Power Lunch - Software & AI Stocks in Focus 1/24/25

Episode Date: January 24, 2025

CNBC’s Tyler Mathisen and Kelly Evans 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.

And welcome to Power Lunch. Well, the DEI backlash continues this time at the home of one of America's biggest retailers. But what might people and investors be missing? The IPO market, it's fired up because one of America's biggest natural gas sellers just went public and just began trading. We'll show you how it's doing. Stargate, AI, and Netflix, oh my. What we all are learning from some of the massive earnings that are rolling out. Kelly.

And it's only going to get more massive next week. Stocks are turning lower this afternoon after the S&P hit new record highs earlier on. 6128 is the new high watermark, but we're actually kind of losing momentum here throughout the afternoon into the weekend. The S&P right now down a third of a percent, six-tenths there for the NASDAQ. All the averages are up about 2% for the week, though. Novo Nordisk shares are jumping the trial for a new weight loss drug showed success. 22% body weight loss in an early trial covering 125 people. Those shares are up 8%, though they're still down 16%.

on the year. And Quantum is back in the news. Raghetti is the most actively traded stock on the New York Stock Exchange today. It's up 3% today, 40% this week, almost 14 a share. And flattish on the year after a big drop from those Jensen Wong comments when he questioned when quantum, Brian, would actually arrive. Well, the four pizzas we had for lunch as a show not in that Novo Nordisk study. All right, Kelly, thank you. We've got a lot more to do this hour, but let's start here with some news in retail. As one of America's biggest retailers just decided to back away from some DEI initiatives. CBC retail reporter Melissa Repco is here with more on that. So Target said today that it's backing away from some major DEI programs, including pledges it made after the police-involved murder of George Floyd in the company's hometown of Minneapolis.

Among its changes, the retailer said it will drop its three-year diversity equity inclusion goals. no longer participate in external diversity-focused surveys like the human rights campaigns, corporate equality index, and end a supplier program specifically aimed at carrying more products from black and minority-owned businesses. Target announced these changes in a letter to employees, which was viewed by CNBC. Target joins a growing list of companies that have walked-backed DEI efforts, including tractor supply, Walmart, and McDonald's. Its announcement comes the same week that President Trump signed an executive order ending the government's DEI programs and putting federal officials overseeing those programs on leave.

But not all companies have joined the trend. Costco said Thursday that more than 98% of shareholders rejected a proposal to evaluate risks of its DEI programs. Costco's board of directors had urged shareholders to vote it down. I thought that was interesting as well because Costco says we've been in this for a long time. We think it benefits our selection at the stores, it benefits innovation at the company. So they really push to retain it and shareholders actually,

I guess, agreed with them. Yes, that is definitely the outlier that we've heard in recent weeks. But that's one of the big questions here. With Target, it's notable that they changed their approach with suppliers. That was something they were also pushing towards, something we've heard from Alta and Sephora and a number of other brands that have said it's good business to have a lot of different newer brands from different types of entrepreneurs on shelves. Do you think a lot of them are going to pursue the same goals under a different name?

That's a good question. And it's hard to say I am going to follow up with. target to ask them what their plans are going forward. But we've seen a little bit of that happen after the affirmative action decision by Supreme Court, where colleges have come up with different ways to approach diversity that maybe were just structured differently. And we may see this in the corporate world, too. Yeah. Melissa, thanks. Appreciate it. Melissa, Repco reporting there. As we mentioned, targets actions are a growing trend across corporate America. And it's a focal point, a major one of the new administration. President Trump's executive order earlier this week calling

DEI programs illegal and discriminatory. Here to discuss Heidi Hicamp, former Senator of North Dakota and John Hope Bryant, who is founder of Operation Hope. Welcome to you both. Senator, I'll start with you. This does appear to be a major turning point in the culture, no?

Who knows? I mean, I think your point of, are we going to see these policies of, you know, that could be profitable because you're offering more vibrant products. You are bringing more creative people to the business. table as you're talking about challenges. So what, you know, DEI now has a bad name. This all started

in earnest during the debate over the Gaza challenge and universities. But, you know, what corporation should always be looking at is, are these policies benefiting shareholders? Are they benefiting your consumers? And I expect that, as you saw Costco say, that there's going a lot of People say, look, it may be in politic to use DEI, but we're going to pursue the same kind of diversity in our thinking and who's sitting around the table making decisions that we always have because it's good for the company. It's good for the bottom line. John Hope, Brian, this is probably an issue as well where, you know, a company like Costco that says this has been a long-term part of our culture. Here's the results we can show from it.

