Power Lunch - Private Credit Concerns, Hot PPI Scares Stocks  2/27/26

Episode Date: February 27, 2026

Citi's Scott Chronert gives his market outlook. Duke Energy CEO Harry Sideris joins the show to talk energy. And Amazon announces it will invest $50B into OpenAI as part of a $110B funding round.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good riddens to February almost. One of the coldest snowiest months here in 150 years is going out with a whimper. Stocks lower as some cracks form in the market. Hi, everybody. All my friends down there in sunny Florida. Credit contagion fears, inflation reigniting, and the software slump hitting big tech this month. We'll try to find some safe ports and opportunity in the storm. But hopefully no more snow storms because we do have another monster funding round for Open AI to talk about today. Amazon, Nvidia and SoftBank investing a record $110 billion in the maker of ChatGPT. We'll take a closer look at this frenzy and why Amazon needs this partnership to stay competitive in the AI race. Speaking of which, an interview don't want to miss, Duke Energy CEO Harry Sedaris joins us to discuss his plans to accommodate big tech's growing power needs.

And he'll weigh in on the president's plans to lower electricity costs for everyday Americans. That's all ahead. All right, happy Friday, everybody. Listen, AI and software, getting all the attention lately. But maybe the bigger risk to your money and investments right now, maybe something totally different. Cracks in what's called private credit, basically big loans being written down. And that is taking down some financial firms and big banks. It is a complicated story.

But here to make sense of it and to make you smarter about it, senior banking and finance reporter, Leslie, picker, Leslie, good to have you on the show. this is a complicated story, but an important one. It's complicated. It is important. And I think the newspeg for this week is we're getting earnings reports from some of these BDCs, business development companies. And oftentimes, they serve as a proxy for what's going on in private credit, because so much of private credit is, of course, private. Well, BDCs are publicly traded. They do report earnings and they do disclose some loans that may have some issues. So you've seen some BDCs with big manager names you know, KKR and Apollo that have reported earnings this week.

And as a result of some loans that have been soured, they needed to cut their dividends. As a result, that spooked the market, those shares have been lower. And it's expanded to the managers of these BDCs, the stock of Apollo itself, KKR and others. And you're seeing kind of this ripple effect because the big banks are down as well. And one thing that's important to point out is that because we are seeing, you know, maybe potentially some cracks, and private credit doesn't mean that the public credit is okay. If you have a credit cycle, that could affect everybody and is likely to affect everybody. And that's why you also see declines in some of the other financials today, which are potentially spooked by some of the

disclosures they've seen this week. Right. And, you know, as we talked about with Mike Bayo last hour, you know, we are, it's a blessing in a way that a lot of this is not running directly through the traditional financial system. And for now is kind of in some of these ancillary areas. but the damage will spread, you know, if the loss is mount. So, Leslie, thanks for now. We appreciate it, Leslie Picker. By the way, don't miss Leslie, sit down Monday with J.P. Morgan, Chair and CEO, Jamie Diamond. You can catch that around 1.30 Eastern time.

And private credit isn't the only concern weighing on the markets. We also have the PPI report. Wholesale prices way hotter than expected, reigniting some inflation fears. AI anxiety still front and center. And if all of that wasn't enough, there's also risk of a broader conflict between the U.S. and Iran. You can see the Dow down about 610 points today. With pressure building on multiple fronts, what should you be doing with your money right now? Let's ask Scott Kronert.

He's U.S. equity strategist at City. He's still a 7,700 price target for the S&P for your end. Scott, it's good to see you. I just want to start with the financials, with the private equity names, publicly traded ones. What would you say we should do there? Just watch monitor or given how the underperformance now year-to-date in the financials, Do investors need to kind of lean out of the space entirely until some of these issues pass? Yeah, I'm going to go with the former.

