Power Lunch - Stocks rebound after the AI rout 1/28/25

Episode Date: January 28, 2025

Stocks are rallying today, as they recover ground from a sell-off sparked by the emergence of Chinese AI startup DeepSeek. We’ll cover all of the angles for you. 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. It's not all bad. Some recovery today after yesterday's deep seek, deep cut to some big tech and energy stocks. But did the tech rattle you? Should it? We're going to ask the man. Some call the Dean evaluations. Did the deep seek news change the power demand story to big companies? Make it a big deal today. We're going to tell you who and why. And oh yes, Kelly, the Federal Reserve. It is their first meeting of the year. And it kicks off with the Fed whispered. himself, David Zervos, here with his hot take. Looking forward to that, as always. Tech stocks are bouncing back after yesterday's big selloff, leading the market with a 1.7% gain. We're up about three quarters of a percent on the S&P quarter percent for the Dow. And Nvidia is bouncing back about 6, 7 percent this afternoon. It's seen some steady gains throughout the session today. And look at this.

Market cap back above $3 trillion. That said, it comes after it shed $589 billion in market value yesterday. the biggest one day loss for any market cap for any single stock, Brian. Wow. Now, market momentum. We all know it's a powerful force. I mean, to your point, look at Nvidia to see how momentum can cut both ways, the bigger a stock is, the more can move markets and ETFs, right? Invidia's in hundreds of ETFs.

When it moves, the market moves. And that means also that when a stock gets kneecap, billions can disappear in minutes. As Kelly just mentioned, and maybe this is a good RBI. Random and interesting, Kelly. Yesterday's drop by NVIDIA was the single greatest day market cap lost by any one company in the history of the world. NVIDIA lost more investor value in one trading session than any company in history. That's a heck of a stat. But of course, it also hopefully, Nvidia has made you very, very rich as prices have moved up or down.

Valuations have also moved. Many energy stocks like Vistra and Constellation yesterday, wiping out most, if not, all of their AI valuation gains. But what does it mean for the macro market? Let's talk about all of it. Joining us out to kick things off, some man that some call the dean of valuations, NYU Stern School of Business Professor Aswaffe, the motor and Oswaf. Good to have you on the program. Yesterday was a really weird day because a lot of stocks got crushed, but most stocks actually went higher. It was a big rotation. What are you seeing on the valuation story? You know, if you didn't have this much money at play, this would be an absolutely fascinating

exercise, an experiment, because I've never seen a story kind of changed this much over a weekend. Let's go back last Friday. The wisdom was that AI was going to be this incredibly big business, and the only way you could be in AI was by investing huge amounts in the most powerful chips, mostly made by Nvidia, you had to have data centers that were immense, lots of data with, there's a power and the energy needs coming in, and that all of this would allow these companies that invested in AI to make immense amounts of money on AI products and services. This is like the emperor's new clothes.

I mean, DeepSeek, you know, if you get past the distractions, if it better than chat GPTs, downloaded more, ultimately shakes that story because it says, look, a big segment of AI, at least the product and services, don't need those powerful chips. They don't need the data. So in many ways, that's exactly what you're seeing playing out, is that effect. I guess the question, backing it up just a second, Oswald, the question that I would ask is, does the market need AI? Does the market need Nvidia?

In other words, if we don't have the AI story, let's assume DeepSeek is real, seven hamps, and duct tape are now the new AI, okay? Let's assume that, I don't think it is, but let's assume it's real. Does the market then have to fall because the valuations are all built on this AI story? It has to give up some gains. You can't have a stock,

which is three, three and a half trillion. Collectively, there are companies that have built off the AI ecosystem that probably are, you know, five, six trillion in value. Some of their value is going to go away. I mean, you can't make it up by having, I mean, imagine how much,

much other companies would have to go up to make up for that difference. There's no way around the fact that the market has to adjust to the bringing down to the AI dream. I mean, let's, the, the contradictory effect of Deep Sea, because it's actually made it more likely that you and I will be more, will, will see more AI products and services be accessible for us. What it's changed is the monetization. It makes it more likely that a big chunk of the AI market is going to be commoditized. Low margin business. is where essentially you're not going to make tons of money. It's good news for consumers in the long term, but along the way, we've got to prune some of

the valuations we've built up because we thought all these companies would be money machines. I like Oswat, the way that you say the deep seek effect will be that the AI market is both bigger and less profitable at the same time. But I wonder if the way to think about it is that it shifts the profits. And the profits are not so much going to the mega power companies, and maybe they are. But the market's telling you yesterday it has to question that thesis. but that the profits might actually be going to software. Look at Salesforce up 5% today, to the deployers of AI

and the ones who are going to capture margin that way as it becomes commoditized. Some of the profits are going to other companies, but a great deal is going to go to consumer surplus. And that's why I said it's ultimately good news for us as consumers. I mean, imagine going back 20 years. You know, look at retail being disrupted by online retail is the biggest beneficiaries there.

