Power Lunch - S&P 500 hits session lows ahead of new auto tariff announcement 3/26/25

Episode Date: March 26, 2025

Stocks are dipping lower again today, led by the tech sector, as trade tariff tensions rear their head again. We’ll tell you all you need to know . 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 alongside Kelly Evans. I'm Brian Sullivan's stock sliding again, but is now the time to load up on some names that a legend loves. Mario Gabelli is here in-house and he's bringing stock picks. Plus, Tim Cook Hearts Asia as he visits yet another country and can Big Solar be saved by the Republicans? Well, look at that surprise story. We've talked about how Texas is the Saudi Arabia of wind. Crazier things have happened. Let's start with a check on the major average.

as we are selling off into the afternoon here on news that the president will be announcing auto tariffs at 4 p.m. The Dow's down about 174, giving up a 200 plus point gain earlier on. S&Ps down 1.2%. And the NASDAQ, that's again where we've seen a lot of the selling pressure in big tech today. The NASDAQ's down 2%. InVIDIA, the chip names, those are also kind of ground zero for the selling pressure. Nvidia down more than 6%. Super micro down more than 8.

Broadcom and Intel are lower as well. a look as we go across. I mean, you can even look at bond yields. Those have been moving higher today. But the energy stocks that we associate with AI are also getting hard like Aklo Vistra and Constellation, Bri. All right. So you've heard about quiet quitting. Well, what about quietly cutting? More Wall Street strategists cutting their forecast for the macro market. Barkley's today. Slicing their S&P 500 target to 5,900 from 6600. That joins a still small but growing. list of companies. There they are that have cut their target. Now we have to

note the 5,900 target is still above where the S&P 500 is now. But do we need to worry about some of these cuts or will Wall Street get it really, really wrong like it largely has the last couple of years?

Let's ask that and more of a legend. Mario Gobelli is chair and CEO of Gamco investors. He has forgotten more about the markets than most of us will ever know, Mario, great to have you once. That's not true, but I'm delighted to be here, accumulated and compounded knowledge that both of you had is exciting and exceptional.

So what's your question? Well, you got 600 pieces of yellow paper. This is going to be the more paper, the better. Let's do this. Number one, do you listen to these strategists? I mean, they're great people, they're friends that come on the show. But let's be clear, the last two years, they've been pretty wildly wrong. Well, that's not.

Whatever one wants to talk about, they want to talk about. But within that framework, when I started doing research as a cell site analyst, I covered industry. So I'd go visit the companies, do the spreadsheets, and so on. The Dow Jones was 1,000. 17 years later, it was 1,000, and you were able to make a lot of money. And during that period, there were cycles like the nifty 50, blah, blah, blah. And that's life. 40 years from now, Brian, when you and I are here with Kelly, the market will be –

Come on, you'll be here. Stop. Don't be a short term. The market will be over a million dollars, compounding at about 8 or 9 percent. That's less than it has been in the last 100 years. So what do we do? What do I worry about? My wall of worry, like anyone on Wall Street should have, is the debt and the deficit of the United States, and how are we dealing with that?

The global marketplace is $115 trillion. The U.S. is $25 trillion of that. Our debt deficit. Last year, $7 trillion we spent. We took in $5. That's $2 trillion. That's $7.7.7. So, yeah, those are the things that our clients worry about.

My job, every day, every moment, 24 hours a day, and from five to nine, five in the morning till nine and night, we try to figure out ways to preserve the wealth of our tax, private wealth clients, and how to enhance those in risk-adjusted returns after tax. So those are the things we do. Meanwhile, there's a lot to buy. Well, and not to get overly stock-specific overly quickly, but it's a frustrating market for people right now because the big tech, the mag seven stuff isn't working. What is working? Well, think of it a different way. If you're a Momo and I'll go into Quant, and in,

five years ago, you were sitting at home playing Grand Theft Auto No. 5, waiting for number six. All of a sudden, Robin Hood says, once you trade stocks, you know, you become a lot short-term. Clearly short-term volatility. From my point of view, it's interesting. Independent of that, independent of that, what does the world look like and where are the shifts? for one of the things that we have to worry about or think about is taxes. What does it mean for clients? What does it mean for corporations? So start with clients.