I think, Kelly, that we're in a watch monitor mode here. If you look at the circumstance, the banks, generally speaking, came out of the Q4 reporting period, I think, in quite good shape. And to a certain degree, the earlier comments on where the private credit risk actually lies, is important. I think the banks are probably arm's length, but not totally free and clear, if you will. Now, without going too far down that path, I think what we've learned over the past several months is that the markets can handle an idiosyncratic issue around a private credit or sort of situation. It is if it broadens where it becomes a little bit bigger deal, and it's very premature. But the market's been doing recently sort of a sell first, you know, think later,

dynamic, if you will. So just to one last point on this, though, as we're looking at the private credit issue on a standalone basis, there's a bigger picture here. And I think it does kind of come back to how one thinks about the AI disruption influence, which is a topic that has really come into the discussion over the past month or so, and it's getting more attention with some other news that hit last night. I think the point here being is that we've been fairly comfortable that AI disruption translates into a couple of things. While on the one hand, we get productivity improvement. On the other hand, we have to face the implications for the labor condition. How this all ties together is pretty straightforward. If you go down a path where you start

seeing a more aggressive phase of layoffs, that ultimately plays into the bigger consumption picture, then you begin to parlay that into this broader credit issue. Right, but those are big ifs. And we'll talk more about this with Greg Ip later on. I think I come down on his side versus the side of, you know, kind of a fast accumulation of layoffs and concern. I don't know if maybe you see things a little differently, Scott, maybe a little more cautious on that. You know, look, I think it's very early endings. I think we're pretty comfortable that depending on the company and the circumstance,

it's going to determine how the AI disruption influence plays through. What I would say on this, though, is that, again, a lot of this ultimately ends up in a sort of a longer-term terminal value or terminal multiple discussion. So in the meantime, how we stay sort of measured on this is that from a fundamental perspective, under the surface, what's happening coming out of the Q4 reporting period is mostly all good. You'll know, we'll remember that, you know, we've been, I think, high in the street with a 320 estimate for the S&P supporting our, year-end target 7,700. Heck, as of today, the consensus is up to 315 from 312 just a month or so ago. So the way it's going right now, Kelly, if I look at this, I mean, my 320 high in the street looks a little conservative. So the underlying fundamental circumstance for here and now is still in very good shape. These longer-term issues, I think, are going to continue to need to be

navigated, but they don't necessarily tell you the entire story. Well, if I look around the world, Scott, South Korea's stock market, if you had that in your bingo card, it's up 20% this month, the Japanese Niki of 10% this month, Brazil is up 5% this month, even old Europe is up, and all those markets, not just this month, have been outperforming the United States over the last, say, year. Are you a believer in these global markets, maybe even over big tech here? What we've been arguing, Brian, I'm not going to answer you directly, but pretty close to it. From a global allocation perspective, we've been sitting there hunker down saying,

hey, look, we're neutral market weight the U.S. Why do I say that? Well, the U.S. is over 60% of the global equity market capitalization. So we're very comfortable with a core exposure here to the U.S. But as we play out the broadening thing that we've been talking about for the better part of this year, broadening continues to include out into other non-tech-related U.S. sectors down into U.S. small midcap and outside the U.S. where you get a much different economic and structural influence around this tech dynamic. So bottom line here is that I still think that the diversification approach here makes a lot of sense.

is we're navigating the near-term noise on this AI disruption element. It does play through to other regions of the globe that are less directly connected to that. Yeah, I saw that there's so much kind of excitement in this Korean stock market, Scott, that people are piling into like leveraged ETFs. They're trading U.S. quantum names. They're having to like take courses to make sure they understand. Like, it's like meme stocks going global. So at some point maybe that the real excitement here is actually the equal.

weight S&P 100 and not the market cap weight. And I'm trying to figure out. Can I even put my 401k in the equal weight? I don't even think they offer that option. Yeah, you can in some way, shape, or form. Look at what I'd say is that you've got to remember the influence in some of these underlying markets. They tend to be much more concentrated.

And in the case of Korea, I have a very heavy semiconductor influence. So the way U.S. tech has gone this year, you know, semis have been up into the right for the most part, particularly in the memory storage side. as software has been the flip side of that. Yeah. So, you know, I think if there's, if there's an angle here that I think I want to circle around on is that we have to look at the shorter term rotations. And for now anyway, the way we're thinking about it is that there is this sell first,

ask questions later. So maybe, maybe we go down a path where things aren't as bad as feared in some of these dialed down more negative positions. and maybe ultimately three, six months from now, the euphoria and some of these really, you know, overachievers gets measured a little bit. So the broader, you know, picture here is I think equal weight S&P is still a very good way of approaching this. But last point on this, if you were to ask me, Scott, what's still sort of least expensive right now or let's call it cheap in the U.S. markets?