And not just Amazon and the other online retail companies, It's you and I in terms of being able to buy stuff at way below what we'd have been able to pay if online retail were not there. So it's a fascinating changing of the story. And to be honest, now I'm actually glad to see some of the AI blowhards being brought down to earth. Because the way they sold the story was just, they broke no stopping them. They just went crazy with the story. And this, I think, is the emperor essentially being revealed to having no clothes. And that, I think, is an adjustment we've got to get used to.

Right. And so from that point of view, the valuation question shifts a little bit. And we say, okay, so what is the appropriate valuation for some of these power and utility stocks? What is the appropriate valuation for the software space? What is the appropriate? I mean, the Nvidia questions are maybe a little bit more difficult to ask. Maybe what is appropriate valuation for chip stocks and for other components into? making AI?

The collective investment in architecture after DeepSeek is going to be smaller than it was before. How much smaller we haven't figured out? That's going to affect the companies that feed into the architecture. The chip companies, the energy companies, I mean, the companies that cool those data centers as a whole ecosystem. The next layer, of course, are the companies that spent the money on AI, and there are some big tech companies in that space. Half of the inverted chips are sold to the four big tech companies.

Some of them today are probably having buyers remorse. Did we have to spend $65 billion? They're never going to say it, right? They can afford to take the loss, but I think that the beneficiaries are the companies that went slow in a strange way while people were jumping on Apple for being slow to the game of not jumping in.

This is an affirmation that Tim Cook was actually on the right track here saying, let's wait, this is too early. We're not going to spend tens of billions of dollars when we haven't quite figured out what we're going to make out of this. So I think it's good in that sense of not jumping into a trend

just because it's happening and starting to spend money before you even know what you will make out of it. All right. Aswath, for joining us today, we appreciate it. It's always good to see you. Aswath Demoderin with NYU. All right, the White House ordering a freeze on federal aid. It's some breaking news.

Get to the White House and Megan Cassello and Moore. Hey, you guys, just wrapping up a long and newsy first press briefing of the second administration, second Trump administration. And the biggest topic by far was this freeze on federal spending that the Office of Management and Budget directed to federal agencies last night that seemed at first to be freezing all federal spending. Press Secretary Caroline Leavitt came out and said any funding that is direct aid to individual Americans would not be affected. And she listed some examples. Those examples of things not affected included Social Security, Medicare and welfare benefits. But when she was asked specifically about Medicaid,

She said she would have to get back to us. Now some individual lawmakers in states, including Florida and Connecticut, are both out there saying on social media that Medicaid programs in their states and systems have been shut down. So a lot of confusion out there right now on Medicaid and a lot of discussion still about whether that type of aid will be frozen under this program. A couple other news highlights from this briefing. I want to bring you. The first question was about Deepseek and whether the president sees anything fishy or what his reaction was to DeepSeek. The press secretary Caroline said that he sees this saying it should be a wake-up call to U.S. AI companies, but that Trump believes in restoring AI dominance and that he's already

taken some steps in that direction, as specifically on the national security implications of DeepSeek. She said she was in touch with security officials inside the White House about that, but no further updates on that at this point. And then finally, just on tariff, she was asked what the prognosis is or what the update is on when tariffs are coming. And Caroline leave it tells us that the February 1st deadline that the president has spoken about for tariffs on Canada, Mexico and China, that that still holds. She says that as of last night when she was speaking with the president directly on tariffs, that that was still on the books, was her wording, but nothing more specific in terms of whether or what Canada or Mexico could offer. So more

to watch on that front, guys. I'll toss it back over to you. Yep, with the date coming up on Saturday of Feb 1, we could see those tariffs go into effect. Megan, thanks. Now it's the first day of the Fed's big meeting concludes tomorrow. Powell and company bring us their decision at that point. But our power lunch mock Fed is making the call today. And today's chair, David Servos, reveals their decision next. Welcome back in about 24 hours. We get the Fed's next decision on interest rates, first one of the year.

Last week, the president demanded they drop rates immediately during his speech out in Davos. Let's check in with our mock fed, see how they feel about that. Six of our seven panelists voted for no change this time. Don Peebles once again, once that 50 basis point cut. All roads point back to Chair Powell as investors gear up for what he'll say at the press conference tomorrow. For more on all of this, let's bring in one of our mock fed panel. I think we said he was the chair this time. I don't know where that comes from, Zervos, but I'm fine with it.