Can I get rid of carried interest? For example, I'm a student and I've got a loan. Why shouldn't I be able to use pre-tax operating earnings, W-2 earnings to pay it off as opposed to after-tax earnings? Those are the kinds of things you think about. And in addition to that, salt taxes. You own a home in Long Island in the New York area, and you're paying real estate taxes non-deductible.

Well, how do we help those individuals? How do we help someone, if you're not tax tips, what about the team in the kitchen? What about the team in the house care? Did they participate in the tipping program? So then we have corporate taxes. What do I like to see? Clearly, keep the corporate tax rate at 21%.

However, allow companies to expense their equipment because this will stimulate and make it clear. I'm a farmer. I got 20,000 acres. There's some uncertainty about exports of my products or imports from Brazil or exports to China. I can then buy a piece of equipment that solves my labor problem, and I can write it off in year one. So those are the kinds of things we think about. You know, one of the oldest companies of the world is kind of up there your way. It's in Connecticut. You're not there, but it's close. Crane Corporation founded 1855. So one of the oldest companies in America and even probably Kelly and I couldn't tell you two things about them much,

except they make stuff, process, flow, technology, whatever the hell that is. Aerospace and Defense, this is a Gabli favorite. Well, look, if you read an annual report as an analyst, then you can see the details, what gross margins, cost of good soul, SGA, they lay it out extremely well, like GATX does, Amatech does it, with Dan Capico, Max Mitchell does a great job at Crane.

GATX, Bob Lyons, is coming into our whole effect. Sony, another one like that, So what is the key variables? Sony, as an example, the stock split differently. It's 6.2 billion shares out. The stock's 25 U.S. They're going to earn a buck 10 for the year ending March 31st, 2025, a buck change. But what do they benefit from?

Grand Deft Auto No. 6. When they do their gaming business, which is PlayStation against Xbox, they'll get the tailwind. They also have music. When Spotify raises prices, they get a piece of that. So those businesses are good, and they're spending off their financial services. And those shares are 47% over the past year. That doesn't, you know, you still think they have a ways to go. They haven't priced in all the GTA hype and all of that?

GTA, like my guy's, you know, Assassin's Creed number 14, Kelly. The guy, one of my analysts, plays the game to see it. It's like, you know, it's helping Spotify. Right, to see what it's like. Yeah, this is somebody does during work hours. Well, let's talk about games. Today, today, I want you to buy. one share of the Atlanta Braves for, instead of an Easter present for someone, buy two shares,

$80. Okay, the stock is $43. Today, Forbes and Sportico came out with their analysis of baseball. What are the values? Obviously, everybody's excited because of what the Celtics went for. Atlanta Braves, 62 million shares, B-A-T-R-A-S. The TV aspect of this. You look at even the NBA, you say, okay, you got the NFL.

you got the big money flowing in. Baseball, they just had this ESPN opportunity that I believe they didn't take up, right? The question is going to be, how disseminated are these games and who's, you know, is there a concern there? There's always a concern of everything, but not one that's at the margin, the most dominant factor, because there's 32 games.

The MLB is allowing 30% to be. Why bother having a piece of a company that a GP is selling you an LP interest? You can buy it direct. You can buy it at $42 for the voting stock. There's only $10 million votes. You could be the owner that considered a table with a vote. So there's one here in New York, not too far from here.

Oh, we knew you were going. You know I was going to Madison Square going. But the Celtics, Wick, sold the Celtics for $6.1 billion. A guy nobody's ever heard of, which is... Oh, come on, stop. I was up in Rhode Island yesterday, and 80% of the students raised their hands, and they knew who he was. independent, and they knew who Jason Tatum was, and they knew that it was injured.

They better know who Tatum is. Yeah, well, like, too. But, Jaylen, I mean, basically, right now the stocks, 24 million shares, the Knicks alone are worth, according to the recent trades, over $7 billion. All you have to do is get the crazies in New York, New York City, not the crazy, whatever they're calling,

politicians in New York City politics. Crazy is fine. Well, why would you want them to move the garden? give them another 10 years. And if they can't win the NBA, then you can move them. I'm more obsessed with whether these have been good investments, right? Because a lot of people are going to get into sports now, especially there's so many different proposals about how to, you know, how to do this over time.