It's big tech. Really? Yeah, oh, yeah. On a P.E. to growth ratio, Brian, I mean, the lead eight, the way we measure it, 28th percentile versus 20-year history. The rest of the index, much higher, okay? So the rest of the index is actually more expensive versus its history right now on forward growth expectations than is big tech. The only thing that's keeping people from stepping in, Scott, is concerned that it's just going to get a lot worse from here. Yeah, so that's all the time frames, right? That's incredible. That's incredible that on a P.E. to P.E. to P.E. to peg ratio, Scott, big tech is cheaper than most of the overall market. And by the way, the Korean market, I hate to harp on the Korean market.

It's up 150% in 14 months. Wow. The 150% in over a year, just over a year, that's bonkers. Just look at what's happening with the earnings, right? expectations, Brian, for the semi-end storage place. It's, you know, they've very much kept pace with the price action. So essentially what's happening here is that if you look at that P to growth ratio, you know, for the elite eight, we're trading at levels that we haven't seen since 2017, so nearly

10-year lows. So, but again, it does come down to your conviction in this forward growth dynamic. Yeah. And I think that's where, you know, that's the best. battleground, honestly, today is, is it a no-brainer to step in or is it, you know, a totally different era? It's not a no-brainer. Yeah, not a no-brainer. No, I agree.

I agree. Yeah. All right. Scott, thanks. Appreciate it today. Scott Croner, great to have you here. Want to just get a quick check on bond yields. It's not just the U.S. 10-year dipping under 4% to date.

Brian, you almost called it yesterday, did you not? I said a lot of things, so I'm never really wrong. You pressed the point. And I thought we could be weeks. I didn't know if it was going to happen again. We're below 4% today, maybe not for the best reason, some credit concerns globally. That said, 396 were there even after the hot PPI. Could be a flight to safety as the Ron Jenner's continue.

The twos in the 30s are down to. The 10 in the 30-year U.S. yields are actually now at their lowest levels since late November, and it's not just here, 10-year guilt, JGBs. Those are also ticking lower amidst all of this turmoil and concern we mentioned. You know what? I had the under on guilt, but you said it, so now I lose the bet. Guilt. We're not doing any Kalshi bets on that, though.

Guilty as charged. And we're just getting started. We've got a jam-pack show for you. Up next, the CEO of a utility giant. Duke Energy joins the show with the stock at record highs. Stay tuned for that and a whole lot more. Five years and $103 billion. That is how much Duke Energy is planning to invest as part of a newly increased capital spending plan.

The North Carolina-based company is working to build out enough power to meet surging demand. It'll be investing about five gigawatts for new power of natural gas and nearly the same in solar. and battery storage. Duke Energy stock, it's been hot. It's on pace for its seventh straight higher month, and seven in the last 10. Its best month in over a year and a half came in February. Harry Sedaris is the CEO of Duke Energy and joins us now in an exclusive interview for our new Power Insider. Energy Focus, Harry, it's great to chat with you again. I want to start very quickly, sort of a little bit on the political angle. The president, there's a meeting next week at the White House. Heck, maybe you'll be there. A bunch of big tech's going to be there. The president

wants everyone to sign this rate player, payer pledge, he said to not have data centers increase home consumer electricity costs. Is that possible? Can both things happen at the same time? Demand growth, but prices don't spike. Yeah, it's really great to be with you again, Brian, and good to see you again. I absolutely do believe that you can do both. And we agree with the administration's push to make sure that the data centers are paying their fair share, keeping the burden off the broader base of the customers. We've been working on this as well for the last year and a half, making sure that our contracts with these large load customers

protect the broader base of our customers by making sure they pay their fair share. And in fact, every new data center that we're signing up, every gigawatt of data center is actually going to reduce the cost to our customers over the life of that contract over the 15 years as they absorb some of the fixed costs of the system. Okay, can you go a little more? Absolutely do both.

Yeah, Harry, go a little more into that. I'm sorry for cutting you off, but how is that possible? And listen, Loudoun County, Virginia, data center capital of America, electricity costs have actually come down. So there is a precedent, but you can't blame people for being skeptical. They say, oh, sure, big tech's going to pay their own way. How does it actually work? Yeah, what we do is we calculate the revenue requirement from all those investments that are

going in to build the infrastructure needed to power the. data centers. And that's what their rate is based off of. So they, they actually collect, we collect the revenue from them covering the cost of those investments and not spreading it out to the rest of the, the customer base. Okay. So how many of these companies, your customers, by the way, I know you've got Microsoft and you've got Amazon, you've got BMW, you got not just big tech, huge industrial companies as well. You and I talked about this in January back down in Florida. How many of these companies need to be sort of cajoled into maybe politically pressured into doing that versus they're coming to you and your team and they're saying,