If you'd like to accept the honor, welcome. Might be the nice chair I'm sitting in here, Kelly. That's true. It's cathedral. He's the chair man. That's right. You're the chair man. That's what you are.

You voted for no change. Why? So I think the market's set up for it. I think they've got no reason to sort of get aggressive right here. They've, they've prepped the market for it. Why would you change it at this point? I am sympathetic to Don's idea that we have, I think, a much lower neutral rate than many in the market or on the committee think is out there, that we're kind of going back to neutral rates at 2019 levels. We've articulated that in a lot of our research related to the balance sheet. But, you know, it's early days.

we can wait. Let's get a few more better, a few more CPI, PC data prints that feel good or a little bit of weakness on the payroll side. And I think we can resume again and get moving lower, which is where I believe we're headed this year. And I think that'll be quite supportive for risk assets. Get moving lower. That's where we're headed this year. That would be good for it. You know, not many people are feeling very confident on that branch right now. Why do you think that is still the way things are going to evolve? I, you know, I think the argument, that we made two years ago, Kelly, that policy wasn't that restrictive because the balance sheet was so large and that was pressuring stimulus into the system, residual stimulus into the system

from all that QE. That's gone. The balance sheet's now at $6.8 trillion. It's getting close to 20% of GDP where it was before COVID. So all that storyline that kept us in the higher for longer camp when everybody else was pushing for massive cuts is reversed. And so we're on the other side of the And you know what? I liked being on the other side of the market two years ago, and I like being on the other side of the market today. It always feels good to be out of the consensus. What about tariffs? You know, I'm just not so worried about them. I'm not worried about the tariffs. I'm not worried about the immigration. I think what the president did with Colombia was an amazing geopolitical strategy, and that's more of what we're going to see with tariffs.

Although he does seem to like the idea of raising revenue and more revenue with tariffs. He keeps talking about McKinley. And he had a pretty powerful speech down here in Florida last night. really, really pushing that almost zero income tax idea. I don't know if we'll go there. But again, I just think the market's overplayed the tariffs hand. The market's overplayed the immigration and the fiscal profligacy risks. And they underplayed actually what the president said last night, which is deregulation. That's the big story.

You know, Kelly, it's the first time I heard him say this. But he said he's pulled CEOs consistently about would they rather have tax cuts or would they rather have deregulation? And he says over the years and over all of his discussions in the past administration and then currently in the lead up to this election and the win, they've all told him one thing. Less regulation is always preferable to lower tax rates if you had to make the choice. And I think that's the biggest story. And it's just a huge positive for business sentiment. Well, you know, we don't talk about it much, David, but you travel the world, right?

And so you get the global view. And I know we got the Fed meeting today and tomorrow and the whole big. thing. I'm looking forward to getting back to the Fed after, I don't know, like eight years. But that aside, what's happening in Europe? Because all I'm looking at is a German stock market that's going up, up, up. We're worried about AI power. They don't have any AI, really, so they don't have anything to worry about. And their borrowing costs are way lower than ours. I feel like there's more opportunity in Europe than there is here right now. Well, you know, a lot of that, Brian, can be traced to the strength of the dollar, the weakness of

the euro, that always propels a stock market higher, gives them a competitive advantage. I think that story is important. We're almost at parity between the euro and the dollar. So that's given them a nice tailwind. And their disinflation story has been more aggressive than ours, which really opens up, I think, more optimism on rate cuts going forward. And we're probably seeing that in the UK as well. So I think that's where that relative optimism, I wouldn't get so excited about taking your hard-earned capital and giving it to the less capital-friendly governments of Europe. I just don't think they treat capital as well as we do. And historically, that's why their P.E.s have been lower. And that's why it's been hard to make money relative to deploying that capital in the U.S. in Europe

for more than, you know, more than many decades. So I don't think that should. 100% agree with everything you just said because, as always, it is accurate. I'm just pointing out this year, the last few months, we've seen some European markets do a little bit better. And me wonders, is that because they're at 2.5 or whatever on the German tenure? And we're at 4 or 6. And we don't know what they're going to do in terms of interest rates, but you probably do. Well, I'll tell you, Brian, I would actually be pretty optimistic on the south of Europe. I think Italy, Greece, Spain, Portugal.

These are places that don't have the same manufacturing malaise and issues that the North faces, particularly with the suspension of Russian energy and just the changes that have taken place in the geopolitical landscape via China. And there's just, you know, we're all going to go on vacation in Europe if we're a parity to the Euro. The places people will travel will not be Dusseldorf. They will be Mekinoz, they will be Rome, they will be Lisbon. I think there's a really good Southern European story.