Here's why we're sticking with it. It's probably going to get different outcome and make a different decision than a company that was maybe newer to this and is a little bit more nervous or unsure about whether to retain that program going forward. Correct. Also, Costco, I believe, understands the 16.3 number that I'm looking at. And Kelly, you'll love this number. And the senator's right, by the way. The 16.3 number is trillion. That's all, I hope your audience is sitting down if they don't fall down. Diverse markets and women in America, of our $27 trillion, GDP is $16.3 trillion. Let that sink in for a minute.

That's 60% of the U.S. economy. 60. So I like math because it doesn't have an opinion. Costco's looking at the math and saying, do I want more customers? Or do I want them to go someplace else? Do I want more employees who can understand the customer base? Do I want products of my shelves that reflect that,

which is what the senator was saying? This is ultimately not about black or white or red or blue. It's green. But D.E. and I as itself has been weaponized. And I believe it's dead. I believe that as a program, it's dead. And I'm fine with that. I've said that before. But diversity is the future of this country because demographics are destiny. And 40% of this country is black and brown today. And within 10 years, there'll be a majority of minorities. And my rich friends, my poor friends that do better. only to stay rich. And so it is fascinating to me a little bit that you have business people in Washington rejecting a business case, which tells me that this is not business as politics. Right. If I go back to the senator for this on a moment, you know, one of the issues that started to get this trend into more hot water, I think, was when it started to hit the levels of quotas and certain practices where people felt it was becoming almost a new form of racism to kind of promote one kind of thing or another over.

the business case that John is fundamentally talking about. So again, I think there's going to be lawyers all over this now who are going to very carefully look at how these programs are structured and what their goals are now. Well, I mean, the narrative has always been wrong. It should never have been about quotas. And when you look at it, the backlash that you often hear is, well, if it's somebody who is African American or Hispanic or a woman in that job, she wasn't as qualified as a man. He wasn't as qualified as the white applicant. That's completely false narrative. And when you have quotas, it begs that discussion. And I think that the way colleges have responded to this is taking a look at what are kind of historic limitations. What do you want in your

student body population without quotas? And so there's ways to accomplish this without raising the hackles. But I think, as he said, this has been weaponized because now DEI is like the horrible thing. ESGs are the horrible thing. But they should always have been done because they are good for the bottom line. They're good for the future of your company. You know, I think about myself, you don't want me buying hair products for an African-American woman. I wouldn't know what to buy and put in the store in a major city across the country. You have to have people who have an experience that your customer has.

if you're going to be successful selling. So John Hope, Brian, what would your advice be for companies right now who are in the middle of this, maybe boardrooms who are trying to decide right now whether to keep the program or scrap it or how to achieve those goals or just make those normal business decisions in a different way? When you're being run out of town, get in front of the crowd and make like a parade, turn a negative into a positive. Don't fight this D&I thing. Again, it's not a rational argument.

It's just an argument. It's designed to get attention, not results. Switch to inclusive economics, which is something that I have framed out in the articles in time and fortune in other ways. We can go and see the data that I've laid out in a business plan for America. It's completely neutral to race. It has not, to the senators, completely correct about the basis of these programs that are designed wrongs because they're designed emotionally.

We're not making a moral argument. We're making a money argument. And it just so happens the money argument actually is quite moral. But we got to go back and refine this. Look, a underserved person in Detroit should have the same opportunity, or sorry, a rural white in West Virginia who has been kept out of markets and opportunity, theoretically should have the same opportunity to get up the ladder as a black male or black female in Detroit who's been kept up opportunity, who can add to the American GDP.

So inclusive economics is just a repairs the ladder so we can grow the economy. I will just change the approach. Thank you both. And again, a big news week on this front. John Hope, Bryant, Senator Heidi Highcamp, appreciate your time. All right, we are just getting started. As we head to break, a power check on the S&P 500 is we sit close to new records. The worst performer in the index right now is Texas Instruments.

