Power Lunch - Stocks relatively flat to start year 1/2/26

Episode Date: January 2, 2026

The overall stock averages start out the year flat. Chip and data storage names rip underneath the surface. And what is the outlook for crude oil prices this year? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The new year, looking a lot like the old year and coming in with a wimper. Welcome to Power Lunch, everybody. I am Brian Sullivan. Kelly, we'll be back on Monday, and you can see we are live here at the NASDAQ market site. Hope you are having a wonderful start to your year, wherever in the world you may be, or at least maybe a better start to a year than much of the stock market, because we are now in a six-day losing street. Many big names. They are being sold off again. But as you can see from your heat map, a lot of green. It's not all bad. Many of the big chip names like Intel and Micron. They are higher. So what will be the name of the game for the rest of the year? We're going to ask Ed Yardini in a moment. Speaking of AI, big tech on track to spend $1 trillion in its infrastructure buildout, but where will it get all the power to power the data centers? We'll take a closer look at solar and wind and

maybe even space. And Houston, we have a winner. And it's not Houston. We're going to reveal the top city for the stock market in 2025. And that name may surprise you. It is all ahead. Hi, everybody. Once again, I am Brian. Thanks for joining us. Yeah, it's a different year, but really the only thing that is officially changed is the calendar. Much of big cap technology is lower right now. InVIDIA and Alphabet, they are the exceptions. And your lead guest today, much called this latest move. That call was because he's not bearish on the overall AI story, far from it, but because there are better opportunities for you in what he calls the impressive 493. Ed Yardinney is still bullish on stocks overall with a 7,700 price target next

year. And he joins us now. He is, of course, the president of Ed Yardini Research. Ed, happy new year. Thanks for coming on. Thank you. Are you negative on the MAG7 or just think there are better opportunities elsewhere? I have a little bit of AI fatigue. I don't know about you, but it's been kind of wearing to be in this AI battles on a daily basis to try to figure out who the winner is going to be, to figure out if all this capital spending is going to pay off.

And I think that's going to spread to other investors. I think it already has. And we may see that maybe the valuation multiples on some of these AI trades start to come off. It doesn't mean that technology is finished for the year ahead. As you said, semiconductors are doing quite well, and there's still going to be a lot of demand for semiconductors. But I would put more money in financials, which we've been overweighting. We'd put more money in industrials, which we've also been overweighting. And health care, we haven't talked about at all.

and we think that might be a sector that does reasonably well this year, especially biotech. Yeah, you know what? I don't tell anybody, but I also have a little AI fatigue. And being here at the NASDAQ, Ed, is appropriate because I was here back in 1999 before half our audience was probably even born. And we were talking about all the capital spending that was going into the guts, the infrastructure part of the Internet, the global crossings of the world. I'm not saying this is going to end like that. But I think to your point, the spending in one group of companies can only last so long before you have to look somewhere else. Correct. And again, I think what really has changed over the past six months or so, maybe ever since Michael Berry pointed out that maybe there's some known unknowns when it comes to the AI trade, I think there's a lot of uncertainty there.

And I'm not sure that these stocks merit this kind of valuation multiple. Maybe Google does right now. I happen to own some personally, so I have to disclose that. But that could change tomorrow or not tomorrow, but next week it could change if some other company comes up with a, you know, a new, new thing that's a better chip that's cooler, doesn't require as much energy. And there's so much money being spent in this area that innovation is occurring at the speed of light. Yeah, I'm going to use a dirty word, utilities. And I don't mean like power utilities because those have been largely red hot. But when you look at an Apple maybe and some of these big tech AI names, I do wonder how much growth might be left in them.

They're massive cash flow generators, which is why I said the word utility ed, but I think to your point, there are faster companies and sectors where you can get the earnings growth that will drive the multiple, that will drive the returns. Where are those? mentioned health care? Financials and industrials, I think materials, the precious metals, obviously, have been doing very well and may very well continue that way, simply because we're looking at a year where monetary and fiscal policies are going to be a very stimulative tag team. Monetary policy has been easing since 2024. They've been lowering interest rates. The bond market hasn't cooperated. Bond yields have stayed elevated. But still, the Fed now is doing another version. of quantitative easing, at least through the middle of the year, or at least until tax

season. And in tax season, there's going to be bigger than usual refunds because the big, beautiful bill was made retroactive to the beginning of 2025. So there's going to be a lot of stimulus coming at the economy. So the economy should be fine. I kind of wonder whether the bond agencies are going to act up and say, you know, they don't really like this stimulative combination of fiscal monetary policy. Yeah, you know, we're here sort of the center of fact.