And you're right. I mean, the Braves have been decent over a five-year period. MSGS, I don't know, it's a little bit more volatile. Well, there's no question that Jimmy Dolan, the family owns all of the 4 million voting shares. The answer is, suppose he sells 10 percent and get to. $700 million and then pays that out as a distribution. He's not going to do it right now. Suppose it's doing some heavy lifting there.

Again, tomorrow morning. We'll see what... CNBC values NBA teams. We'll see where that comes in. Because everything's got to go up now. Because that's $6.1 billion sale for the... No, no, they already valued these teams. By the way, 6-1 is low because you throw in some extra stuff.

Whatever. The point is you don't need to do it through an intermediary. But going back... Okay, Max Mitchell at Crane did a great job. He split the company. He provided financial engineering. They're going to earn over $6 a share in the current year, and they have good cash flow. The point is there are a lot of these little companies, you know, relative to Nvidia, you know, market cap two or $300 million.

Like they are very limited in CAPEX. They're very smart in what they're doing. They understand their business, and it's a global model. Take GATX, for example, $35 million shares, the stock's $150 plus or minus. and basically they have rail equipment in the United States in Europe, in India, and they own jet engines that they're leasing through Rolls-Royce partnership and some they own on their own. So there's a lot, and they're very smart.

They've had this knowledge for, like you pointed out in the case of Cray, over 100 years. This one here has also been in business that long. I love your pivot, though. Only Mario Gablee could pivot. You've pivoted from GTA Grand Deft Auto to GATX, which is the Chicago-based rail company. out of a discussion about the If you're on the radio, you're driving, you're like, I don't know what's going on.

We went for the something. That doesn't matter. I pivot quickly. To rails to whatever. I follow, listen, we have 35 analysts. Each one follows 40 companies. That's 1,400. Yesterday, Brian, 47 annual reports came in.

I want to have spreadsheets in them, and I want to read most of them to glance through the CEO. I want to see the Delta of Change. We work, as I said, from 5 in the morning to 9 at night, I get tired. And also, I want to watch Yellowstone. on and, you know, landman.

Landman. Brian's going to watch Peacock. Brian's going to groan. Oh, I got to pray the church. I got to ask you about Paramount. Okay. What's the latest with the side? Because we know, talking about these media companies, especially these sagas, this has been

going on for years. No, it's only, come on. It's basically, look, Paramount is the following. Because of what COVID, if you ran a movie theater, you had a problem. in 2023 because of the extreme actors and writers guild you had a problem. So she leveraged up, Sherry leveraged up the company and ran into some financial challenges. The company cut the dividend from 95 cents to 20 cents, and that further exacerbated the problem. She probably was at Sun Valley in July of 2023 and said help.

So now we have two individuals that are bidding for the company that have technical skill sets, can move them into an advanced rate in terms of dealing with the streaming business. They've offered 15 a share. It's still trading under 12. No, let's do it a different way. There's 40 million voting shares. My clients, whatever they buy, are always buying the voting shares. So we own five of the 10 million shares that she doesn't own, that National Amusement doesn't own. All we want to know is what price did she get. And that's what we're digging at through certain dynamics in the courts.

Some people, $15 for her. That's not the publicly listed stock. It's public listed. But it's not the same share class that Kelly's talking about. No, she's talking about the non-voting stock gets $15 a share and gets one point of, and they get probably 55% of the stock off. The point is, what is the stub after the tender offer? What's that going to sell for? That's arbitrage 101.

The arbitrage understand that. From my end, it's a good deal. All we want is what we call Operation Fishbowl. put in the world to see what national amusement is getting for the voting stock and what they're getting for their shares of non-voting. They have 30 million of voting, 30 million non-voting. But when you multiply 650 million shares, take your price of 15, that's only $10 billion, and that's 12 billion.

In New York language, that's not a big number. Netflix is selling at a $400 billion market cap. Exactly, exactly. So when you're looking at content between Zazlov and Warner Brothers and the content they have in a library in Paramount and the ability to create content like Yellowstone, like Landman, and what can they do with that and how do they license it? That's very creative. And now you bring in someone that understands technology. So those are the pluses that you see. So I know we have to go. Let's just kind of broaden it back out and I appreciate you touching on that.