Harry, we want to build this. We need your power. And we're willing to already, without being asked or forced to sort of kick in that money. They've been great partners and very supportive of what we're trying to do to make sure that we're protecting our customers. So they've been at the table. They've been working side by side with us, hand in glove to make sure that we have the right terms and conditions that protect the customers, but also get them what they need. They want speed to power. They want us to be able to hook them up faster. And by doing some things like being curtailable for about 50 hours a year, that allows us to bring them online sooner. So they've been very supportive in working with us to make sure that we're accomplishing what they need and what our customers

need as well. So you got five gigs of planned build out for natural gas. By the way, a gig is about 750,000 homes. So you're talking what, three and a half, four million homes are the power. about the same with solar and batteries. You're in North Carolina, one of the fastest growing states in America. You're also big into Indiana where there's a huge data center build out. What is the best use? We talked about 103 billion, Harry, in capital spending. What is the best use of that money in gas and solar geographically or with customers? Yeah, our strategy has always been all of the above. So it's gas, it's solar, it's batteries, it's squeezing more megawatts out of our current assets. We're going to,

to operate our nuclear, our current nuclear plants by 300 megawatts. We're increasing the output of our current gas plants, so 1,000 megawatts out of the existing assets, which squeezes more value out for our customers. We need all the electrons we can get. So each of those plays a different role in that. Gas is a good base load, cheap resource. Solar provides you a lot of cheap energy, and then batteries helps you store and handle the peaks as they come along. And we are blessed to be. be in some territories that are growing really fast. You mentioned the Carolinas in Florida with population migration, Indiana, with manufacturing and data centers. Here in Charlotte, 157 people move here every day. So we are growing like crazy. Yeah, we saw that map here. I mean,

literally three of the fastest growing states, either with industrial demand or population demand. You talked about building out nuclear 300 megawatts. How long, can you tell our audience, viewers and listeners, right? Your customers that are watching right now, how long does it take to build out nuclear? Just south you might have heard this. You know, it's a pretty big nuclear plant, not yours called Vodal, took a long time, was over budget. So a lot of the nuclear haters like, well, look at that. That took forever and cost a lot more. What's the reality of nuclear right now? Well, nuclear is very important to our company. We have 11 reactors. They're low cost, reliable. They provide great power to our customers, but they also provide savings to our customers through tax credits.

Last year alone, we had the highest capacity factor ever for our nuclear plants, over 96% of the time being online. That produced $600 million that we're going to give back to our customers and tax credits. So they're very beneficial. We have it in our plans towards the latter part of the 2030s. Right now, we're focused on keeping our options open. We filed a permit in December for our SMR at our Balluz Creek facility. We'll hear back from the NRC in 18 months. But that's really to keep optionality open as we work through the key decisions on if we go forward with nuclear.

How are we going to protect our investors? How are we going to protect our customers? Is the technology and the supply chain mature enough? We're working with the administration and government agencies hand in hand to make sure that we're ready for that decision. when it comes. Quickly, Ballou's Creek is the nuclear facility that you were talking about. You said 18 months. So is that good? Harry, because a lot of the stuff we hear about is permitting reform, got to speed this up, speed this up. Is 18 months a good number? Or is it kind of where we were a couple years ago and we still got work to do? Yeah, I think it's a good number. And I know the

executive order the administration put out is going to streamline that even more. But that's not the long tent in the poll. Getting the supply chain, making sure that we mitigate the finance, risks to the investors and the customers. That's really where our focus areas is now. We're doing the permitting, but that's not holding us up. All right. Harry Sedaris, Duke Energy, the stock has been red hot as well. And by the way, one of my producers went to Duke University. So he was all excited about this segment. I said, no, no, it's Duke Energy. Just take it easy. We can talk basketball, too. I know. I know you can. Harry, really appreciate it. Have a great weekend. Thank you very much. Thank you. You too. And speaking of energy, airline stocks hitting some

turpulence today, in part as oil prices spike. Look at United down nearly 9% and Delta down seven. They're on track for their worst days since last April. The cruise stock, similar story in some rough waters, ha, with Carnival leading the declines. They've also been under some activist pressure. Carnival shares are down 4%. Coming up, did Amazon make their $50 billion investment in Open AI to play offense or defense? As Amazon shares been flat for a year now, more after this. Welcome back. Open AI announcing a $110 billion funding round with backing from the likes of NVIDIA, SoftBank, and Amazon today. The investment boosts Open AI to a pre-money valuation of $730 billion. So do the math, folks. That means it's $840 billion post money, almost a trillion dollar private market company.

