so what is the narrative for gold that's going to drive it higher or lower? Is it going to be, you know, making sure that no other central banks are dumping it? If the dollar, maybe the dollar starts weakening again, so that puts less pressure on it. And as for lower real yields, you would have thought we were in an environment like that right now, because the inflation,

rate is taken off, but the policy rate has stayed the same, and yet gold's going down, not up. Yeah, well, real yield. So all you have to do is look at the 10-year tips market, and real yields have not been moving lower. And the other aspect to that is M2, money supply. Money supply is actually still increasing. So you have a couple of different things that are with gold and against goal. But to your point, if geopolitics is sort of getting curtailed here and there could be an Iranian deal, then I would think that's less of a reason to own gold. If you think that the other central banks are dumping it less of a reason. But I think what you're going to see is if Warsh's door opens. And what I mean by that is if you have the ability to see where he can cut rates, because right

now, they're not factoring in any rate cuts. But if you have an open door to rate cuts, then you're going to see gold probably take off, but it does take time. Steve, what do you make about the moving oil? We just talked about the straight-of-horm moves. We showed some ships that apparently have moved. Ship owners aren't waiting. But let's be clear, we hit Iran with limited military strikes today. This war not over. Multiple people sort of claiming control over the country. and oil is down 15 bucks a barrel in the last couple of sessions. What's the Grasso take on crude oil? Yes, sir.

So if you look at the back months, which I know you follow it better than anyone, better than traders do, back months towards the end of the year have it priced in as $75 of bower for WTI crude. So we're an extreme backwardation. Having said that, you need a couple of things to happen. You need this really to resolve not just talks of money. the war resolving. But Brian, you know, the cure for high prices is high prices. So at the end of all of this, people have been saying there's going to be a risk premium. I think we could be trading

lower than where oil started preying war because of the demand destruction, probably to the tune of four million barrels per day or so. But you're going to have demand destruction that could actually push oil back down below $65 once this is resolved. It comes with a huge caveat. The caveat is this. They cannot charge tolls to get through the Humbo Strait, and they cannot be in control of the Herb... Do you mean Iran.

Yep, I hear you. And by the way, I don't disagree at all on the price action months ahead. It's what the market is saying. We'll see what happens. But to your point, nothing is saying. solidified yet. We'll see if we get it. We're sort of one RPG away from $110 oil again. But Steve Grasso, really appreciate your take. As always, my friend, we'll see you soon. Thank you very much. Thanks. All right, so Steve talked about gold and inflation and yields. Look at that. Yields are down a little bit today at 4.5%.

A Citadel trader, by the way, Citadel being one of the biggest securities firms of the world, warning that the Federal Reserve may be at risk of falling behind the curve as a new note from the firm flag's rising inflation risk and the possibility that markets may be underpricing how restrictive policy may need to stay. Huh. Let's see what Rick thinks about it. I'll out bringing Rick Santelli.

In Chicago, Rick, you're there every day. Is the market underpricing in the Fed? Well, you know, everybody's entitled their opinion. and who would I be to ever question Citadel, one of the largest clears in the entire world. But I will say this. I think that the market is dealing with the potential future of inflation just fine. And I'll tell you, I think it's pretty easy to prove that.

All you have to remember is exactly one week ago and put up the chart, a two-year close at a yield, the high-heeled close of the cycle going back to early 25 at 412. So basically we're down what? seven basis points on that same day a week ago. Ten years closed at 468. Okay, so they're down basically almost 20 basis points. And the reason for that is, is because oil and tenure are moving sympatico. And remember, before the war started, a 10 year was at the lows.

It was at mid-390s. It was at a cycle low yield. So the last mile of hot inflation was priced in, and we were still under 4%. The war began, and we see what happened. Look at that 210 spread. In a matter of a week, it's fallen from 56 to the low 40s. My point is that the 10-year had already priced in the last mile, and it was okay with that sticky well above 2%.

The additional amount? Well, it's looking at oil as the definitive expert, not clearing, entities, not traders, not Fed Fund futures. It's following oil and two-year is definitely taking out all the easing. I think not only is the market right where it should be, I think that the Fed's always late and the market's always early. It doesn't mean the market is always pricing right, but if it doesn't, you'll see more curve action on a steepener, but it certainly doesn't seem in the cards at the moment. Back to you. Rick, thank you very much, Rick Santelli. Still ahead, we have stats at record highs powered by the blistering rally in semis and tech,

but how much runway is really left? We're asking cities Drew Pettit after the break. Folks, welcome back markets. The Dow's down a little bit, who cares? Nobody looks at the Dow. The S&P, NASDAQ, Russell 2000, the Small Cap 600, they are all at new highs right now. Up across the board, the NASDAQ is up more than 1%.