But so you say if you're worried about what the market's going to do right now, get out of the market. Kind of like Brian was saying yesterday. Like you're not. I didn't say that. You're not. Luke said that. Meaning this is the kind of environment that you say, you just have to, you know, find your bets and, you know, not worry overly about tariffs or whatever else is going to be. Okay, here's my point of view. If I'm running against an index or I'm they trading, those are different issues. If I'm worried about, I pay a 39.7% tax in Florida on my long-term capital gains versus 23.8, I like things I can make money on a couple of years from now. And like Ben Franklin, you know, dial taxes and death are the things we always are aware that are going to happen. But independent of that, how do you make and keep money?

How do I preserve wealth and keep it for the person that's listening to you? Which is more about the policymaking that the Joke has to get done this yet. You think that's almost more important or probably as important as whatever is going to happen with tariffs. Well, tariffs are important. Today, for example, at 4 o'clock, if I'm Trump, I'm going to exempt parts that are made in Mexico by not parts imported from China into Mexico. Because every company that we follow, and I've been following the auto industry for a long period of time, you cannot substitute and make parts quickly. You need a five years between labor, technology, plants, locations.

So if you exclude parts, that's one thing. We sell 16 million cars. Of those amounts sold, 10 or 12 million are made, a million to is Mexico. As long as they're made in Mexico, and those companies are owned by American companies. If you take the S&P 500, 40 percent of revenues, and I don't know the percentage of, earnings, American companies. So you want him to just make sure that he exempts Mexico? Parts. Yeah. Cards. There's 1.2 million cars coming to the United States.

Two million. Parts coming from Mexico, not parts of Mexico. Not Puebla. Listen, I'd rather that he takes over C&P. He's going to take over this part of the world that we live in. Now, I had to forget. He's taking over the news cycle. We know he's taking over the news cycle. Mara Gubelli. Thank you very much.

The way to get rich is you own Crane, Sony, GATX, Madison Square Garden? A bunch of other stocks. But buy a baseball team. Buy a baseball team today. I don't like the Braves. That's your problem. They're playing the Padres. I can't do it.

You probably didn't even do your madman's bracket. You probably been kicked out initially. I'm in second place. Good for you. Doing well. You know why? NIL is ruining college sports. Only the top seeds are going to advance.

Exactly. Because that's where all the money is. Bet on the top seeds. they went like 52 and 6 straight up. I think it was some number like that in the first two rounds of the playoffs. College basketball has gotten boring, but we're going to take a, we'll get you back on and talk about that, Mr. Fordham, the RAM, soon. Mario, thanks. Appreciate it.

Hey, great to be with you guys. Thank you for having me. Wonderful. Lots more show to come. But first, a tech tit for tat. The U.S. now blacklisting over 50 Chinese companies as China potentially ramps up chip regulations. That's got Nvidia caught in the middle down 6% today. after this.

The advice I would give my younger self is when you are often told that life is a marathon and not a sprint, you don't really have the context to understand the meaning of that. For me, over time, what I've realized is that you always have a clean slate. You can always reinvent yourself. Don't look so much for perfection at that moment in time, but understand that your careers and your life have a very long history. Welcome back to Power Lodge as NVIDIA shares are down 6% today. That's putting pressure on the NASDAQ and the broader markets.

New energy efficiency rules in China could disqualify certain Nvidia chips from being used in data centers there. Meanwhile, the U.S. blacklisting 50 Chinese companies from receiving American chips and saying they'll crack down on smuggling. Or chips said to other countries that are making their way into China. Let's bring in DeWordrick McNeil. He's managing director and senior policy analysts at Longview Global and a CNBC contributor. DeWordrick investors are naturally. jittery because this is a huge market for NVIDIA chips, both in terms of what we actually know and how they might be getting there. So how big a deal is today's news do you think?

Well, I think it's certainly something that investors should keep an eye on. What it says, Kelly, all of these actions, the Chinese actions as well as the ones announced earlier this week by the U.S. What it says is that the chip war, Kelly, is still on and that the Trump administration still sees a need to continue with what I'm calling some policy continuity with the Biden administration to try and prevent China's chip industry from developing the maturation and to try and keep a performance delta between what the U.S. is doing and China's doing. But China is fighting back aggressively, as we've seen with the Deep Seek story here over the last several weeks, Kelly.