money as well. And on Wednesday, Guy Adami said he thought the 10-year yield might go to four and a half percent. In other words, yields would go up, even if the Fed is cutting rates. Is that what you meant by the bond vigilantes? Yeah, yeah. Yeah, absolutely. The bond yield might go up instead of down. I mean, that's what happened in 2024. At the tail end of that year, the Fed decided to lower the Fed funds rate by 100 basis points from September through December of 2024, so they east, they thought. And the bottom market completely offset that as the bond yield went up 100 basis points. This year, they've cut 75 basis points and additional 75 basis points. And the bond yield really hasn't paid much attention to that. It's the bond yield remains above four.

It seems to be crawling towards four and a quarter percent. Yeah, that's my most likely scenario is that the bond yield will stay around four and a half percent on average this year plus minus 25 basis points. Well, maybe not exactly the news that homebuyers want to hear, because I know there's a lot of families out there that are hoping that mortgage rates may go down. Sounds like you think that they may not. You are bullish, though, on the market. Your target 7,700. We're at 68 and change. So where then is that growth, that 8 or 10 percent that you're seeing, Ed, where is that coming from?

Well, I think technology and communication services aren't going to suddenly stop growing. they're just going to maybe grow at a slower rate, and maybe the multiple gets readjusted slightly to the downside. The Magnificent Seven, only a few months ago, we're trading at a forward P.E. of 30. Now they're probably down to about 27. So they're kind of inching downwards. But I think the opportunities remain in industrials, maybe mid-cap industrials for a change. I mean, onshoreing is still going on.

We don't know exactly how much money is coming in. as a result of President Trump's tariff negotiations where he said it's going to be trillions of dollars coming in as sort of a quid pro quo for an easier tariff deal. So that could be a source for the industrials. And then financials, I mean, financials are technology. As a matter of fact, the impressive 493

are in technology companies because they're going to be using all these technologies to increase their productivity because there's a real shortage of skill of labor. You know, I like the term impressive 493. I will say, though, Ed, it doesn't quite roll off the tongue like Mag 7, but we'll work on that. You'll work on that. We will. That's what we do. Ed Yardinney, Yardini Research. Have a great day. Good weekend and a happy new year. Ed. See you soon. Thank you. Thank you. All right. Well, we just kind of talked about it. Let's go now back to the bond market. Stocks, of course, dated well last year. But so too did many bonds. In fact, it didn't get a lot of attention. But the Treasury bond market posted its best year since 2020. Wasn't great, but didn't do badly. Now, though, we turn our attention to the Fed. Not only

what the Fed will do at its meeting at the end of this month, but also at some point, an announcement from the president nominating a new Fed chair. What do the prediction markets think? Well, it's been changing. It's been fluctuating. But right now, Kevin Hassett, according to Kalshi, with a 42% chance of becoming the next Fed nominee, Kevin Warsh, closing in at 36%. Christopher Waller, right around 12 percent. Rick Santelli, joining us now from Chicago, Rick. I'm sure you just heard what Ed Yardini had to say and said he didn't think it was out of the question if bond yields rose this year. What do you think? I think I'd be shocked if they didn't rise this year, to be honest. So yes, Ed and I are totally on the same page. And let's start at the beginning.

Yes, a decent year for treasuries. But then again, how decent depends on which part of the yield curve you looked at. The two year yields and short-term yields were down much more dramatically than 10-year yields, and actually, the truth be known, 30-year bond yields actually closed the year higher than they closed 2024. Now, let's look at a chart of the S&P 500 versus 10-year, okay? Now, this is for the entire year last year. That intersection in the middle is July, but rates didn't really start to go down until the end of July. And the reason I find that's so important is let's look at what happened at the end of July. It was the last Fed meeting where you didn't get a rate cut. The next three meetings after July were Sep Akadis. We had

rate cuts. Now, let's look at what non-farm payrolls were doing. If you look at the June, July, that's when the deterioration started. So it really does explain why interest rates started to really break away and move lower when stocks are moving higher. And the other piece of the puzzle is stocks moved higher at that point because right around mid-June to July is where the Liberation Day highs were taken out. In other words, after Liberation Day, the equities went down. When they came and finally made a new high for the year after that, that's when everything seemed to change. Now, look at the yield curve. Steepest in four years on Tuesday tens, what does all this mean?