And this rally may not be done. Evercores, Ed Yardinney says, The rally has more legs and will lift the S&P 500 to uncharted territory. 8,250 by the end of the year and 10,000 by the end of the decade. Now, your next guest is also bullish on stocks, but he's also sticking with his S&P target of 7,700 by the end of the year. Joining us now for more is Drew Petitie's U.S. equity strategist at Citigr. It's Yardinni Research there, not Everkore as an old firm. Drew, but either, whatever, here's a thing.

You're not getting into the auction business because now I feel like we're at the part of the story where these strategists are like, 7,900, do I hear? 7,8,000, 8,000, 8,100, 8,200, right? Thank you for laughing. That was my auctioneer impression. They just keep raising their targets because the market keeps going up.

You're not there yet. How come? It's the multiple you can put on earnings. Look, where the index is going to trade short term, it's going to be a lot about sentiment. And I think you're right, a lot of strategies want to chase sentiment when they think about price targets. For us, we're thinking about fair value. Earnings, look, we were like street high in earnings at the beginning of the year and all of a sudden,

320 looks conservative for 2026 earnings. It's just the problem of a sustainable multiple you can put on that. We're trading over 25 times today. But as Rick kind of set us up before we went into break, you got yields higher like $450 on the 10 year. and you have inflation expectations higher in a curve that's actually gotten flatter throughout the year, all of that doesn't set you up for a higher sustainable

multiple at this point. And if it doesn't set you up for a higher multiple, then you're reliant on earnings. And Drew, some might say earnings alone gets you to higher price targets at this point. Yeah, that's fair, but there's some devil in the details here when you

looked at Q1 numbers. Like, look, we called it a blowout. It was absolutely great. The problem is there's about $8 to $10.10 that's not really operating earnings. It's write-ups of assets. It's add-backs for tariffs. So if you strip that out, you're in like the high $320s for this year. That is close to our bull case for 2026 earnings, but markets don't always continue to pay for that. So we've got to be careful when we think about EPS versus what was really driven by operations. No, it's a great point. And so you say the earnings growth alone kind of gets us to what is already your bull case scenario. And remind me, what's your price target for the year on top of that earnings?

So 7700 still gets you over like just over like 24 times on 320. I think our ball case is 8300 on 330 in earnings. That's going to put you something more like 25 and a half times for this year. We think the high end of value right now, unless rates come down and rate volatility, oil ball comes down, you're probably looking at maybe 24 times as a reasonable high-end multiple right now. Oh, yeah. I mean, you're still, that's really healthy, historically speaking. Also, there's been a little bit of kind of degradation in the earnings on the retail end, probably because margins are being sacrificed to fuel and things like that. Can you just talk a little bit about that?

Look, I think the consumer and a lot of the consumer stocks right now, they don't have pricing power. So they're taking higher inflation, higher input inflation. So think of like intermediate stage PPI is a lot higher than end stage PPI or CPI right now. So that's margin compression for typical businesses. And the market wants to narrow in to stocks that have pricing power. And that's the setup for semis and a lot of the tech and AI names that, you know, are, look, front and center in the headlines. today. So you narrow into pricing power when you're worried about inflation degrading margins. How much this market rally, if any, Drew, is because there are just fewer companies to invest in

and more money around the world. The number of publicly traded companies when I got into this job 100 years ago was 8,000. It's like 3,600 in the United States now. Shares have gone down because of buybacks and it's trillions of dollars in money markets around the world. To me, part of the bull case is that there's more money chasing in some cases fewer public assets. And there's more leverage applied to that money too, Brian. When we look at some of the inputs to our positioning and sentiment models, you're looking at margin debt that even if you normalize it, is extremely high right now.

And the velocity of that money, when you look at the retail action and how much volume happens outside of traditional exchanges, that's really high too. So more money on the sidelines that can be put to work quickly, and there's more money being leveraged right now. So that all feeds into why we're grinding and we keep pushing so much higher right now in the short term. But again, fundamentals, though, are really good. Back to what I said earlier, we're really bullish on fundamentals.

That's why we're not saying, like, take the money and run, sell and me and go away, pick your cliche. It's a good fundamental story, and it has a lot of good backing and short term price momentum behind it as well. I don't know how they end an auction. What happens if there's not another, I mean, not raising $80,000? They pay that price. Then the winner is at Yardetti or whatever. Yeah. I mean, they're all raising it and it's an interesting world right now.

Yeah, well, especially given the momentum we've seen. I appreciate the cautionary points about it, though. Drew, good to see you. Thanks. Hey, thanks, Kelly. Thanks, Brian. Appreciate it. Let's get to Leslie Picker now for the CNBC News Update.