You've got leaders there like Maloney, which is very friendly to the current administration. We've got a friend that's going to be the ambassador there, it looks like, from the United States, Brian. That could make that even more interesting. I'm really positive on the South of Europe, really positive. And I think people want to venture out of our recommendation of a U.S. trade. I would be looking first to either Japan or to the South of Europe. I think they both offer very interesting opportunities for risk assets. Yeah. For travel.

And for vacation. Where would you want to go? Should we go to Capri or Cologne? Yeah. Hard call there. I think that's a pretty easy call. Yeah, I think it's a dark and rainy or, yeah, anyway. I'll go to Cologne.

I'll go to Cologne that I'll see it. I don't want to go to Capri. It's too. Oh. I don't want to go to Capri either. Too beachy? Like, I even know. They don't have any beaches.

It's all rocky. There's other places, Kelly. There's other things. David, thanks. Appreciate it. David, Zervos. Always a pleasure, guys. Of Jeffreys, the chairman. By the way, the very nice bartender at the Marriott in Cologne, Ted is his name. You went to Cologne and you were at the Marriott?

Ted, you think I'm joking? I'm not. All right, on deck. Bonds may be boring, but coming up, we're going to show you why what bonds do may be critical to your stock money. They call it market navigator, and it's next. Welcome back to Power Lunch with some green on the screen today for a change. The S&P up about 8 tenths of a percent. The NASDAQ nearly 2 percent, Dom. And that brings us to Market Navigator.

All right. So let's talk a little bit about the yield curve and what it's been doing and how to read the signs to profit in this kind of environment. Now, since last summer, the 210 yield curve spread, short-term, long-term yields, right, has been steepening consistently. That's a trend that picked up some steam after the presidential election. Our next guest has thoughts on that and also says that despite all those sell-off in AI stocks, investors can still use that space to their advantage. So joining me now is Jan Szilaghi, the CEO and co-founder of Reflexivity, a firm that uses AI and machine learning to glean things about the market. So, Jan, take us through what you're seeing and what your models are seeing and what it can mean for investors. Yeah, hi, great to be on the show.

So, as you already mentioned, reflexivity's purpose and mission is really to monitor all sorts of developments in the vast space of kind of market data points. And currently, one of the more interesting ones is the fact that, as you already mentioned, the yield curve has been steepening. In other words, I think investors are very clearly anticipating a period of higher economic growth and also as a result higher inflationary environment. What the system is highlighting is that during that period, the sectors that have tended to do by far the best are generally cyclical sectors. So things that you see outperform are real estate, material sectors, also consumer discretionary and industrials.

And the margin is not small. They outperform the kind of less exciting sectors and less cyclical sectors like utilities, healthcare and so on, by three to one. So it really is quite a big difference. Again, presumably not quite a huge surprise to better investors, but that is the kind of the upshot on the on the on the sector side. So if it's going to be cyclically oriented, economically growth oriented, what parts of the market do you think will or what is the data suggest will outperform in that kind of environment? You laid out some sectors, but if you were to place bets, where do you think the biggest octane boost comes from?

Yeah, I mean, I think presumably you are going to see. actually quite a lot, quite a lot of gains specifically on the kind of industrial and consumer discretionary side. I think industrials are interesting to watch because we can see that there is a push on the side of the current administration already to really boost manufacturing in particular in the US. So I think you are going to find some interesting names there without going into individual stocks. I think that's the space absolutely to watch because generally it's the less exciting one for a lot of investors, the ones, again, to avoid are then names in the utility sector with the caveat, and to the extent that we get to talk about it in a little bit, of those that have exposure

to AI. So obviously, the utility sector generally as rates rise, those stocks underperform, but there will be exceptions like Constellation, energy, and so on. Yeah, I know you think you're still in the camp. We're going to see a lot of adoption of this and be careful betting against it. Young, we appreciate it. Thank you very much for that. So what's interesting about that is that story about the utilities trade, that is one that's got a lot of people a little bit nervous, right, about what exactly would it could mean.

And is this a precedent for how much volatility there could be? We also heard the case for health care last hour and the sector was up 2% yesterday. The steepening yield curve is a reminder. He says to just be a little bit careful. It's kind of taking that too far right now. Don, thanks. You got it. Brian.

Oh, coming up. Speaking of why one energy CEO says we may have gotten it all wrong about yesterday's. Big moves. Huh. And he's here. Welcome back. I'm Julia Borson with your CNBC News update. Israeli Prime Minister Benjamin Netanyahu says President Trump invited him to a meeting at the White House one week from today.