So is this all kind of posturing and the demand will all? ultimately be there and NVIDIA will have a lot of opportunities there in the long run? Or do investors need to rethink just how big their market will be? Yeah, look, I think this is about a $17 billion dollar market as it currently stands for NVIDIA, but I would not expect for that type of market dominance to remain over time.

The Chinese don't want it. The Chinese may not need it. They have certainly figured out a way we think to do some of this as just good. enough. So less energy, less compute power, but still pretty efficient for its AI needs, Kelly. So I think the future here is not that long. And so I do think investors should start to think about that. Do you think DeWordwick that Deep Seek is entirely, it's not real, but as they say it is? Or do you think there might be a little, you know, fibbing going on here about the cost and

capabilities? Well, I think that's certainly a question, Brian. I'll tell you something else that's being discussed. Now, this could just be wounded eco, but if you talk to a lot of people here in Washington, the view is that there was some technology diffusion that went into what we see here. So taking some of the U.S. advanced chips that have been moved through these third party loopholes in place to get to some of those achievements. And this latest action by the U.S. is intended to shut down that backdoor. So I think the debate is still out, but certainly I think we are at a place where Deep Seek is real, regardless of how they got there, and I think it's going to challenge the West for sure.

DeWorgiarduk, what other risks do you see more broadly for U.S. firms in China, if any? I mean, look at the summit that was just held to kind of court global leaders and Tim Cook was there. Yeah, look, I think there are a lot of risk still on the security side. Again, I come back to this announcement this week. The policy continuity here, I think, may shock a lot of people, but there are a lot of people in the Trump administration who still believe. that the technology war, the chip war, which was started by Biden, could be ramped up with Trump

because they still want to prevent this technology from being used on the battlefield, Kelly, where a few nanometers can make all the difference for targeting, communication, and autonomous decision-making in the battle space. So I think this space is going to remain a hot and contested space for a very long time, and investors need to be aware of that. All right. DeWhorjean, thanks so much for joining us today. Appreciate it.

Thank you, Kelly. DeWardric McNeil. All right, coming up, how a few smaller stocks might give you big-time returns. All right, welcome back to power lunch on a down day for the market, Dow Industrials. Not down that much. It's the NASDAQ, again, that is outsized. The NASDAQ is down 351 points or just under 2%. A lot of the AI-related stocks, Invisi, invidias, the super micros, and whatever.

They are down 5, 7, or you. even 9% right now, just another haircut. All right, let's get now out of Chicago and Rick Santelli for a look at how bonds are trading on the back of a down day for most stocks. Rick. Yeah, you know, we started out this morning at 8.30 Eastern with what I thought was a pretty solid durable goods report. The headline number, every aspect of the report was stronger except for a cap of good

orders, non-defense, X, Air. It was down 310s. That's the only surprise. But if you look at last month, it was upgraded up 9 tenths, which was a two-year best. So I think many investors and analysts, Brian, are getting awfully picky trying to pick out tariff activity when it's really difficult to see in some of the hard data like durable goods. Now, if you look at it 24-hour chart of tens, what you should see is the last uptick and rates on the right side there. That was a five-year auction that had middling demand.

And post that, the yields moving down, that really is buying brought in, pushing yields down based on stocks being on the lows of the day, nervous about tariffs. And if you look at a chart going back to last Thursday, we had stacking. Fridays high was higher than Thursdays, Monday's higher than Fridays, yesterday's higher than Mondays. But today it looks like we're going to break that pattern. Very important when you have stacking that turns the other way. We're losing a bit of momentum to upper higher yields. And if you look at a December 1st chart of twos, tens, and dollar all on it, what you really should notice is after the early March lows that we had that went back to December, what we see now is really kind of a range. So even though there's all this uncertainty, the interest rate side and the dollars effect by interest rates really is consolidating much better.

And maybe some of that is due to the volatility in equities. Kelly, back to you. Rick, thank you very much. I feel like this is an important story. Keep an eye on these bond yields and how they're behaving to the upside. Up next, the president vowed to cut Biden's green energy tax credits, but, and this is kind of what we were just talking about, some Republicans may be pushing back.