Amazon CEO, Andy Jassy, was on Squawk Box earlier today alongside the OpenAI CEO, Sam Olman, to break down what this partnership means for his company. Open AI is off to an amazing start. They're going to be one of the very big winners, we believe, long-term. I think we can help them quite a bit as part of this partnership. I think just having their offerings available on bedrock, you know, being able to leverage Traynium, which gives them 30 to 40 percent better price performance, matters a lot in AI. And I think it's going to be a very strong long-term partnership where we're going to also

be happy about the investment. It'll yield a good return for Amazon over a long period of time. Our next guest says Amazon needs this for AWS. Joining us to break it down is Barton Crockett. He's Rosenblot Security Senior Internet Media Analyst. Barton, good to see you. So why do they need this? Well, they need this because models, LLMs, are in a very important part of the competition now in cloud services.

And Google's really been pressing an advantage. They're the only provider that an enterprise can use to get Gemini. Gemini's been the leading model. and the backlog for Google Cloud grew like 160% year over year, nearly in the fourth quarter, up to 240 billion, very close to AWS's backlog of 244. So AWS likes to think of themselves as the clear leader, but in backlog, it's really kind of two guys going toe to toe to toe. So they need to improve their model access.

They're not going to get Gemini, but they can get better access to the OpenAI model, you know, anchored by chat, GBT infrastructure. And that's a big part of what they're announcing here. And they're doing it with a different approach, which is kind of an agentic frontier model, which will make Amazon kind of the go-to for agentic using OpenAI, or Microsoft kind of retains the API kind of core integration. So it's a splitting of capabilities,

but an improvement for Amazon that's important here competitively. And do you think they all need each other to, exceed Nvidia and Amazon and opening. I mean, you know, people are saying the deal is circular, but what they're all kind of doing is reinforcing a competitor to, as you mentioned, Google's Gemini. Yeah. I mean, I think that clearly an element of this, you know, Nvidia sells to everyone,

but an element of the other guys is, yeah, they're strength in us working together so that we, you know, continue to stay on the field here. And, yeah, so that's part of the industrial logic for sure in OpenA. and AWS, you know, getting together, you know, and Open AI also getting Microsoft. They're all propping each other up to compete against a formidable Google. Yeah, and we'll see if they succeed on that front. Barton, while you're here, can we turn to the media front? Talk a little Netflix soaring 12% today as they are officially walking away from the Warner Brothers deal.

Now, of course, comes after Paramount raised its offer, and Paramount shares are still flying. It makes the Ellison Family's Media Empire the big winner here. So what's the next move for, does Netflix need it? a next move? No, I mean, you know, they, they toyed with this. I never thought that they would win. I always thought the Ellisons had more, you know, money and that they put the money to play. And so I'm not surprised at all that this is how it turned out. And so Netflix goes back to where they were. You know, the thing about Netflix is they're a great business, you know, getting larger. There is a certain element of maturity that slips in there. So, you know, we've retained a neutral rating

because we think of, you know, 20x EBITDA, a little north of that. With EBITDA growing at maybe a 20% pace, you're not unfairly valued here. But they go back to what they were doing and what they were doing was working. And, you know, and I think you've just got to be careful on what you pay for this stock at this least levels. But you remove a lot of uncertainty, which is great. Yeah. We were talking to Scott Kroen at top of the show, Barton, about how cheap the big tech.

He calls him the elite eight. They were originally known as Fang, which is what our Netflix chat makes me. Now, of course, Nvidia is the new end. But my point is, when you look across the Internet media space that you cover, which includes a lot of these big tech names, do you think that they are all cheap enough to be screaming buys? Or do you think they are highly differentiated and investors should be cautious? Look, I think that there are some great screaming buys.

You know, we've been really constructive on meta, which I know is controversial, which is amazing because, you know, leave aside the capbacks, which will level out. they're building an infrastructure, but they won't continue to add double the CAPEX year after year. And the level out, they'll get growth on that. And it'll be, you know, in maturity, a really high margin business. So it's a classic capitalism, invest, build it, and then make the margin on it later on.