Hi, Leslie. Hey, Kelly, the Trump administration is planning a government-wide NDA that would bar federal workers from sharing confidential government information. That's according to a draft notice posted by the Office of Personal Management today. The draft cites a number of high-profile leaks, including ones related to the U.S. raid on Venezuela to capture Nicholas Maduro. According to the draft, agencies can decide whether or not to adopt the NDA. South Carolina's Senate has voted against a measure to advance a new congressional map for the state. President Trump had urged lawmakers to pass the new map, which eliminated the state's only majority black district giving Republicans a chance to win

the seat. Some Republicans changed their minds at the last minute with one saying it was wrong to approve a map with such little review. The CDC is seeking staff volunteers to go to domestic airports and help screen for Ebola as the outbreak in Africa intensifies. That's according to an internal email from the public health agency viewed by Bloomberg. More than 900 suspected cases and more than 200 deaths have been reported in the Democratic Republic of Congo and Uganda. Ryan, I'll send it back to you. All right. Scary stuff, Lizzie Picker. Thank you very much. All right, Power Lunch. We're going to be right back after this short break.

Welcome back to Power Lunch. I'm Dominic here with your market navigator. These markets right now trading at or near record highs yet again. So for many investors, the question is, how do you stay exposed for the growth in the markets without overpaying for those growth stocks. Our next guest is eyeing some names, including one that's been skyrocketing as of late, up more than 800% in the past year. Joining us now for the case is David Miller, the co-founder and chief investment officer over at Catalyst Funds. David, where exactly do you find that growth at a reasonable, and I say reasonable being relative, reasonably relative price in this kind of market? Well, I mean, we've really seen quite a tear in micron, but when you look at it,

it's still trading it likely under 10 times forward earnings. So I think it's kind of interesting. You can see a stock rip like that, but still see something that you could still potentially look at as value. All right. So 10 times forward earnings, no doubt that that's way below the multiple for both technology and the S&P 500.

Where else do you try to find some of those growth stories while getting comfortable with evaluation? I think you can also find some of these companies like an Amazon that are a bit misunderstood as to just how strong and powerful their margins can be. Obviously, their margins in e-commerce aren't great, but when you look at their margins in advertising, they're sky high. When you look at their AWS margins, they're also sky high, but they can grow revenue and earnings likely in the high 20s for an Amazon for those specific

business lines, the AWS and the ad side. So you could see some real expansion in their margins, even though they might not grow top line quite as fast. Now, so you mentioned Amazon, you've got micron, you're also thinking about another chip name that could be part of that story as well. So I think Broadcom, while it's certainly not cheap, they're an amazing AI infrastructure toll road story. They have multiple revenue streams, multiple paths for growth, both the custom AI chips that the hypers need so they're not totally reliant on Nvidia GPUs. They have the networking infrastructure where they have some massive growth. And then they also have the enterprise software on cloud enterprise software where they can grow all three of which can have some really impressive

margins. So I think they're one of the ultimate companies that can deliver that infrastructure to the AI needs that these hyperscalers have. All right, David Miller and Catalyst Funds, thank you very much for those picks. Again, Amazon, Micron, and Broadcom. And Brian Kelly, just for your kind of contextual information, Amazon and Broadcom both at 31 times next year's earnings, and Micron is, in fact, at 10 years next year's earnings, 10 times. 10 times now after today's move? Wow, Don, thanks for him. You got it. I'll take semiconductor valuations for 400, Dom. You know what? I've got a quiz for you. Okay, you want to give me a quiz?

I'm going to form it in a question if I can, Jim. Okay, but you can't answer it because you probably know the answer to this. We're going to show you. Okay, here we go, folks. Here's a car quiz. Can you name what company is making that all electric? Well, we just showed the logo. I'm not allowed to say it now, right? There's the logo. There's the logo, though.

It's pretty small. There's another logo. But it's not red. If you're on the radio, name the car. We're back running for this. The prancing horse has gone electric. Ferrari unveiling its first EV. It's called luce, which means light in Italian.

but there's nothing light about the price tag. Ferrari says the EV will start around $640,000. Wall Street not appearing to buy the hype. Shares are lower by nearly 5% after the announcement, and investors aren't the only skeptics. The former Ferrari chairman slammed the new car, telling Italian media, quote, there's a risk of destroying a myth. I hope at least they remove the prancing horse. Surely this is a car that not even the Chinese would copy. Robert Frank joins us. now. He's slamming it, Robert. I mean, it's a little, I don't know. The car itself, when I see it, it's okay. Okay, for what? Kelly, we should add that Luca now works for a competitor of Ferrari, so we should take his comments with a grain of salt. But let me give you some numbers. It's easy

to judge this car from the outside. Let's take a look at the internals here. This is 1,035 horsepower. So despite its looks, it is a very powerful car. It's got four or less. electric motors. It does zero to 60 in 2.5 seconds. But as you said, Kelly, a starting price of $640,000. Now, the market obviously a little skeptical, not just of demand for this, but more importantly, of as you see there, the amount of money that Ferrari has spent and will continue to spend to make this car possible. It has something like 60 patents that it has secured for this car. So the question is, Will they recoup that investment? And so far, you know, this is a stock that was already down, including today,

it's down 30% over the past 12 months. The CEO telling CNBC earlier today that, look, this is a different technology. Electric vehicles are different from combustion engines. So therefore, they didn't want it to look the same or be the same as their traditional cars. Now, of course, we all know what we expect from a Ferrari, and this is not it. Well, we got to bring in the car guru on set here. Brian, what do you think? I think, and Robert would know, I think the car is going to sell. I'm poking fun at it too, Robert. It looks like the Nissan Leaf, which costs $30,000 to $50,000. People are knocking the car online.