Details on that story next. Welcome back to Power Lunch. I'm Pippa Stevens with your CNBC News Update. The Secretary General of NATO, Mark Ruta, said this afternoon, four U.S. soldiers who went missing in Lithuania have died. He didn't provide any further details. The U.S. Army said in a statement, the soldiers have been conducting tactical training near Belarus.

Lithuania's military added a tract vehicle had gone missing. The Trump administration asked the Supreme Court today to allow it to cut hundreds of millions of dollars in funding for teacher training. The move is part of the president's crackdown on diversity, equity, and inclusion initiatives. Eight Democratic-led states have challenged the policy, which has cut off $600 million in,

funds that the Trump administration says were promoting divisive policies. And the New York Fed estimates nearly 10 million student loan borrowers became passed due on their bills after COVID-era payment programs expired. By the end of the off-ramp period, researchers say borrowers racked up more than $250 billion in delinquent debt. Kelly, back to you. All right, thank you very much, Pippa. The president has vowed to end the tax credit for some green energy sectors. The move could cost thousands of jobs, though, and now there is a push from Republicans to save these tax credits and the jobs that come with them. Emily Wilkins is here with more. Hi, Emily. Hey, Kelly. Well, yeah, it's really one of the biggest debates on the Hill right now in terms of taxes.

What is going to happen with these green energy tax credits? And companies are already swarming on Capitol Hill, asking Republicans to protect select credits that have already led to, as you said, thousands of jobs and hundreds of billions in investment. Ragu Ballor, the co-founder of Solar Energy Company Enphase, is on the hill and he's making his case with lawmakers. We caught up with him yesterday. Retaining these tax credits is extremely important because it's an opportunity here where not only are we creating all these jobs,

especially local jobs in the communities, high technology manufacturing jobs, but we are also exporting product. outside the United States. And that is a core element of what I consider to be American energy dominance. And that opportunity should not be missed. N-phase's manufacturing was overseas just a few years ago. But an expanded production credit for green energy sources has allowed Belor to move N-phase operations to Texas and South Carolina,

employing 1,200 Americans. But if the tax credits go away, the jobs might as well. But now, a growing number. number of Republicans are pushing to protect certain of these tax credits, 21 Republicans signed on to a letter asking the head of the tax writing committee to protect certain credits that have led to investments in their districts. One of the signers, Congressman Dave Joyce, said it would be unfair to companies that have already hired and planned for the credits to have the rug pulled out from under them. We're going to use every arrow in our quiver

for energy production, then certainly we shouldn't debilitate those that have already invested in some systems. Other lawmakers have told me that while they want to keep the jobs that green energy provides, they are going to have to find the cuts somewhere to help cover the cost of Trump's tax, energy, defense, and border agenda bill. Lawmakers are meeting over the next few weeks to hash out the details. Guys? But I think it's little cases like this, Emily, that are why bond yields are doing what they're doing.

Because everyone's basically trying to figure out how not to cut back on all of this deficit spending. in little ways here and there. And so whatever the headlines may be with Doge, I think the much bigger concern that the bond market is sniffing out is what if we're going to continue to have 6% plus deficits for the foreseeable future? You know, I think that was a full vehement agreement with that excellent point.

Emily, thanks very much. That was it. All right, well, why don't we stay on this topic of energy because investors are bullish or who were bullish on wind and solar, certainly closely watching any news around what Emily just talked about in the Eflation Reduction Act, tax credits, and more. And your next guest says that while it is a rather cloudy time, there is still plenty of sun left to shine, particularly on some big solar stocks. Corinne Blanchard is clean tech analyst at Deutsche Bank, a must read in the space on the street.