You know, Amazon is looking somewhat similar. I mean, they've had not the growth from AI that, you know, that Met has had and that Google Cloud has had. They're still searching for that. But if they can find it, you know, at this multiple, if they can, you know, accelerate the growth by being a leader, you know, it could be very interesting as well. Meta, maybe Amazon making the top. Do we include Netflix still? And there's sort of a, why do we even talk? I mean, they're clearly not the same kind of AI player as we talk about with all the others. Yeah, I mean, it's, you know, it's apples and oranges. You know, Netflix is good at what they do, subscription service to consumers. And, you know, they've, they're maturing. You see that. in not reporting subscribers. You see that in looking at huge deals.

But, you know, but they're maturing gracefully, and they're still a very good company. Don't we all hope to? And maybe they'll use AI to make it easier to pick what you want to watch or something and benefit that way. Barton, thanks for now. Appreciate it.

Great, thank you. Barton Crockett with Rosenblot. All right, let's get now to Pippa Stevens, who has a CNBC news update. Pippa. Hey, Brian. President Trump suggested today he is considering a, quote, friendly takeover of Cuba. He told reporters at the White House, Secretary of State Marco Rubio,

is dealing with the issue at a very high level. His comments come after he tightened economic sanctions on Cuba following the capture of Cuban ally Venezuelan President Nicholas Maduro. Attorney General Pombondi announced today 30 more people have been indicted for allegedly taking part in an anti-immigration enforcement protest at a church in Minnesota last month. That brings the total number of people charged to nearly 40, including former CNN-turned independent journalist anchor Don Lemon. The group protested at the church over claims a pastor there is an ICE official. And NFL teams will have more cash to spend on players for the upcoming season.

The league reportedly told teams today the salary cap is going up to $301.2 million per team, an increase of $22 million from last season. The cap has risen every year since 2011, except for in 2021, when the league prioritized recovering from the pandemic. That's a whole lot of money, Brian. Back to you. Yeah, it really is. And kind of the friendly takeover at Cuba, kind of just, that's what the president does, kind of drops one in there. And we'd love to figure it out. Pip Stevens, thank you. Friendly takeover. All right, on deck. We're going to try to answer maybe the biggest question in American business right now.

Will AI take your job? We have heard a lot of debate about AI disruption and the impact on white collar jobs. And just today, Payment Company Block announced it's laying off more than 4,000 workers or nearly half of its head count. They say the reason is AI. The shares are up 15% on the news. Will more companies follow suit? Block CEO, Jack Dorsey thinks so. But your next guest has a new column out today arguing that tech has never caused a job apocalypse.

Greg Ipp is Chief Economics commentator at the Wall Street Journal. Greg, you took the words out of my mouth, but what data are you marshalling to make this point? People I really respect, like, really think this time is going to be different. Look, I'm not going to dismiss the possibility, Kevin, Kelly, that this time will be different. Look, you and I work in journalism, and we are very exposed to AI, and so I think we'd be nuts to sort of like play down the risks here. But here are the two things, the two main points I want to make to you. First of all, we have almost never seen any new technology destroy more jobs than it created. The reason why is that as the price of the thing it innovates falls, people consume more of it.

And even in those rare instances where you see a lot of sectoral job loss, perhaps, because of a new technology, it's never enough to outweigh job creation and the rest of the economy. Because when prices of something like technology are going down, real incomes rise and so people can spend more. So if you were to posit that those things were different this time that AI is unlike everything else, that's fine. But you have to assume that this time is different. And I seem to remember somebody saying that the most dangerous words on Wall Street are this time is different. Yeah, that's been said a few. By the way, also a very good book.

Greg, here's, I think, Kelly and I agree mostly on this, maybe different how it works. Get your take. Here's my beef with the AI is going to kill job story. It's probably true. But if AI kills all these jobs, like with the job, like with, the block thing, and Block's got its own issues, okay? Stock's down 80% in five years. That said, if it kills all the jobs, what's the point of AI?

The economy is consumer spending. If nobody's working because AI took all the jobs, nobody makes any money, Vegas shuts down, airlines close, there is no need for AI because there's no economy. Yes, I mean, the argument does get kind of circular, right? And by the way, it's one reason why people have been making predictions like this, like forever. John Maynard Keynes said it in the 1930s. They were all Time magazine said it in the 1960s, and it's never true for the reason you said.

But here's my more sort of granular point, right? If a jobs wipe out on the scale that Doomers, like in that Cotini Research Report talked about, was in the wings, surely we should see it in the data, some sign of it in the data right now. And this is what surprised me when I researched my column. The number of software developers is still going up. Their salary premium as of 2024 is still going up. You're not really seeing in the aggregate data. major dislocation in these jobs.