If you're an investor, you've lost 7.5% of your money today, the market simply did not like the earnings. But the top stock today in the entire index, Next Era Energy. Yes, it did miss on expectations for revenue, but it said it should earn close to what is expected for the year or more. And added, it may restart a shuttered nuclear plant in Iowa. Oh, and by the way, Next Era Energy CEO, John Ketchum, he is your exclusive guest right after this. A rare T-interview, TV interview. We're back. All right, one of the biggest IPOs in years happening today at the New York Stock Exchange, and it should be a company.

Our viewers know pretty well. It's called Venture Global. They do a lot of things, but on a basic level, they sell liquefied natural gas by giant ship all over the world. Stock opening today, a little below the IPO price. They opened up at $24.5. They did go public at $25 a share, but the company now is a market valuation of roughly $60 billion. Kelly recently had a meeting with the CEO, Mike Sable, and he reiterated how bullish the company is on America's ability to sell LNG to Europe and to Asia. big, didn't go maybe as well as what some hope for, but still venture global, a big IPO,

whatever the sector. Huge company in a very hot space right now. So again, I'm a little surprised that this wasn't a hot IPO that had to, but if they priced it too high, I had to walk it back, whatever the case may be. Even I wonder to some extent whether this idea that there's going to be so much supply coming in, whether it's on the gas side or the oil side, makes people go, well, well, let's see what exactly that means for the price and their profitability. Yes, and a main beneficiary of the end of the LNG pause.

to their Calcashoe Pass, number two, export facility. Speaking of energy, the best performing stock in the S&P 500 right now, as we just showed you, is Next Era Energy. It is the biggest renewable energy generator in America. Now, on earnings, revenue did miss some Wall Street estimates today, but the CEO was also bullish on natural gas and on nuclear. Hi. That's the Nuclear Federal Energy Regulatory Commission.

Here in a first on CBC interview is John Kemp, Catchup, Chairman, President, and CEO of Next Era Energy. John, I don't know if that was your PR people calling anyway. I appreciate you coming on the program. You reminded Wall Street and investors today in your conference call. I thought this was fascinating that you in Florida Power and Light, sort of the former, the current company with the former name that you guys have, is not just the biggest renewables generator in America.

You also have the largest natural gas fleet in America. And you may restart a nuclear plant in Iowa. Talk to us about that and also why you and your team felt it was important to reiterate to investors. Listen, we're huge renewable generators, but we also are huge energy generators generally. Well, you know, we are a really unique company. Yeah, we are in all the above company. We own a rate regulated utility in Florida Power and Light, as you mentioned, the largest rate regulated utility in the United States were the largest

generator and operator of natural gas fire generation in the country. We're one of the largest nuclear operators as well, and we're the largest renewables company building battery storage facilities as well. So we do it all. And today we announced our entree back into gas, which is something that we have a long, long history. And again, nobody has built more gas fire generation in this country over the last 20 years and next era energy. So this is a natural foray for us. And we've entered into a framework agreement with GE-Vernova. So it combines not only the nation's largest builder of natural gas fire generation, together with the company that sells more gas turbines than anybody else in the United States and has some of the best technology

and best solutions. And so we think that is a great fit when you mix those two together. And coming on the heels of the new administration's energy dominance agenda, you know, we are going to play a huge part in that. And you think about our ability to combine all types of generation. I talked about gas fire generation, but nuclear as well, which you just mentioned, And we have recently filed with the NRC an application to restart that facility and to get the operating license moving forward.

We still have a little bit more work to do in terms of finding the customer to make that project come to fruition. John, I want to jump in here, and I appreciate it. It's like Sierra Week where we have a little more time. But I wonder if this is a pivot a little bit by next, Aaron, if it is or isn't going to that. But also, here's the reality. Okay, I think America, I think America is waking up to something that we've been talking about for years on this network, which is the demand side of energy is only growing.

And we have 10 inches of snow on the ground in Milton, Florida, as of yesterday, demand for power and heat spiking people. Ultimately, they're going to care how they get it. But they want to make sure first that they do get it. Is this a pivot by next era? and do you feel like there is a reawakening in America with this country saying, my gosh, we want to be climate and carbon smart, but at the core of it, we also need to make sure the lights and the heat work. The key is that we're going to need it all.