Corinne, good to have you back on the program. I know you can't know what D.C. is going to do. So how do you model what you think D.C. might do? Thanks, Brian. Thank you for having me back. I think it's a valid concern for investor. I think we're very likely to hear a lot of talks and a lot of news around potential regulatory changes

over the coming months and probably have some more clarity coming over the summer. That's definitely an overhang for most investors looking at the space now. And I think the way to approach it is to look at ITC from one side and I'm talking about the 30% ITC and then looking at 45x tax credit. for First Solar. And we are more positive or we believe there is a higher likelihood to see the

45x production tax credit to remain in place. And therefore, we are a little bit more bullish on first solar versus the rest of the space here at Deutsche Bank. Yeah, and it's well said. And I've kind of written the same thing, Corin, because I do a lot with energy, which the idea you heard the Ohio Congressman tell Emily Wilkins exactly this. If you want to build a new housing development outside of Phoenix or Texas or whatever, you're not building a nuclear plant for the next 20 years. You're probably not building a natural gas fired power plant for the next five to 10 years. Solar is your option. Costs are coming down. And there's really only one big utility scale solar company in the United States. That is Phoenix based for solar. Do they kind of have the run of things

over everybody else right now in the solar space? I think if you're looking for a US-based company producing solar panel, first solar is two, right? Most of the rest of the industry is based in China. So I think that's the name that investors are looking at. Look, I think there is a number of clouds or a number of overhang, whatever you want to call it, that are waiting on the stock right now. And obviously, again, the biggest one being that 45 weeks credit. But I think overall, once we get clarity over this,

I think that should help investors to reenter the name, reenter the space with a renew stance. And very likely, a little bit more positive that's what we have heard over the last several months. Well, it's been a tough time for a lot of reasons, not just politics. There's been a lot of different things in the space that you cover. Give our audience and listeners a reason to be optimistic about First Solar or anybody else that you like at Deutsche Bank, Corinne,

because it has been a very rough last two years for most of these names. Yes, I would agree. And we launched coverage two and a half years ago. And I think you had me on your segment. And it was a little bit easier. And then, you know, I think the last 18 months went off, right? Look, I think solar is a very untapped or clean tech overall is a very untapped market in the U.S. So I think that's what you're trying to play here.

Yes, you're going to have bumps along the road. And then obviously the regulatory framework is your number one advantage or disadvantage, depending on how the government wants to play it out. But I think the fact that the market is so on top, there is a lot of potential for growth, be it first solar, be it maybe on the short term, Sun Run, which we believe could be something on the short term. I think there is few players. And I would just say for investors, be selective, but don't be afraid to look at the space.

Yeah, and with Sun Run and Enphase, who we just heard from, there's also a segment to be had about California's rules and regulations, but that's for another segment. We won't put you on the spot. Corinne Blanchard of Deutsche Bank. Don't worry. Thank you very much. Coming up, our trader will offer some under the radar ways to play the health care sector.

Be right back on Power Lunch. Welcome back. We have a news alert on Open AI. Kate Rooney is back. Hi, Kate. Hi, Kelly. Yeah, so I'm hearing that Open AI expects to more than triple its revenue this year to $12.7 billion. It's being fueled by the paid AI software it offers like ChatGPT. This is according to a person familiar with that growth and revenue rate.

Bloomberg did first report this one, no comment from OpenAI. That number, that $12.7 billion number, it's up from about $3.7 billion in annual revenue. We're hearing last year the company from this source telling me they do expect to more than double that next year to more than $29 billion, despite that revenue jump, it's not translating to profits yet. Open AI, according to this source, does not expect to be cash flow positive until 2029. That year, it's projecting revenue is going to top 125 billion. It does show some traction in the business, subscription offerings on both the

consumer and business, kind of enterprise side of the business, but costs here are very high. You got data centers, chips, talent, all of which are key to building one of the leading AI systems. I'm also hearing the company is still in discussions right now to raise as much. as $40 billion in private markets in a funding round. This would be led by SoftBank that would value the company roughly $300 billion at that price tag. If you think about a revenue, based on what we're hearing today, it would be about 23 times revenue. It is high for startups, but it does suggest here the investors think it's going to keep growing at these rates and potentially justify that price tag guys. Are these early investors?

Are they lighting cigars with hundreds at this point? Like, what exactly is happening? the money, every time you come on, there's another $20 billion. 20 billion. The numbers are just getting crazy big. I mean, a billion dollar round, I feel like our expectations have changed. But keep in context, I mentioned SoftBank. This is Mossassan.

This is somebody who's known for taking massive bets, pouring billions into startups, whether it's worked or not, but one of the most successful tech investors, but absolutely an optimist. And then you've got Sam Altman, the CEO of OpenAI, a prolific fundraiser, and able to really sell investors. on the idea that this growth is going to keep up and that AI is going to change the world. We will see, though, if these numbers are justified.