I'll put it together for you, Brian. The more steepness in the yield curve, the more the argument that Ed Dardinney and I, are making gets pushed into reality that long rates are showing us they want to be more stubborn. And if you want to know how good of a year, you're going to have in treasuries, especially looking to the short end, monitor the jobs market, because the Fed chair, in my opinion, is not going to make a whole lot of difference. It's all about the economy. And within that subset, it's all about jobs. That's amazing because I get two questions. People, very nice viewers, they spot me out, they want to talk, whatever, I'm approachable. They ask me,

about NVIDIA, where's it going? Should they sell their home and put all their money in Vivida? No, don't do that. But the second biggest question I get is where are bond yields and mortgage rates going? I should tell them, Rick Santelli says, probably higher? That's what I would say, definitely probably higher. And I think four and a half, maybe a little low for the high of the year. I think it could be more like $4.75. But if I had to make a call, I think the high frequency yield, trade in tens for the first half of this year is going to be 4.37. I like it. See, also I'm dropping your name, Rick. So I'm covering my own derrier. Well, Rick Santelli says, Rick, happy new year. Thank you. Happy New Year. All right, folks, we are just getting started.

And in a few minutes, we are going to reveal the biggest winner for the stock market city-wise this year. It's our Power City Indexes. It's coming up exclusively in a few minutes. But up next, can Invidia keep its title as the king of AI or is a new king waiting in the wings? Christina Partsen-Eblis is waiting in the wings. She's here, and we'll talk about that. Next. All right, welcome back. Let's talk about Invidia because Jensen Wong and company, they're going on an all-out

offense to defend their company's crown is the kings of AI. It's a $30 billion spending blitz aimed it squarely. The next phase of the AI arms race, something called inference. We're here at the NASDAQ. Christina Parts-Nevilus is also here and has that story. I know you've got some things, but what is inference in like layman's terms? It's literally the, so let's say you're a doctor, you train, you go to medical school to become a doctor. That's the training part. The inference part is me saying, oh, no, I got like broken tooth or a broken arm. You go for a dentist for that. Yeah, I know, because I had lipstick on my teeth.

You were just nicely telling me that. And so you're the doctor. You're providing the inference of the answer, which is the short version of it. So what's up of this spending blitz? It's making a massive bet, thank you. It's making a massive bet to dominate the battleground in AI, potentially spending up to $23 billion to do it. In less than four months, the chipmaker has executed two major deals

and is potentially pursuing a third, all focused on inference. So the technology that runs AI models after they're trained. Hopefully that doctor analogy worked. But first in late December, Invidia closed its largest deal ever, around $20 billion for Grok with a Q, its inference chip technology. They brought in its founder, Jonathan Ross, who also created Google's TPU chips. Those are their custom chips that did, you know, very well in the most recent AI models, Gemini. Second, in September, Nvidia, paid over $900 million for, in fact,

Fabrica's networking technology that really helps connects AI chips while also hiring its CEO and key staff. Third, NVIDIA is reportedly in advance talks to buy Israeli AI startup AI21 Labs for roughly $2 to $3 billion, according to local Israeli media. AI21 only labs only does about $50 million in revenue, but the deal is values or values it roughly at $10 to $15 million per employee for their 200-person team, many who have PhDs. It's a pure talent play. NVIDIA declined to comment on that deal. Nvidia owns roughly 90% of the AI training market, but inference is just fragmenting very quickly. Inference is cheaper to run,

doesn't need the same horsepower nor the same memory. And so that opens the door for competitors, Google, Amazon. So many companies are trying to create custom chips. They're popping up everywhere. Although that AI21 deal is not done just yet, the spending strategy is clear. And that is to lock down inference talent, especially talent and technology before the competitor.

can. Fair enough. And we don't know if they're overpaying for this stuff. There's a lot of great restaurants right around us here in New York. I could pay $30 for a plate of spaghetti or $200 for the same plate of spaghetti. And it doesn't mean it'll be any better. I wonder if they're overpaying. You don't have to address that. But we can address the stock price. Bring that chart back up. Here's the dirty little secret. Invidia stock hasn't done squat in about six months. It was the October high. So what are people, but the stock's basically been flat. Yeah. It popped up a little bit in October. Why is that stock chart not moving?