It comes as the U.S. presses for the continuation of a fragile ceasefire in Gaza that brought 15 months of fighting between Israel and Hamas to a halt. The White House said today the mysterious drones that flew over New Jersey last year were in part authorized by the Federal Aviation Administration for, research and quote, various other reasons. The large number of unexplained nighttime sightings eventually led to an FAA order banning drones in the airspace of several New Jersey cities. And California Governor Gavin Newsom launched a fundraiser today for Los Angeles fire recovery. L.A. rises, pledges to help affected communities rebuild. It was started today with a $100 million donation from the Dodgers. The destructive palisades and Eaton fires are now nearly 100, percent contained. Together, they destroyed more than 16,000 structures and claimed at least 29 lives.

Brian, back over to you. At least we know now the drones actually existed. Julia Borsden, thank you very much, in the flesh. All right, let's talk power with one of Wall Street's most powerful people. I get choked up just saying that. Halima Croft of ABC Capital Markets speaks to literally all the power players all over the world on your way to D.C. You stop them to see us, and we appreciate it. Obviously, there's a lot to talk about. In fact, OPEC making kind of a bigger move than we think yesterday. That aside, obviously the energy collapse, AI kind of the story. I know you're not a stock person, but do you think what happened in the last 36 hours or so is going to fundamentally change the energy investment and infrastructure story in America? Well, there was a question about, where we're having too lofty expectations anyway about, you know, power demand because of AI.

But if you think about the near-term story, it still looks very supportive. I mean, look at the situation when it comes to, you know, weather. I mean, if you think about what we've seen in terms of weather events here, in terms of the Gulf Coast, the South, if you look at what's happening in Europe, colder than expected winter weather. We still have, it looks like, significant seasonal demand for natural gas, and we just have to wait and see how this story plays out on AI. Okay, you pointed this out to me, and I want to be clear, Kelly,

I have no idea what this means. It may mean nothing. I want to make that clear, but the Danish government, I know. The Danish government today, in Danish. So we used the, we used to translate. And I think I posted, Javier Blas, and Bloomberg originally posted, great work by him,

basically saying they're going to allow Russia to do some maintenance work on the blown up Nord Stream 2 pipeline. What does this possibly mean? This seems like a big deal. Undisclosed maintenance work. And it was so interesting because European governments were roundly saying, never again are we taking Russian pipeline gas.

And so the question is, is this because of environmental precaution? And it could be. It could be. Basically, that's what the expectation is. But we also have a story out today talking about Germany taking record LNG imports from Russia as well. Now, that is essentially blended LNG. It comes via sort of France to Germany.

But there's a broader question about, are we going to see more Russian molecules making their way into Europe? because you had a previous guest talking about Germany. Germany has suffered a lot economically because of their energy insecurity. I mean, listen, I was not privy to the Danish react. But I take your point. So here's what I'm thinking about.

I hear Danish, I think what's going on with Greenland, right? I hear LNG and I think America's trying to clearly increase our presence in the economic situation of Europe via gas, via literally whatever the situation is being. What's the big picture here? Well, see, again, to be determined in terms of this Danish story, but we have to stay on top of it, but President Trump has been really adamant. Europe, we want you to take more U.S. LNG, more U.S. energy in general. So was this announcement sort of a subtle message to the United States about potentially like alternative suppliers?

Like you threatened to take Greenland and we're going to go take more Russian. Buy Greenland, not take it. Purchase. Purchase. Purchase. Purchase. Acre. So I think it's going to be very interesting to see like how energy becomes a broader bargaining chip.

When we think about, you know, China tariffs, does China come in and basically say, we're going to buy a lot of U.S. LNG as part of the negotiations? So how energy fits into these broader negotiations is going to be fascinating. Quickly, OPEC, quietly. His Royal Highness, Saudi Arabia, they put out a picture of the five, I think, or four of the five founding members. I know. I think we have it. There it is.

The Venezuelan is very tall, by the way. It's Kuwait on the far left. Libya there. Saudi Arabia. Second from the right. What's going on with this picture? UAE. I mean, the question is, what are they?

discussing. And there were reports in Saudi state media. They were discussing market stability. Obviously, we have a very interesting meeting or important meeting coming up. The Joint Ministerial Monitoring Committee meeting of OPEC on Monday comes against the backdrop of President Trump saying OPEC lower

prices. I want more oil. We have to wait and see what happens come Monday. No indications are looking to break up their agreement. When you know, let us know. And if you figure out what this Denmark thing means, let us know about that as well. Stay tuned. Stay tuned in Danish. Thank you, Halima Croft.