We're going to need renewables. We're going to need battery storage. We're going to need gas fire generation. We're going to need nuclear. And why are we going to need it all? Because power demand is higher than it's ever been. We are anticipating the demand for power. to increase sixfold over the next 20 years compared to the prior 20. We haven't seen this kind of

demand for power since the Industrial Revolution. That's why Next Era plans to invest $120 billion of capital over the next four years. And it's going to come from all generation resources. But one of the points I want to make is that not all generation is created equally in terms of the ability to deliver it to market on a linear timeline. So, for example, For example, renewables can be delivered right now. They're ready right now. They can accommodate that demand today. Gas fire generation, for example, under the framework agreement we announced today,

won't be ready until 2030 or beyond at scale and then nuclear, you know, beyond that, because it's a lot of its first of a kind technology other than the restarts that we're announcing with Dwayne Arnold. So it's going to be really, really important for this country to mix those technologies. mix those technologies together. Renewables for low-cost energy because it's available today, backed up by baseload generation from gas-fire generation and nuclear that comes a little later. Can you get it, talk to us, Dwayne Arnold, this nuclear power plant in Iowa? Can you get a little deeper into that? Because I was reading your earnings call transcript. John, it was like, we're thinking about it, we're looking at it. Is this happening? Is next-air energy going to 100% restart this power

plant if, if, and I know it's, you can't control what D.C. does, if it is approved by Washington, D.C., because I do worry, and I'm going to bring up Homer Simpson, actually, the nuclear technician cartoon character, do we have the people four and five and six years later to run these plants? We do, we do. And it's going to get built as long as we get a contract that support the cost. We're optimistic we can. There's a lot of interest from data center companies around Dwayne Arnold. In terms of the people to run it, I feel very comfortable. We have a centralized operation the way we approach nuclear operations here at Next Era.

So we already have engineers and folks that do a lot of the legwork around nuclear plants that work on all of our plants that we have today. So adding another one won't actually create much of a demand and workforce other than the operators that will be located at the plant. We have a continuous operation training program. So we're very well suited to accommodate bringing Dwayne Arnold back online. Well, that would be fascinating to see if we can do that. And I have a feeling that given all the data center announcements, John,

you and your team are not going to have a problem finding a contract for all that power. John Ketchum, Chairman, President, CEO of Next Era Energy, top performer in the S&P 500 right now. John, thank you. See you soon. Very high. Thank you. Along with GE Varnova, partner for us. for a lot of this. After the break, the earnings season special, we hear it every quarter,

the new hot phrase. It's maybe inflation if you want to blame something. If you want to boost, mention AI. Now there's a new word dominating earnings calls. The reveal is next. All right, welcome back to Power Lunch and happy Friday, by the way. Well, we may not be there right now, but earlier today, the S&P 500 rather quietly hit a new record. Don't tell anybody. But even with these gains, there are minefields everywhere, investors. Here's one, maybe today. Citigroup sent this chart out to clients. More and more companies are using the T-word in their earnings calls. That T-word is tariffs. That's right. And your next guest says that is just one thing to watch in a stock market that may be priced, if not at perfection,

pretty doggone close. Peter Malook is the president and CEO of creative planning. They have got a cool $350 billion under management and frequently rated one of. If not, the top-rank financial and wealth advisory firms in the United States. Peter's also a good follow on social media. I think of tariff as another word for tax. Some people might disagree. And so if I'm hearing all these tariff and tax-like references on earnings calls, Peter, in a market that is, what, 27 times forward earnings,

I could give you a good reason to be a little nervous about stocks. Yeah, first of all, well, it's great to see you on there. That was a short-lived absence, which was expected. You're one of the best, and you're a great follower on Twitter, too. But, okay, to your question about tariffs, but basically, the market by almost every measure is very, very high valuations. In the top 10, 15%, by almost every measure. Now, that's price to perfection, but we are kind of on its face, a perfect environment. You have very low unemployment that seems very persistent no matter what we do.

You have growing earnings that seems persistent no matter what we do. You've got an AI revolution that is real and just getting started. And you've got a very pro-business administration. That is all priced in. And the thing about the markets is things don't ever stay perfect, and there's not a lot of room to move here. And tariffs, I think, is a big, real issue. A lot of people forget this. But this isn't our first rodeo with tariffs.