We pay them 20 bucks a month. That's true. Well, there you go. That does it. That's all there you. I said 20 billion. We won't. We refused for 10 years to pay for Netflix. We're happy to pay them 20 bucks a month for the usage.

And they still can't turn a profit. I'm going to make a prediction that the Evans Chemmy clan will be a subject of a reality show someday soon on the new Spinco. Up next, some big ideas to play in small caps with our friend, the great Amy Zack. Welcome back. It's that time. Three-stock lunch. We're going to do things a little differently today. Our next guest brings us three under the radar names in the healthcare space that investors should know about it.

Maybe even invest in. Here with her picks is Amy Zhang, the executive vice president and portfolio manager at Alger. Amy, it's great to have you here and welcome. Let's start with your first pick, which is ticker WGS, Gened DX. Yeah. Thank you, Kelly, for having me out. Well, Gene DX is a diagnostic company that specializes in exome and genome testing to diagnose rare diseases. One in 10 Americans has a rare disease and half of them are children. What's remarkable about Gene DX is they can do it fast and cheaper than their competitors while still having very high accuracy. So as you can see, they are really solving a very quick. critical problem in health care. And we think the company still has a very long, runway for growth. Currently, the focus is in pediatrics, but the company also has the potential to expand to, you know, healthy babies, screening healthy babies and adults. So overall, we think the addressable market could be over $40 billion plus, and now the company's last 12 months revenue last year is only about $305 million. And it's also the company became

profitable Q3 last year. So I would think going forward, we're very positive. We can continue to deliver robust revenue profitability growth. Shares are up 1,000% over the past year. So a lot of people might think that's too much. It's interesting to hear you say this is one that could still keep going. And I remember, Amy, the first time we spoke about like five or six years ago, you recommended Netara. You're back recommending Netara. NTA, I believe, is the ticker. It's a stock you've owned for a long time.

You've loved for a long time. Why? Yes, great to see you, Brian. Yes, we still love Netara. You know, as you know, it's a diagnostic company that's focus on genetic testing for reproductive house oncology and organ transplant using its unique liquid biopsy platform. Netara is really one of the most exceptional companies, I think. It is still firing on all cylinders, has delivered tremendous growth and became, you know, cash flow positive last year.

I think the crown drew of Netara's liquid biopsy platform now is Signatura, which is a leading MRD test, meaning they can detect, you know, recurrence of cancer using cell-free DNA. and it's very important to save lives, as we always say, that, you know, signetaria can detect cancer recurrence on average, nine months early, in many cases, even longer than traditional methods like MRI or CT scan. As you see, that's really tremendous. And going forward, you know, they are going to get into cancer screening. That could double the AUM to be, you know, overall long. term, we think the addressable market can be about $60 billion. So there's still, you know, and also management execution is superb and second to none. So we think there's tremendous growth ahead for Natera.

And then in kind of a different field of health care, glauco sounds like kind of what it is. They do glaucoma. You maybe can tell us what exactly. Why do you like this stock, Amy? Well, glaucoma is a growing market driven by aging population. And Glacos, you know, is one of the most innovative companies, and they've been pioneer in a minimum invasive glaucoma surgery. And what is really exciting now about these companies in the crust of a new product launch of its newest product called IDOS. What IDOS does is really it's a sustained release drug that can elude medication to patients continuously for up to three years.

So that replaced the topical eye drops since many people forget to take and also can avoid a lot of more invasive surgery. So we think this is a game changer and has blockbuster potential. Super interesting, especially they hit a little bit of a skid lately after a strong period of performance. Amy, thanks so much. It's nice to have you here. Appreciate the ideas. Thank you. Amy Zhang. And remember, you can recap every three-stock lunch using that QR code or go to CNBC.com. And Amy's not just a fund manager. She was the top. ranked small and mid-cap fund manager in America, I think for a couple of years running.

So you just got basically three stock picks from one of the top fund managers. For free. For well, yeah. Try to beat that. Or CNBC Pro. Maybe you pay for that. Thanks for watching. Power lunch, everybody.

Closing bell starts right now.