All right, why don't we go ahead and stay with energy as well? Because obviously, that was the big story with a lot of names. Some are rebounding. You've got Aklo and Vistra. They are higher, but a little bit. 5 and 6 percent. Vistra lost 29 percent yesterday. On the upside or the downside, I should say, Constellation Energy and Nextera. They're actually down again. Nextera rose yesterday, but Constellation did not. In the meantime, Chevron, partnering with the investment firm, engine number one and GEVernova today. to build natural gas-powered power plants to run, you guessed it, data centers across America.

Heck of a timing for that deal to be announced. Joining us out of talk about all this and more is Paul Prager. He is the CEO of Terawolf. They're an infrastructure-focused Bitcoin mining company. They got nuclear assets. And the minute, not the minute, Paul, but when all this stuff sort of happened to yesterday, you texted me and basically said that we're kind of getting the story wrong. What did we get wrong?

What did we miss? What did the financial markets? CNBC, whatever. What did we miss about what happened yesterday? Sure. It's nice to be here. Terawolf is an energy infrastructure company, and we build state-of-the-art data centers for quality customers, first-class credits. First thing we got wrong here was the power markets are already tight, right? You have retirements in the Mid-Atlantic, you have industrial growth in Texas, you have a grid that's currently burdened. You have a new administration, which is going to re-industrialize the United States. So even without a demand, a massive new demand for

power for data centers, power is already tight. Okay? Second, not all powers created equal. At Terra Wolf, we have power now. We have inexpensive power and we have green power. There's a big difference when you're talking about power that's available for delivery today, 12 months from now, 24 months from now, or 9, 10 years from now when you're talking about the SMRs. Yeah, so let me back it up because you're a tech expert as well. And I know you're going to speak your mind because on a great show that precedes this one, it's called The Exchange, 1 p.m. Eastern time with Kelly Evans. Kyle Bass effectively said in the way Kyle does that this news out of China,

deep seek is probably garbage. It's probably not accurate or if it is. There's more to it. Do you believe that China has effectively figured out AI with like, you know, five million bucks and a couple people? No, but there's a lot we don't know. But I don't think that matters with respect to what we are doing here in the United States, right? Their models may be more energy efficient, but in any event, the broader adoption of AI leads to higher energy demand because of increased and higher consumption.

They still run on GPUs. In this particular case with Deep Sea, it's reinforcement learning. But there's intense competition here in the United States, and that intense competition will be to be, number one, and that drives demand for computational power, which requires substantial energy resources. So, Paul, and by the way, we've heard analysts say, look, amidst all these power needs, companies that have kind of figured this out and could be a resource for this, the Bitcoin miner. So, you know, I'm just trying to think through these cycles and sort of people who are in these stocks, they have earnings every quarter to worry about. What do you think,

this investment cycle is revenue cycle, whatever, is going to look like for the next four to six quarters for the people who are in these stocks? I think very exciting. Listen, only two Bitcoin mining companies made the leap. That's Corps, of course, Scientific and Terrell Wolf. Terrell is in a premier situation. We've got a contract with C-42, G-42. G-42 is an unbelievable credit backed by Mubatala. They're part, if you will, of the MBX group that President Trump talked about in Stargate. So we have a contract with them to buy electricity to service the data center. We are building for them at upper teams yield. And so that credit, the credit story hasn't changed no matter what happens with Deepseek or what comes out of China. And our customers

are business as usual. They're at the site. They're with our partners, Dell and Vidiya. they're working on how to build the best data centers. And the customers that we don't have yet under contract, but that we've been talking to for the last nine months, they're still there. They're still intensively engaged in negotiations to sign a contract for new power. So I think the next four to six quarters are ripe with opportunity

if you've got the power and if it's at a low price and particularly if it's green power, which is what Terrell's. story is. So the fact that we're moving from training to inferencing to possibly, you know, Deep Seek aside, this larger transition seems like it's one that would be somewhat less energy intensive than the first time around, or do you think that's wrong? And it will be equally or more so. I think it will be equally or more so. There's no doubt that the deep seek relied on already built architecture. You don't know what was behind it. What's at the foundation of it?

But energy infrastructure is the foundation of this entire industry. And it's intensely competitive right now. And the question is, I don't know where we're going to be in 10 years because of the advancements and the algorithms and where data centers get to in terms of, you know, artificial intelligence. But I can tell you, they're still going to require power and they're going to require substantial power to get there. Some people would argue that if DeepSeek is real, we're going to use more power because we're just going to have more AI.

And so therefore, it may not be as much power per data center. I know you guys are building one up on the heart against the shores of Lake Ontario, but that if it is actually cheaper, then we're just going to use more. And energy consumption might remain the same. Greater adoption means greater energy requirements. Yeah. Is that a BS thesis? No, I think greater adoption means greater energy requirements. But I don't know how far deep SQL get, but I know here in the United States, the companies who are focused on co-location, they require energy to advance their models.