What are people saying about that? So in regards to the stock just over the last little while, one, there was profit taking in many of these AI plays, but two, it's just like what's the next big catalyst for Nvidia? And so they're turning to other plays like memory, right, that has seen a gigantic, I know you just talked about that, a gigantic surge. So the upside for many stockholders is like,

let me move into the other picks and shovels of the AI trade. To your comment about spending too much, NVIDIA has roughly, what was it, $80 billion in free cash flow, which is estimated to be $96 billion by the end of the fiscal year, to increase 58% next year. So there's a lot of cash on hand, and they need to do something. They can only, they roughly spent about $52 billion in buying back shares to help shareholders. What else are they going to do with that? Well, they're buying companies. You just said it.

They're buying, they're spending billions and billions and billions of dollars to buy companies. They're a large company, so they can't just buy it. So they're doing these, like, accurate. like this GROC thing. They didn't buy GROC, but they kind of bought GROC because they're bringing the CEO over, but GROC, I guess, will still exist. Do we call it a deal? We call it a merger? What do we call it? We call it an alliance or a partnership, which seems to be the norm, right? If you talk about Open AI, all these deals with AMD, Broadcom, et cetera, everybody is just, you know, frenemies almost in a way now. Just don't call it a comeback because they've been here

for years. Preston-Evelas, thank you. Thank you. All right after the break, serious crude reality check is Iran brutally puts down economic and social protests, the global impact of a discussion on oil and energy. Next, welcome, but welcome back. Let's talk oil and energy crude oil, slightly lower to start the year. This after a big 20% drop in 2025, and that was the worst yearly performance since the year 2020. Supply and demand appear out of balance with way more oil than needed on the market right now. But as always with oil, there are also many geopolitical risks, including growing tension in Iran, where the Iranian regime is aggressively and violently putting down protests over that country's bad economy and lack of social freedoms.

And now the president vowing to intervene, Trump tweeting out basically that if Iran kills peaceful demonstrators, the United States may get involved. Bob McNally is founder and president of Rapid and Energy Group, and he joins us now. And Bob, one to welcome me on, talk about your outlook for the year. Obviously, Venezuela is out there. But things are really getting ugly or uglier in Iran, Russian planes or landing. It looks like they're helping to maybe put down some of these protests. Do you think that Iran is going to be a flashpoint or a bigger flashpoint for the energy markets this year? Brian, happy New Year. I do think Iran is going to be a flashpoint.

Mainly, though, if we step back behind what the president just announced in it, we think Israel means it. I think Israel's not done with Iran. They want to suppress Iran's missile and new capabilities. So we've got 70% probability of renewed Israeli strikes on Iran in the first half of this year. With regard to the president, I don't see a major U.S. military campaign, but the U.S. certainly in for selective strikes or sanctions if Iran kills. protesters. So we think Iran's going to come back. But the thing is, Brian, if you look at it, since Iran attacked Abcake in September of 2019, biggest disruption in modern history, it's been a nothing burger. And the traders have been just discounting that there'll be a material disruption.

You see that in today's price action. So we're not necessarily saying there's going to be a major sustained disruption in oil supply, but Iran is going to feature, Russia is going to feature, and to some degree Venezuela is going to feature on the oil market screen, we think, this year. It is truly one of the only or at least maybe the biggest global market along with currencies. And everybody's just pointed to supply and demand, Bob. You can look at the different estimates. I know that OPEC will disagree with some of the numbers, but you've got in some estimates billions of barrels just kind of floating around in storage on super tankers to nowhere being held up. How do you see supply and demand not only right now, Bob, but where it's going in months and quarters ahead?

You know, Brian, I've been counting barrels for over 30 years, and I've rarely seen a time where there's such difference about what's happening just ahead of us in the coming quarters. Some see, like the IEA, 4 million plus barrel a day surpluses in the first quarter. Rapidan, we're a little lower, a little about 3.5 million barrels a day. But there's a lot of folks who think that the surplus idea is just a hoax. With this, Brian, we've got to step back and say, the trend is your friend in terms of prices. The prices are telling us that we're heading towards oversupport. flat prices are heading down all year. The curve is moving from contango into contango from

backwardation. We're seeing oil on the water build up. I think it's fair to say we're moving towards oversupply. We can debate how big, but we're heading that direction. I think that's pretty clear and that's the way we see it. Then the question becomes, who will hold the bottom? Who will keep a 50 or so dollar floor under crude if this oversupply tends toward the high end? So I actually have a piece coming out on CBC.com this weekend, my big energy theme, solar, wind, oil for the year. That'll be published probably on Sunday. I'll make sure everybody sees that. But as an advanced look, one of those themes is how low does OPEC plus let the price of oil go? If we get down to the low to mid-50s, some people saying maybe we see 40s for U.S. traded crude oil, do OPEC and its allies?