Trump had a little bit of a tariff war about five or six. years ago in December, and the market went down 19.6% in just a couple weeks. Most people didn't notice it was the end of the year, holidays, and it turned around so quickly when we settle our little tariff dispute with China. I don't think this go-round is going to be so easy, and I'm not sure the markets are ready for it. I think Trump is clearly posturing and being very aggressive, and we're not just talking about China now. We're talking about Canada and Mexico and Europe, but basically having an economic war with everybody. Now, you can make the case to the long run, this is better for America, and I think it is. I think what he's

doing is he's going to say we're going to put all these tariffs, actually put tariffs in place, and then get concessions and then remove the tariffs. So in the long run, it'll be fine. But brace yourself for what the markets may do in the short run. I just, we've been a long time without a correction. And when it happens, people are going to freak out. And I think that's, this would be one of many things that could trigger the correction that may be overdue. Speaking of that correction, Peter, a lot of people say, why bother waiting and worrying about exactly when it'll happen. I'm just going to stay long, you know, not, not, you know, I'm not talking about active managers, right? I'm talking about kind of when you're trying to build

well for the long run. Is there any reason to call that strategy? Just stay long and wait, wait it out. Any reason to call that into question? No, I love that, Kelly. Actually, I'm so glad you're clarifying this because I'm not suggesting anybody go to the sidelines and wait this out. There's a lot of stuff that I think can increase volatility this year from an unexpected direction. Interest rates could go to the inflation. aspects of not just tariffs, but this new immigration policy. There's all kinds of thing. I think people are just expecting up and to the right. You know, first time Trump was in office, 12 straight months of the market going up. I don't think that had ever happened before or since.

I don't see that happening here, but I'm not suggesting to stay on the sidelines. I'm suggesting there may be opportunity. This is going to be great for the long-term investor and whatever allocation you've got, focus on the long run and you may get a gift. We are able to rebalance into some weakness. You know, it's like you look around the world, Peter, and I've been critical of the German economy. It's a disaster. Their environmental record may be good, but their energy record is horrible. But that aside, it's just another proof that the stock market and the economy can often be different things because the German stock market. Yes, Kelly, I know your lead producer for the one o'clock is from Germany.

The German stock market has outperformed the S&P 500 over the last six months. It's the second best behind Slovenia, which I'm told is nearby anyway, in the world. And I bring this up because it shows that markets are not always economies. And as troubled as the German economy is, their borrowing costs are so much lower, Peter, because of it. And maybe there are better opportunities than the big cap U.S. things around the world. Yeah, I mean, if you look at Vanguard, BlackRock, Goldman, all of them at the turn of the decade. And I think at the beginning of this year, almost all of them, if not all them suggested, international would do better than U.S. Small cap would do better than large. And of course,

we know this decade last year has not been the case. And everyone's waiting for that great rotation. And you see value. I mean, by every measure, there is more value to be had overseas. But you know what? I mean, this AI revolution, it's happening almost entirely in the United States. It's happening the majority in just seven to ten stocks. Almost all of those are in the S&P 500. That's really what's created this big value. difference. And I don't see anything in the short run really changing those things, but there's no question that you should have your eggs in different baskets because the U.S. market is priced to perfection because we're in a near perfect environment. And the rest of the world is priced

not for disaster, but on the brink of disaster. And so they're all just about where they're supposed to be. And it wouldn't surprise me if we finally get this rotation, although I'm not smart enough to time that. Well, I would say thank God the stock markets up because who can afford eggs. Well, right. And Peter, I was just going to say in terms of potential headwinds, the only one I'm keeping an eye on it, I don't know how close you follow this, is Deepseek because all of these valuations built up in Nvidia and all the power stocks and all the data center and all the compute that's going into that is on the premise that we need these mega investments in order to stay at the leading edge. And if that's not true and if you can get a good result a lot less expensively, I do wonder what that means for some of the biggest stocks. Yeah, I think we've got a lot. I think there's going to be. the massive, massive, massive investment in this space and anything that we find that creates efficiency or a lower cost way to do something is going to be offset by the massive demand, the incredible revolution that 2,000 years from now, if the Earth is somehow still spinning,

they're going to be talking about this time in economics books and in civilization books. So I don't think it's possible for us to meet all of the energy demands and everything else that we're going to need efficiently. I think we're going to see improvements, but the demand is just moving faster. Yeah, you know, listen, Kelly's a lot younger than we are, Peter, but what a time to be alive, because I'll tell you what, people our age, not only got to see the birth of AI like you're talking about, but the birth of the internet, the internet literally was created. I saw it too.