These are very sophisticated computational models that require substantial energy resources. And I think Terowulf is particularly well situated because, A, we have a contract customer who's a world-class credit. And, B, we have power now. it's inexpensive power and it's green power. So I think we're in the right place at the right time. Paul Prager, CEO, Tara Wolf, Paul, always outspoken, and we appreciate it. Thank you. I see you guys.

And still to come, two-time Super Bowl MVP, Eli Manning joins us to talk Super Bowl 59, the business of sports, and very much more. Power lunch will be right back. All right, going to give you a quick check here. Broader markets, they are higher. Now, yesterday it was a weird day because the NASDAQ got crushed, but most stocks actually rose. It was just the really big tech stocks that fell. Not all of them, by the way.

Apple was higher yesterday. We're also watching Novo Nordisk right now. It's down a little bit, but some breaking news in the last couple of minutes. And that is the FDA approving their weight loss drug, OZempic, for additional uses around kidney and heart diseases in adults with type 2 diabetes. Interestingly, the shares are still lower. So a lot's been priced in to some of these names. Novo's down nearly 2%. And the matchup for Super Bowl 59 is set.

The Eagles, the Philadelphia Eagles, will face the chiefs of Kansas City who are going for a record third straight Super Bowl win. Joining us now is two-time Super Bowl MVP, former New York giant star quarterback, Eli Manning. He's at the I Connections Global Altz Conference in Miami Beach. Eli, we're all New Jersey people.

We could have done this here and saved you the trip. I know. I should have known, but it's great to be down here in Miami, get a little warm weather. get away from the cold. So I'm enjoying the conference here at Eye Connections. Absolutely. So I watch it a little bit on Sunday, but then I see all this drama on social media around the refs and the calls. Did something really happen that like we should be concerned about?

Or do you think this is just like sour grapes? Yeah, I think it was a great game, especially against the Bills and the Chiefs. Both of these teams are deserving to be in that game. Both of them could have been deserving to make the Super Bowl. There's always on the course of a game, there's going to be calls that could have gone here, could have gone there, going back and forth. As a matter of fact, they came down to the fourth quarter. They left it up to the players to make some of the plays. And the bills had some opportunities that had chances. The Chiefs, they find ways to win close games.

That's what they've been doing all year. They have one of the great players of all time in Patrick Mahomes and two great coaches, Andy Reeves, Steve Spagnola, on the defensive side. So, you know, they've been fun to watch, obviously, going for three straight Super Bowl. It's pretty impressive. They're amazing. Look, I've been on the bandwagon for a long time. That's all I do. I don't have a real team.

I just hop on the bandwagon, but I still feel bad for Josh Allen because how do you get? He can't even get to the Super Bowl. It's hard to get past them. Listen, the Super Bowl and the success of the NFL right now is interesting because society has never been more fragmented.

There's no breakthrough shows really and music stars and even the NBA has been struggling in recent years after they kind of had this strong period. What's the formula for success? What are they doing right? Well, they didn't. They just have great players. They have a great product and live events.

It's what it's all about. You have to either be there live to watch it. You want to watch it on TV. And so with that, they're getting great media rights. And the game is very healthy because the stars are doing well and playing well. They've done great things in the past years, making the game safer. So your biggest players aren't missing the big moments.

And they're staying healthy and playing great at the pitiful moments. And so it's a great matchup in the Super Bowl. and it's Kansas City. It's hard for me to say the Eagles are in another Super Bowl being in the NFC East and the Giants, but they've been playing well. I'm happy for my pal Saquan Barclay, former teammate and his success that he's having. And what an unbelievable year had an opportunity to break the rushing record until he sat out the last regular season game and thinking about the team, thinking about what's at stake.

And so the league is healthy. The product's great. And just to be associated with, and you see it. with the, like I said, the media rights. Everybody wants a piece of the action. You know what product, Eli, it's Brian Sullivan, is not great. That is college football. And I know you got some views on this.

I'm going to be fully transparent. I went to Virginia Tech. We have a proud college football program that is not done as well as many of us has hoped. And I'll tell you why it ticks me off. If I was Ohio State, I would just get the whole team in a room and go, guess what, guys? Why don't we do $50 million? The entire team goes to some new school. We're a proven winner.

right? I'm only half joking because I feel like that's where college sports is right now. It's like this. I want to see the players get taken care of, maybe get direct payments. But do you think college football is sustainable the way it is right now? It's insane. Yeah, it's kind of the Wild Wild West right now in college football. I thought the playoffs system was awesome. I thought it played really well getting those 12 teams. I also have a fan in the background that's not.