reverse course and start to pull oil back off the market. Brian, I think they will. And if you look at those meetings and you and I have been to the meetings or having another one on Sunday, they've been signaling regularly in their communique this year, even as they have been increasing production, now they've halted. But they've said, look, if this gets out of control, we will act. They've signaled that subtly, but clearly. They said, we'll not only undo the 1.6 million barrel day of hikes we put in,

place, but even the 2.2 million barrel a day. To me, and I'm reliably informed, that means that if things get sloppy to the downside, OPEC plus is ready to act, I think, to prevent a collapse into the 30s or 40s. Not 100% probability. They may be late. They may be too small, but they think the intention is there if needed. Because I got to be honest with you, Bob, one of the things that makes, if somebody said, are you bullish or bearish for the price of oil, I would lean to the bullish side. I don't think oil is going to surge. I've been bearish. In fact, last year and two years ago, I was in print, bearish. But I would say one of the reasons I am a little more bullish is because everybody and their mother and their relatives appear to be negative. I can't find an oil bull

to save my life. Absolutely. From a contrarian standpoint, makes sense to be bullish. Another reason, though, Brian, and you and I've been talking about this for years. We'll look at 2025 as the year that the peak oil demand narrative died. And I think the market is adjusting an industry that companies are adjusting to the fact that by no means are we on track for peak oil demand by 2030. That means we're structurally short in those out years. So even if we have this near term over supply, I think one reason you see the equities holding up quite well during this, despite the pessimistic sentiment on next year's prices, is because they realize the five, the 10-year outlook is suddenly much brighter than everyone's been thinking for the last five years.

It's just some of these projections, I don't know where they're respectfully to the groups coming up with them. I don't know where people are getting these numbers, Bob. They're like, oh, oil demand's going to peak out. Really? Because a couple people are buying electric cars and wealthy nations. Look at emerging markets. The reality is that half of oil in the world is not used for transportation. It's used for other stuff, things that are growing.

I just don't know where some of these numbers are coming from. Well, I think during the sort of Paris Accord Agreement era, there was both wishful thinking and official forecast that said, look, not only should we kill oil demand with EVs, but we will. And we won't allow any forecast that contradicts that to appear. That proved misplaced. You know, hope is no basis for forecast in investing. And I think to their credit, the IEA and others, we're seeing other major forecasters are all swinging back to reality as we have been predicting to their credit. Yep. And even, by the way, the European market in the IEA's backyard is now talking about getting rid of EV mandates and going back to the gas-powered car.

Bob McNally, Rapid and Energy Group, Bob. Thank you. Have a happy New Year. Good weekend. We'll see you soon. Thanks, Brian. All right, coming up, we'll stay on the energy story. Can wind, solar, or even space power AI, is the energy out there to make these dreams that are maybe holding up the market happen? We're back on Power Lunch for the NASDAQ right after this.

All right, another big energy headline. The world's largest offshore wind developer is taking on Trump in court. Denmark's Orsted has filed a legal challenge against the White House after the administration moved to suspend a nearly $5 billion offshore wind project called Revolution Wind. Actually, Orsted's doing two projects. Now, this follows the Dominion Energy lawsuit after the Trump-lawful. administration paused several large offshore wind development, citing unnamed national security concerns. Shares of Copenhagen list at Orsted, it jumped, about 4.5% on the news, but the fight over big wind is not over, particularly with all the projections for all the power we're going to need

to power our lives, data centers, AI, and, you know, just the heat and lights. Let's bring in Big Thinker Stephen Bird. He is Morgan Stanley's Global Head of Thematic and Sustainability research. This is also to give a little tease to my own piece coming out this weekend. One of my seven big energy themes to watch next year. What happens to big wind, Stephen? What do you think is going to happen here? Yeah, you know, I think wind, when we think about just what you mentioned earlier and Happy New Year, by the way, when we think about the source of energy we need for AI and just industrial growth, even electric vehicles, wind is relatively small. It's a rounding air relative, for example, to the energy we need for data centers. The location is typically not