I was in those rooms. Yeah, thank you. I'll age myself. Thank you very much. But you know what I mean? We got to watch the internet literally be created. I said to my husband the other day, this feels like the most exciting time to be alive. be alive since the internet was literally first coming on the scene.

Every single day, we're like, should we mess around with it? I mean, it's so fun. It's so fun. Yeah, so we could find Peter H-TTP colon backslash, Peter Malook of Creative Planning. Peter, thank you very much to appreciate that. Thank you for the kind ones, by the one. Appreciate it. Let's turn to the bond markets now with yield slightly lower today after the president said he'll demand lower rates.

And with the meeting for the Fed looming next week, Rick Santelli joining us from Chicago. We're highlighting the two-year there, Rick. Yeah, yeah, you know, I have to get to that. You know, the president demanding lower rates, you're not going to be able to get what you demand when it comes to interest rates. However, he also wants to bring down electric costs, energy costs, grid costs, and remove subsidies.

That alone could make a huge difference on inflation. So there's a definite two-sided coin here when it looks at inflation and interest rates. We need to take the other side consideration. Now, let's look at what happened with that two year. If you look at the two year, at 945 Eastern, boy, the bottom falls out. You see a lot of buying pushing yields down. What happened then? That's when we saw the services PMI moved from 56.8 to 52.8. It's preliminary jam read. So that was weaker than expected. And if you open the chart up to a week to date of tens,

you could see that, you know, on Wednesday we had a higher high than Tuesday. On Thursday, Yesterday we had a higher high than Wednesday. Today we do not have a higher yield than we did yesterday. We're breaking the pattern, so it's turning down a bit. But yet we see that two-year note yields are down on the week, suddenly a couple of basis points, 10-year or down one. So we're almost a parallel shift on the yield curve. But the big story this week is the dollar index.

Look at a week today to the dollar index. As it sits now, it's going to be closing the week, just this one week down 1.7 percent. and of open the chart up, it most likely is going to be on pace for the lowest close in six weeks. And talking about how the German stock market could do so well, well, look at their currency. They're an export economy. Germany has put back to back to back to back quarters of negative GDP. Many are betting the central bank's going to ease a whole lot, and that may be putting a life back into that German economy.

Back to you. Rick, thank you. I appreciate you mentioning. Santelli. Lots more show ahead, but next, the AI wave lifting all ships. Oracle having its best week since 2021 after the Stargate announcement and Big Tech is on deck to report next week. Analysts are desperate to see what they have to say and we'll have some details next. Welcome back to Power Lunch. I'm Kay Rooney with your CNBC news update. Thousands of anti-abortion demonstrators are in Washington, D.C. this afternoon for the 52nd

annual March for Life. President Trump pre-recorded a video for the event and Vice President J.D. Vance appeared in person for a speech calling President Trump the most pro-family, pro-life president of our lifetime. Meanwhile, the leader of Ontario, which is Canada's most populist province, said he's going to be calling for early elections because of the need for strong mandates to fight President Trump's plan to impose tariffs on Canadian exports. Doug Ford says he's going to dissolve his government next week and call for an election on Tuesday to allow for voting in February about four months earlier than planned. And Los Angeles prosecutors said this afternoon they will not charge shock rocker Marilyn

Manson following a years-long investigation into allegations of sexual assault and domestic violence. According to the L.A. District Attorney, the allegations are too old under the law, and there's not enough evidence to charge the 56-year-old whose real name is Brian Warner. Guys, back over to you. All right, Kate, thank you very much, Kate Rooney. And welcome back. That Stargate announcement earlier this week opened the floodgates for tech. Shares of Microsoft up 3%, Oracle more than 14%, and on pace for its best week since 2021. Today, Meta saying they'll begin testing AI-powered ads and threads, up 2%, a little less now on that news. That stock has tripled in five years. It's also set to report next week, along with Apple, Intel, and others. Which of these could get the next AI-fueled boost?

Joining us to discuss that, Stefan Sloinski is the global head of software research at BNP Pariba. All right, Stefan, you stick with the obvious. You go for the not so obvious under the radar names. Welcome. What do you do? Yeah, hi, Kelly. Thanks for having me. So, yeah, big week coming up next week to focus on fundamentals.

I think the big names are still going to be quite dominant. The main one, of course, is going to be Microsoft. So, you know, Meta announced their big Kappex plan for this year, so they stole a little bit of their own thunder from next week. So I think the focus is going to be on Microsoft next week. And especially that Microsoft Azure cloud computing business, can they guide for acceleration? You know, will that help continue this AI trade? We think it will.