You know, is that happy? He's honking about it. But, you know, to have those teams go in to play for this championship, Ohio State to, you know, go through this. I thought, again, it was exciting to watch. It had a great championship game. And so obviously the whole system with NIL, like you said, I'm happy these guys are getting taken care of.

I'm happy it is a big business. There is a lot of money being made. The players should share in that. But are you going to be able to do that year in, year out, be able to transfer schools every year. Something's got to work out to fix it. So you don't have to recruit your players every year that are already on your team. You develop.

It's hard to develop these guys knowing, hey, you can sit for a little bit. We'll keep you happy. And then we'll throw you in when you're ready to play. If they're not playing right away, they're leaving. So there's things that got to get worked out there. But, again, I think there's great players. The product is good. The players are working hard.

It's just kind of figuring out some of the transfer rules. Well, you know, listen, I'm not picking on Ohio State either because I got a lot of family that went there, but they won the title this year. Very quickly, how does your, you're, I think you're the richest Manning. I mean, your other brother talks all the time on TV. Your third brother doesn't get a lot of attention, but he's a very successful investor in his own right, by the way, Cooper, with private equity and hotels and everything like this. But how does Eli Manning invest his money? Well, just try to surround myself with good people, have a great team to look at interesting. opportunities and that's what it's all about. I think I'm passionate about sports. I like investing

in different sports opportunities looking at those things. And obviously there's a lot of mention about private equity, getting into the NFL and getting stakes in that. But I think there's a lot of other opportunities to invest in the adjacencies around sports, whether it's media and content or from, you know, equipment to agencies to data to, you know, the tech part. of it. So youth sports is something I'm passionate about. You know, believe in getting involved in that. I have four kids that are all playing a ton of sports and understand just the life lessons that you learn through sports and starting at an early age, how healthy it is. And so I want to get involved, make a difference, you know, help out the next generation and make sure sports are staying in a good place.

There's a lot of logistics getting four kids to sports. Eli, thanks for making the time. Really appreciate it. It's great to have you on the program. We'd be happy to come on the Manningcast anytime. So you're welcome. I love it. All right, next year. Thank you. How do you get six kids? You don't. To sports. Quick programming note. Fast money is live from the same I Connections Global Alts Conference down in Miami. Here from top investors and strategists about the AI trade, what to expect from the Fed tomorrow and more. It all starts today at 5 p.m. Eastern. We'll come in Florida this morning. All right, three stock lunch is next. Very quick. Three stock lunch to wrap it up here. Our trader is Jay Wood's chief global strategist to freedom capital

markets J GM, worst day in four years. Yeah, I think it's an opportunity to buy the stock. Yes, the quarter was pretty solid. People were concerned about 25% tariffs that weren't mentioned in their guidance if they do hit Mexico and Canada. I look at two levels technically. This $50 level should hold old resistance from the summertime, now acts of support, rising 200-day moving average.

So risk reward, you buy it here, you get out if it breaks the 200-day moving average. Our fundamental analyst, Mike Ward, loves it, so I'm in. You're giving it a chance. All right, Jay, what about RTX formerly Raytheon? A stock is up about 2% today. Not a huge mover. They beat estimates. Better than Rocky.

Yeah, best in class. And yes, it's outperforming Lockheed. Lockheed didn't have that rosy outlook as we're seeing with Raytheon. The sector is strong. It's one of the best in class in the sector. It's breaking out. I like the strength. I like the price action there.

And then what someone's not talking about is Trump wants this American Iron Dome And guess who helped with the Israeli Iron Dome? Raytheon. So if this does come to pass, expect Raytheon to be okay. The headwind there is Doge. But technically, it's breaking out. It has solid price action. I think it's a great long-term buy and hold.

I got to ask you about Nvidia. Let's wrap it up with that. Yeah, we got to. You know, I wish I came on the show at 9 o'clock. The setup for traders, especially the traders watching this, you know, you watch that 200-day moving average. It's the first time it broke below it since December of 2023, maybe October 2023.

It's been a while. We finally eclipsed it. Every buy stop in the world was set to 122. As soon as it hit 122, it was off to the races. So your risk reward, it was set up for a nice rebound trade. And long term, I still think it's great. This story out of China with Deep Seek, we shot first. We're asking questions now and the answers we're getting.

Kyle Bass was on your show. He doesn't trust it. And I have more questions than answers. So I think this was a buying opportunity, just like August 5th with the Japan Yan carry trade. Remember that? We sold off a ridiculous amount. We got an opportunity to buy. It does fail the 200 day.

You get out. We're going to wrap it there. Jay Woods. Thank you very much. Thanks for watching Power Lunch. He's so great. He's so good. Closing bell starts right now.