ideal from a data center perspective, and the cost, frankly, is high. And the United States does have a massive land mass. There are fundamental questions about sort of the cost and the importance of offshore wind. So I don't really view it as a primary player in terms of what we're going to need. I look more to natural gas. We'll have some degree of storage with solar. We'll see quite a bit nuclear. I just don't see wind as being a primary actor here, to be honest. I think the theme, and you're the thematic guy, so tell me if I'm wrong, Stephen, I think the theme is, if you build a giant wind farm off the coast of Massachusetts, and that powers 600,000 homes of making the number up, that that energy that's going to the homes from the wind turbines

will then be used for other things. They don't have to necessarily power data centers, use the wind to power homes and then use the energy that was going to power the homes to power the data centers. That anyway is the argument that they would make. Yeah, and I just don't find a compelling

because when you look at the Northeast, there's very little data center activity compared to other parts of the United States. A big part of that is cost of power. If you look at the overall cost of power in the Northeast, it's just much higher. Total volume of available power is quite limited, even with some degree

of offshore wind coming online. So I just don't find that very compelling. When you look at the average cost, for example, in the state of Texas for power versus, say, Massachusetts, it's just much lower in Texas. And I think that's a big driver for why we're seeing so much more data center activity down in Texas. By the way, as you said that, I just looked at the Boston power grid because it's all online and I'll post it. A lot, not a lot. A couple percent of their renewables power right now is coming from trash. They're literally burning trash.

Do you see any indication besides Texas that other parts of America are getting, I don't say smarter about energy because a lot of people disagree with that theme, but that they're starting to have this energy realization that they're going to need more power from somewhere, and that could benefit the nuclear's and, dare I even say, the natural gases of the world? I do. What I see a lot is awareness of overall power bills. You know, I think a major theme of the 2026 election will be affordability, and customer

utility bills are a huge part of that discussion. And in the election we saw in November, states like New Jersey, Virginia, Pennsylvania, power bills were a major area of focus. So when you take a hard look at the approach to getting power bills low, it tends to involve natural gas, but not just gas. In many situations, solar is very low cost, energy storage is dropping. And then I am optimistic at the turn of the decade that nuclear will fall in cost and will be a big part of the solution as well.

So to your question, I see immense political folks. focus on affordability. I think, frankly, that's healthy. I think it's my number, by the way, again, preview to my piece coming out this weekend. Number one risk is that political pushback against data centers, Paulo Global, you might have heard of them, sort of semi-competitive use, so I won't bring them up. I want to pivot, Stephen, to a topic, of course, that we've talked about a lot, the AI Revolution. Listen to this. Earlier this week, we spoke to the CEO of Planet Labs. As you probably know, they recently partnered with Google on a project to build or at least

explore building, data centers in space. Here's what he said. When launch costs come down a certain amount and those satellite costs come down a certain amount, eventually it's cheaper to put compute centers in space. In principle, you get free power, free cooling in space. The only challenge is it costs a lot to build the satellites and launch them. Now, this all comes as your team projects a 47-gagawatt cumulative shortfall in power demand. versus supply. Again, for our audience, put in perspective, one gigawatt of power, rough, very roughly,

about 7 to 800,000 mid-sized American homes. So you look at that, what is that 30 million homes a shortfall. That's right. Do you expect data centers in space and relatively soon? I think we will see data centers in space. We are bullish that the unit cost of getting, you know, anything, a sense of space essentially are going to drop dramatically. I agree with the points on cooling. I do think it makes a lot of sense. That said, the companies I talk to, they're not waiting. They're pursuing all the above. And I have to say it's sort of a race of innovation to see whether data centers in space or fuel cells or natural gas or Bitcoin conversions, which will get us there the fastest. I am pretty encouraged by just the land-based

solutions that I'm seeing. Pretty impressive stuff in terms of just, you know, innovative approaches to getting that electricity to data centers much more quickly. happens, Stephen, and I hope it does soon in our lifetimes. You look up and be like, oh, that's a data center. You know, through a telescope, of course. Who's going to win? Well, I'd say the big space players, you would imagine, would be a big part of this. I also think the hyperscalers would win in the sense that what they desperately need

is more compute. You know, one big theme we see is the demand for compute looks like practically straight line up. It is growing so quickly. So the AI adopters and enablers, they just need more compute so we can actually get data centers in space at low cost. I think that's a big advantage for everybody across the AI ecosystem except for the land-based A infrastructure players.