I get it. But you know as well as I do. The car will sell because here's, if I'm wrong, tell me, I'm wrong. I think Ferrari will go to its best customer and say, listen, if you want the hot new Ferrari, a gas powered car, you got to buy this one and then you can get in line for the other one. They will sell this car. It'll go away and we'll forget this ever happen. And it's notoriety. It might be a status symbol all the phone.

That happens all the time. This is the unfortunate Ferrari. Yeah. Brian, I agree with you. Also, if you put a Ferrari badge on anything, it will likely sell because all the other cars, there is a waiting list to buy them if you're lucky enough to even buy one of more than a year.

So this might be a Ferrari you can actually buy, number one. And number two, it's unclear how many they need to sell or plan to sell. Maybe they sell 50, maybe they sell 500. Who knows? They haven't put any sales targets on that. So, you know, they will probably say it's success, even if it's a fairly small number of cars. Look, the whole company makes only about 15,000 cars a year.

so they don't have to sell too many of these for it to be a success within the portfolio. They will sell out. They'll sell out, right? Like, it looks like an Azuzu impulse and a lucid air had a baby. Or that Subaru, what was the Subaru, which had the window inside the window from like 1988?

It will sell because they're going to go to the clients and say, you want your other car, you've got to buy this one, and they'll buy it. Some Italian billionaires will be like, I'll take two. The other thing I would say, Brian, is this was designed in conjunction with Johnny Ive. He, of course, was the design chief at Apple. And this car, like the iPhone, is a lot of glass from Corning.

And remember, Benedict Dovina, the current CEO of Ferrari, came from an electronics firm that designed the motion sensors for the iPhone. So this might actually be the Apple car that we were all waiting for showing up through Ferrari. That is a great line. I like that line, Robert. That is a great line. You know, love it or hate it. That's an interesting point about the design influence.

It can join its lineage there with the, what else did I make with the iPhone culminating in the... I want to know how much the tires cost because if it goes zero to 60 in 2.5 seconds, the car is heavy. It's about 5,000 pounds. The torque is going to be unbelievable. The tireware has got to be like 5,000 miles on a set of tires, Robert. Yeah, but if you're paying 640, you don't care. You don't care. You don't care.

Robert Frank probably be rolling up in one of these soon, to be honest with you. Their headquarters for the U.S. is right down the street here. Is it Montvale? No, no. It's right down here, Robert? Ferrari's U.S. headquarters, isn't it down the block? I love to see it. Bring it over.

A mile and a half down the street, guys. Every time Robert rolls up, he's in some car that he gets to test it. It's amazing. Every time I pull in, I'm excited to see what else is in the park. I love it because then he gives me the key and I get to go for a ride. You shouldn't tell people. Oh, yeah, that's right. That never happened.

It's never happened. Tuesday. I'm crazy. Robert thanks. More power lunch after the break. Another win for Starlink and for SpaceX as it gears up for its IPO. American Airlines announcing earlier today they will use Starlink for In-Flight Wi-Fi and over 500 planes. They join United, Southwest, and Alaska, and opting for Starlink instead of Amazon's Leo. Delta recently chose Leo over Starlink for its in flight Wi-Fi starting in 2028.

Delta's CEO Brian told us the other day he did so in part because they thought they might be able to link up with Amazon and other services in flight. It matters. I used it. You can actually, it works. It's fast and pretty much from takeoff to landing. If you want to be on your computer and do work, yeah, you can do it. Yeah, absolutely. It's not like that sort of chunky Wi-Fi you're normally used to and you get annoyed with. I think it's a lion's share of revenue for SpaceX as well. Speaking of energy, by the way, we got another big interview tomorrow. Paul Prager, CEO of Tara Wolf will join us exclusively. Listen, that stock soaring again today. It's been red

hot. It's at 25 bucks. If you zoom out for the full year, the stock is more than already double talk about AI, even a little bit about Bitcoin and crypto demand. Paul Prager and Terrell Wolf on tomorrow. Oh yeah, Bitcoin. Maybe he'll buy that Ferrari. We'll ask him. Thanks for watching, PowerLut. Posing Bell starts right now.