So, you know, I think a lot of investors in these names are torn between the going, okay, I'm just sticking with the MAG7, this is the only sure thing in the market, and between thinking, nope, I'm going to get in, and it's going to be the peak, and I've missed the whole run, and it's time to rotate into energy. Yeah, I think when you look at the larger stocks, the MAG7, but, you know, within that, if you look at Microsoft, you look at Google, you look at meta, you know, you still have quite reasonable valuations of some of them. And especially on the enterprise side, you could see revenue growth accelerating here.

So I mentioned Microsoft with Azure. You know, they should do 32% growth in that fiscal Q2 and maybe guide for 33, 34%. So we're getting that acceleration, lucky to come through as capacity comes online. You also have Microsoft 365 copilot, their enterprise product there in the office suite. Again, feedback's been a bit mixed, but we think they come out with data that show that, you know, you may have already sold 10 million seats of co-pilot, where, again, that's a business. gen AI monetization. I think the interesting and exciting thing, especially for Microsoft with that Stargate announcement you referred to, we could see CappX growth really significantly slow.

Right. So we could be reaching that point on Microsoft where revenue growth is accelerating, CAPX growth is slowing, and investors can get more confident around those returns. Yeah, which again might be a really important turning point. So you like Microsoft alphabet, Oracle, SAP, all of those names. Who are you underperform on in your space? And why? We're a bit more cautious on meta, for example. So I think it'll be a more difficult year for meta. They announced the 65 or 60 to 65 billion of CAPEX coming this next year. That's a 60% increase at the high end.

So we're seeing CAPX really ballooning there. They don't have the monetization mechanisms that Google and Amazon or Microsoft does. So meta is still 98% reliant on advertising. So they're building out their Lama model. They're building out meta AI, but the monetization is still uncertain. And then finally, you have revenue growth slowing. So in Q4, maybe 17%, but we could be slowing down into the low teens as we go into 2025. So again, you don't have those re-accelerations of their enterprise cloud computing businesses like you'll see at Google or Amazon.

You also have less events this year that are going to help advertising. So we think the setup's a little bit tricky after a very impressive run over the last few years for META. So we all underperform on that one heading into 2025. Well, we always like hearing the contrarian take because everyone else sees it just, you know, only going higher. Stefan, thanks for joining us. It'll be a fun and busy week next week. Stefan Sluinsky with BNP.

Appreciate it. All right, on deck, why a possible plan by President Trump has the Bitcoin Bulls very happy right now. All right, welcome back to Power Lunch. Bitcoin is booming again. It is not only back above $105,000, it is near $106,000. One reason may be this.

President Trump signing an executive, order that many believe will clear the way for the creation of a national Bitcoin stockpile, kind of like a strategic petroleum reserve, except that's a strategic crypto reserve. Mackenzie Sagalos is down in D.C. She's been going to all the hot events down there around Bitcoin. There's definitely a buzz around crypto with President Trump. There certainly is, Brian, and Donald Trump has been delivering on a lot of the promises that he made to the crypto industry on the campaign. trail. The latest is a sweeping executive order Thursday that promotes digital asset adoption

in the U.S. The centerpiece is a new industry working group, which will evaluate the potential of taking cryptocurrency seized by the government and holding it in a national stockpile. Now, also in the order protecting Bitcoin miners and software developers from what the president called persecution and promoting U.S. dollar-pegged stable coins while banning a digital dollar from the Fed. Still, the moves fell short of enacting some of the industry's biggest wish list items, like directing the U.S. to start buying Bitcoin directly and holding it in a reserve. There are also still questions about how much this order can do without the buy-in of Congress. Meantime, though, we've seen a few big changes at the SEC this week late yesterday.