That would clearly be a negative for them because a perception is you don't need to spend these large premium on these land-based solutions if you can get data centers in space. And then you wonder if we get data centers of space and they work, what happens all the data centers we're currently building and we talk about every day. But we'll save that for another segment because we have to go. Stephen Byrd, have a great weekend. Happy New Year. Thank you. Thank you.

All right. Let's get now over to Stephen. for a CBC News update. Hey, Brian, yeah, Russia is denying involvement in an attack on a multi-story apartment building today in eastern Ukraine. Ukrainian officials, they say at least 25 are injured, but Russia's defense ministry claimed the reports are untrue, and they suggested the blasts had been caused by the detonation of Ukrainian ammunition.

The ministry also accused Ukraine of trying to distract from a Ukrainian strike on a hotel on New Year's Eve that killed nearly 30 people. Meantime, Sacks Global announced today its CEO Mark Metric is stepping down, amidst reports the retailer is struggling and preparing to file for bankruptcy. Metric has been with the company for nearly 30 years and led Sachs' 2024 merger with Neiman Marcus. A federal appeals court delivered a win to Paramount today ruling Top Gun Maverick did not infringe on the 1983 article that inspired that original Top Gun movie. The family of the writer argued the 2022 Blockbuster shared plot, characters, and themes

with the article, even after they terminated their license with the studio in 2020. The court, however, said the sequel was, quote, largely dissimilar from the original article. Brian, back over to you. Did you see it? I haven't seen it. I have not seen the sequel, only the original. We're the two guys. Probably the two only men in America have not seen it.

Talk to me, Kovac. All right, Steve, thank you very much. Appreciate it. I got something to do this weekend, I guess. All right. Coming up, the best performing city for the stock market. The big reveal of our 2025 Power City Index winner is next. 245 here on the East Coast time for our big reveal.

Which city or metro area won the stock market in America in 2025? We showed you on Wednesday it was nearly too close to call, but there can be only one winner. So let's count you down three to one, the top three cities and areas for the stock market in America, vis-a-vis our power city index. The third best metro area, Washington, D.C. It's PCI, had a median return of 16.8% over the past 12 months, led by big gains in RTX, Capital One, General Dynamics, and more, obviously, defense spending,

one of the big market themes of 2025, and those stocks reflected it. The second best area for the stock market? Not a city at all. It's a metro area known around the world. It's Silicon Valley. The 12 biggest companies in our Power City Index in the Palo Alto and San Jose region had a big 20.2% medium return this year. Three of the four A's powered the gains. That would be Applovin, alphabet, and applied materials.

In fact, only service now fell in the Silicon Valley Power City Index, but the decline, big enough to bring the median return down. And your king of the stock market in 2025 is the Queen City, Charlotte, North Carolina. It narrowly top Silicon Valley, and Charlotte's 12 biggest companies posted a median return of 21.1%. You had big gains from Albumarl, Curtis Wright,

New Corps, SPX, and Bank of America. So a big congratulations to Charlotte, North Carolina, I mean, even the Panthers are good in football this year. So everything is kind of looking up. The top city in your Power City Index for 2025, Charlotte, North Carolina. By the way, second time in a number of years, a North Carolina city has won the competition. If you remember, because this is our 10th year doing this, Raleigh was the top city a few years ago, which, by the way, lines up very nicely with CNBC's and Scott Cohn's top states for business.

Charlotte, congrats, and I certainly hope that all of you are benefiting from those stock gains. All right, coming up, we're going to talk cars and also ask if robot cars, or just robots, are the real secret to Tesla's future. Tesla, investors, future. Tesla, hitting a critical moment. The company just reported fourth quarter production and delivery numbers. And for the second year in a row, Tesla reported an annual decline in fourth quarter deliveries. They fell about 16% year over year. Full year deliveries down about 9%. The focus now shifts forward, though. The company expanding beyond EVs. Let's talk about it.