And to the extent that some research shows that, for example, some younger people are having trouble finding jobs, it's really, really hard to prove that that's because of AI, as opposed to some slowing in job creation, which we know always affects young people first. I would go even a step further because it's fun to be provocative every now and then, but I think I actually believe this, Greg, and I would posit that not only is AI not going to cause, you know,

mass job losses on net. I'm not saying individual position. I'm talking about for society at large. I think we should all be so glad it came along. Imagine where we'd be for not the innovations of the internet and things like that, that create all of these new industries. Like, if there's not innovation, there's not productivity, there's not this constant improvement,

there's not these new jobs to be created. I just feel like this is literally how it works. You're absolutely right, Kelly. I mean, there's no creation without. destruction, right? That's the nature of creative destruction. Just give you a few sort of like little examples, right? So GPS, right? If you're a taxi driver, terrifying, right? The GPS takes all the value of your knowledge away. But the GPS made possible Uber and Lyft. And more people drive cars or taxis than ever. And we take more car drives than ever. And like food delivery,

all these industries that essentially came into existence, creating new jobs and opportunities thanks to a technology that we didn't have before, but you only created some displacement. An example I always like to use is spreadsheets. When they came along with Lotus 1,23 and Excel in the early 1980s, all these bookkeepers lost their jobs. But what did we see happen? The number of chartered accountants, chartered financial analysts,

management analysts, all these people who can now suddenly do all this and make stuff with spreadsheets, their numbers shot up. I could go on and on and on. Like when you think about what AI and LLMs do, they make it really fast and easy to create new software applications. So why isn't it a realistic outlook that suddenly we will be creating millions and millions of new bespoke software applications? Everybody will have their own customized software to do their own shopping or manage their finances or something like that. It's the nature of our creativity. When something gets really cheap and easy to use, we find so many more uses for it.

And those uses will require jobs on the other side. And I do understand, and I'm not discounting the idea that a lot of these amazing technologies, to Kelly's point about, thank goodness for technology, won't disrupt parts of, say, the junior analyst market for investment bankers or entry-level associate attorneys. I get that. But here's my other beef. If you eliminate entry-level jobs, there are no upper-level jobs for anybody to move into. You just have the same group of old people getting old.

You have to have the young people that are trained to do those things that then they're not entry level. In five years, they're mid-leveled, and they move up, correct? If you can wipe out the entry-level jobs, who's left to become the rainmakers and the money-makers of the firms? Maybe I'm being stupidly optimistic. I mean, I think you're making a good point here, which is that enterprises are organic-growing organizations and they don't eat their own seed corn, right? So if an organization discovers it doesn't need as many new entry-level junior associates doing a certain type of job, they're still going to be cognizant of the fact that they need new people to take place, the place of the people who are leaving and retiring, and to reinvigorate it.

So they'll do something else. But listen, I mean, I totally get that a AI can now create a pitch deck in half an hour that you needed a junior banker to take two weeks to do in the past. So why won't we hire those people to create other things? Like maybe make more pitch decks, more present. I agree. I like you, I'm not about to play down the risks out here, but I think over and over again, we underestimate the creativity and our ability to find new ways to do new things with these technologies. I agree. And all of that said, go use these new tools because that's how you make sure that you're part of the story of the future, not the story of the past. Greg, thanks. Appreciate it very much today. Greg, I'm thank you. With the Wall Street Journal.

Coming up one stock that is surging on AI tailwinds, but another sliding on AI fears. get a money manager's thought on both names right after the break. Welcome back to Power Lunch. As you just saw, the Dow there is down about 670 points this afternoon driven by a myriad of worrisome headlines you can point to, starting, of course, in technology where software stocks remain under pressure, but also circling to Iran, jitters going into the weekend and some other issues. Let's do a special tech edition of our power check, shall we, given all this. G-squared Private Well, CIO, and CNBC contributor Victoria Green is here with us to walk through these trades.

Victoria, welcome to you. Let's actually start with Dell. This one deserves more attention. It is flying. It's up 20% at last check, 21 now. What are they doing right? And what do you do with the name? I love Dell here.