It withdrew a controversial accounting rule that some said made institutional crypto adoption more difficult. Already, the CEOs of Wall Street's biggest banks are signaling a legitimate interest in expanding their digital offerings, Brian. All right, you went to all the hot parties that I didn't get invited to. Kelly probably did. I did not. You were there. So I'm going to put you on the spot, Mac. What are people saying? I know, listen, it's obviously Bitcoin is $106,000, whatever it is now. What are people saying behind the scenes? You talk to all of them. What's their real vibe? So on Friday on the first ever crypto inaugural ball where you weren't just seeing the heads of all the crypto exchanges and Bitcoin mining firms coming into town, but also the Speaker of the House, multiple senators and congressmen, Trump's picks to lead Treasury commerce. And then even Paul Atkins was reportedly getting drinks with a crypto firm ahead of that crypto ball. And what people were collectively talking about was enthusiasm around seeing hard and fast rules on crypto. And even though this executive order was perhaps light on certain items on the wish list, you know, it stopped short of creating this sort of strategic crypto stockpile.

What it did do was create this working group. So a lot of people over the weekend stayed in town to have conversations with Trump's new team to talk about who might be on this working group, what would be realistic. The EO was really just the first step. And as I said, Brian, so much action out of the SEC just this week, that rollback of SAB-121, that niche accounting rule, that's a game changer for banks being able to custody cryptocurrency, a lot of pent-up demand there. That's a great point.

McKenzie, thanks. Appreciate it. Mackenzie Sagalos. Looking fresh, by the way, after a fun-filled weekend. I guess it was several. We didn't get, where's our invites? Maybe next, yeah. Texas Instruments is not exactly a chip off the old block.

Not every semi-stock can be Nvidia. It's taking a big dip on weak guidance. We'll trade that name and others in three-stock lunch. It's time for today's three-stock lunch. where we do three different trades, three stock stories, why they matter to you. Here to do the honors is Michael Landsberg, CIO at Landsberg Private Wealth Management.

Michael, welcome. Let's start with Verizon. They're actually hired today after posting their strongest quarterly wireless subscriber growth than nearly five years, and they only get a one and a half percent boost. What do you do with the stock? I don't like the stock at all.

I mean, I look back 2007, the iPhone came out. 2000, 25, we got the iPhone 16. Verizon stock price is the same. 40 bucks then, 40 bucks now. It's just not a stock that we want to own. It's kind of like your grandparents' dividend stock. I don't think it's a name that you want to keep. If you have it, sell it.

If you don't, don't own it. It's crazy. They spend all this money. They do all these things for us, and we're just like, ah, forget you. All right. So what about Texas Instruments? They're down 7% today for the worst day in three years.

After disappointing guidance below estimates, what ails this one, and would you pick it up here? The issue really is they're not in the cool part of tech. I mean, semiconductors, as you talked about before, generative AI is kind of where the place to be is, and that's where all the growth is. They have very little exposure there.

The other issue I have is the multiple on Texas Instruments is not cheap. So I get if you don't have a lot of AI exposure, but I shouldn't be paying over 30 times for next year's earnings when earnings aren't going to grow much. There's better places to be in semi with exposure to AI that isn't much more expensive than this. So that's where I'd be. Obviously, it's down for a good reason

because margins aren't there, but I'd stay away. All right. So a sell and a cell. so this one better be a buy. Oh, and it's Twilio of 20% today. Biggest gain since 2020. They had better than expected forecast ahead of their earnings for this name. We don't even talk about it that much. What do you do here? I'm going to give it a hold, and here's why. The stock was 400 bucks in 2021, and they've gotten kind of crushed. The issue has never been revenue growth. They've had revenue growth for 11 straight years. It just seems like management's never talked about making any money. It's never been a profitable.

This time, actually, we're hearing discussions of profitability and margins. And I think that's going to be exciting about the stock and where it can go. We still think you can wait a quarter or two to make sure that it's actually real action, not just talk. But obviously, at 140, 137, it's got a lot of room before it gets back to 392. So I think you can wait a quarter or two. But if it continues to do well, margins get better. I think it's something you could pick up down the route. Anything you're picking up ahead of earnings next week, the big names, the biggies?

I think the biggies. Most people have a lot of exposure to the biggies. I mean, so when we look at some of those names, I think you've got those. I mean, we've been exciting. What's been happening with bank earnings has been a good tell. And I think continue, big tech continues to be the place to be. I think you can broaden your exposure, not just to the mag seven, but some of those other names, I think have been driving this rally more recently.

Michael, appreciate it. Michael Lansberg, Bennett, Private Well. All right, well, hey, I'm off Monday for a speaking thing. That's not loud. I'm giving a speech. Can we carry it live? No. Thanks for watching, everyone.

I'll see you Tuesday. Good. Closing bell starts right now.