Philabo joining us now. Phil, the numbers weren't great. The stock not taking a huge hit. are investors kind of largely looking past the automobile or maybe the human driver automobile for Tesla? Sure. Well, certainly with regard to the numbers for the fourth quarter, they are. I mean, look at these numbers. This was expected to be a lackluster quarter and a lackluster year, and that's what we got. 418,227 vehicles delivered. That was down compared to what the estimate was was going to be 426. Tesla said it might be around 422. Regardless, they were not good numbers. 2025, 1.63 million vehicles were delivered. Again, that's a decline compared to 2024. Second straight annual drop for Tesla. And in terms of annual deployments of energy, this might be the

bright spot within all the news from Tesla today. It was up 48.7%. Look at this. This has been a bright spot that has not gotten a lot of attention, Brian, in terms of where Tesla has been. And when you look at where they are, this is expected to grow maybe not 49% in 2026, but we know the story there. There's demand for energy, and Tesla is taking advantage of that demand with their energy deployments. Remember, as you take a look at shares of Tesla, we will get their fourth quarter earnings. And more importantly, commentary from Elon Musk on January 28th after the bell. And he's likely to talk not about deliveries, not about the conventional auto business, if you will, or EV business, if you will.

He's going to talk about what he believes are the drivers of growth in the future for Tesla. And this is the reason the stock was up almost 20% last year. You've got the Robotaxy Rollout, regardless of the fact that it is not going as fast as many thought it might. People are still optimistic that they will continue growing and growing at a quick pace in 26. Cybercab production begins to ramp up maybe in the middle of the year. And then you have the optimist robot development. Everybody's all over the map on this. Some people are saying his estimate of a million robots by 2030 is ridiculous.

Others who are saying, if Elon can do it, he'll do it. So why not buy into it? Finally, take a look at shares of Tesla and GM. And the reason we're showing you this, Brian, we've talked about this over the last couple of weeks. GM outperformed Tesla purely as an investment in 2025. And I know whenever I show this chart or talk about this in the last month, I will get these texts from people saying, yeah, but go back and look at Tesla over the last five years. That's not the point here.

is this was a great year, or 25 was a great year for investors in General Motors. Does that continue? We'll find out on Monday what their Q4 numbers look like in terms of sales. And 26, by the way, Brian, is expected to be maybe, maybe slightly higher in terms of total auto sales, though most people believe we're going to continue to see things pull back a little bit. Is there anybody out there that's saying that Tesla's pretty much locked up the EV market with a little rivian and maybe lucid on the side. You sprinkle in a couple of Silverado EVs. We know that Ford's having their problems. And that kind of Detroit should maybe leave the EV market to Tesla and a little bit of Rivian and some others and focus on Tahos and expeditions. Is that a growing theme?

To an extent, Brian, to an extent they are. They are pivoting more towards internal combustion engine vehicle development and production, ramping that up and deemphasizing EV production. But let's be clear here, GM, Ford, and Stalantis as well, they're not giving up on EVs altogether. Do they expect them to be major growers in profit areas in the next four, three, four years? No. But you and I know how this works. The EV is not going away. There may come a point where the EV comes back into Vogue, where people will want it again.

I don't know when that might be. Might not be this decade. But it could be this decade. It could be 29. And GM Ford and Stalantis and others, they want to be prepared when the pendulum swings back if it swings back. Well, Stalantus is swinging back. Aren't they bringing back that giant engine ram? It's like the Ford Raptor competitor?

Sure. Yes. It's a great halo vehicle. And it's a small, it's a niche vehicle, but people will buy it. There will be buyers for that vehicle. Yeah. I mean, no one. Phila Bow, great stuff.

Thank you very much. Appreciate it. You bet. All right. Coming up, it is the end of an era. Warren Buffett stepping down a CEO of Berkshire Hathaway. What he told Becky Quick about his legacy. Next.

It is a new era at Berkshire Hathaway. Greg Abel has taken the helm after Warren Buffett's legendary 60-year run coming to an end. An exclusive interview with Becky Quick, the Oracle of Omaha gave his seal of approval for his seat. successor? I'd rather have Greg handling my money than any of the top investment advisors or any of the top CEOs of the United States. That is a huge endorsement. It is a huge endorsement, but it's an endorsement we've made. And don't miss the rest of that interview during our prime time special tune in on Tuesday, January 13th, 7 p.m. Eastern time. That's a big one. All right, folks, markets are coming back. Maybe we end the first trading day of the year higher. I'll see you on fast money at 5 p.m., but closing bell starts right now.