Honestly, it was a very impressive beat that they just had. I mean, the amount of free cash flow they generated, this is a quality company. And they're sitting right where they need to be where people are spending money on servers, on rap. We're having all this infrastructure buildout. And they talk about it's not just coming from the hyperscalers anymore. It's coming from sovereign nations.

It's coming from government buildout. It's coming from corporate buildout. You're not just a MAG7 exposed here. It's everybody spending money on Compete Power and AI. And Del just sits so pretty. And look at this stock. It's actually relatively cheap for a tech stuff, right? About 15, 16 times.

I know today's a big move up. It's one I'd like to own, though, similar to hopping into memory there a little bit. I think you need to hop in here for a little bit more infrastructure exposure in your tech portfolio. All right. Speaking of old big tech names, how about IBM? We're speaking of Lotus 1, 2, 3. I think IBM bought them back in the day. day. But the shares were down about 7% this week on some AI concerns about, you know,

they're going to take over some of the coding language. Would you own it? Yeah, I do own it. Full disclosure, we have trimmed it back. It's a hold for me. I love IBM. I think it's a great company. I think there are headwinds right now that's going to make this stock a little bit difficult in the near term. Now, clip your dividend on to understand their wealth position, but there's a shakeout going on right now in software. There's a sell everything freak out about if there's going to be any consultants left. Is there going to be anything to do on the services side or is it all going to be done by an algorithm, which is very likely overblown. But I think we could still see those headwinds way down a good stop here. It also got

pretty expensive. I do think the stock might tread a little water, have a little near term downside. But we love where it's thick. We love Red Hat. We love their recent acquisition of Hashi Corp. We think they're super well positioned with AI. But right now it's a narrative similar to the video. You might just not be able to win against the narrative right now. I like how Patrick Morehead's reaction. He said, IBM wants Cobold to go away too. They'll do better if it does. Finally, on Alphabet, we've kind of mentioned this one tangentially all day long because of this Open AI fundraise. Does $110 billion make Alphabet less attractive if Open AI is now going to be a more formidable rival to Gemini? No, I think Google is phenomenally well positioned. And look at

their deal with meta. Could this be their AWF moment? Is this where they monetize something they were doing internally for their own compute power and now start selling their TPUs, which are expected to be very, very strong competitors for Navidia? I think, Google is a winner here, was a winner going into this earning season. And if they do strike more and more deals to compete with the video, again, I look at this as AWF wasn't an external thing for a while there. It was meant as an Amazon internal way to manage workflows. And I could see Google developing this.

That would be very interesting. Another new narrative to follow. Victoria, thanks. Appreciate it. Thanks, Kelly. Victoria Green with G squared. All right. Tomorrow is Rare Diseases Day, and to highlight it the group, Every Life held a series of events in

Washington, D.C. And this year, CNBC launched CNBC Cures to help raise awareness of rare diseases. On Tuesday, Becky Quick, will host the first annual CNBC Cures Summit in New York City. The event is sold out, but you can register for a free live stream by scanning the QR code on your screen right now. Important event. We're back right up to this. Last trading day of the month, great time for a quick update on what American City is winning the stock market so far. I know it's early in the year. But the boost. energy and oil and gas is powering Houston to the early lead in our power city indexes. 12 biggest companies, an average return of 18.9 percent so far this year.

SLB, Occidental ExxonMobil, leading the gains. A close second is the Denver metro area up 17.3 percent. Big boom and oil and gas and gold, by the way. And that has followed Kelly by a big return for all you yinzers out in Pittsburgh, having a good year with a gain of 16.3 percent. Halmet Aerospace is one of these stocks that just won't stop. Wow. Five-year return of over 800 percent.

I keep calling them. I'm sorry, Halmet. We love trying to get you on. They won't talk. This has been the greatest money-making stock in America the last five years. And what you say is actually fascinating that it spun out of Alcoa. So go back to 2016, Alcoa split into that in Arconic. Arconic then split into that in Helmut.

So if you go back and you were a shareholder in Alcoa and you had, you know, $10,000. Well, I'll tell you what Gemini says in a minute here. You'd have a lot of money now, even though this stuff. Remember when it was in the Dow and he used to kickoff earnings season and we used to talk to Klaus all the time? I mean, it's amazing to see now 10 years on. And Helmut an aerospace company using aluminum for airline parts, just a rocket ship. It's always on Wall Street's most love list and they've gotten it right. Now you think about Honeywell and the others who are pursuing the same.

It's fascinating. Leave it with some good news. Happy Friday. Thanks for watching Power Lunch, everybody.