Power Lunch - Stocks Sell Off for Second Consecutive Day 9/24/25

Episode Date: September 24, 2025

Companies continue to pledge more money to the AI buildout. We dive into it with Niles Investment Management's Dan Niles. And what else is sticking out right now in equities? Charles Schwab's Liz Ann Sonders weighs in. It's all here on Power Lunch Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, your record rally taking a little bit of a breather, the AI trade hitting some turbulence, ambitious dreams, maybe colliding with reality. Welcome to Power Lunch, everybody. Speaking of reality, the S&P 500 snap against record run is AI giants like Nvidia and Oracle remain under a little bit of pressure for the second straight day. A lot of growing questions around the AI boom like, is the power infrastructure even possible? Is it available? Does the funding even exist? There is a lot to chew on there. But could Texan pain be the bank's gain? Many financials on fire. The Keith Preetin Woods Bank ETF at all-time highs. We'll ask Anton Schultz, Abendon Capital for his top picks in the regional banks and homesweet home. The Fed making its first rate cut of the year. That must mean mortgages are headed lower, right? Well, some new data looks encouraging. But like a everything else, it is far from a sure thing. Hi, everybody. Thank you very much for joining us, as you can see a big hour ahead,

but we begin with this. Growing concerns about what is really driving the entire stock market. That is the spending boom around AI. It is the circle and the cycle of AI investing. Companies are investing in other companies, which are then investing back into those other companies and so on. It's hundreds of billions of dollars of money being poured really into just a few big tech firms. And we know it is very difficult to keep up with all of this stuff.

That's our job. So how about this? As McKenzie Sigalos writes in a must-read piece on CBC.com right now, at roughly, very roughly, $50 billion per site, open AIs projects alone add up to about $850 billion in spending. That is nearly half of the two. trillion dollar global AI infrastructure spend that HSBC is predicting. Now, you know this. Much of that money is going to Nvidia, Oracle, and a couple of others. Now, of course, these huge AI factories don't just run on money. They run on electricity. And from a power perspective, the numbers are also staggering to

the point of being almost unbelievable. Get this. In less than 48 hours, Open AI has announced commitments equal to the electricity output of 17 new nuclear power plants or about nine Hoover dams. The bottom line is this. It is a spending spree right now, unlike we have ever seen, even at the creation of the intranet itself. Let's talk about it all with McKenzie, who's just back from one of those big projects out in the Texas desert.

McKenzie, great piece, by the way. I urge everybody to go read it. And Deutsche Bank also had a note out this morning, and I think they put it into perspective. Deutsche Bank writes this, quote, simplifying it, perhaps in video, which employed only 36,000 people at the last update earlier this year, holds the keys to all global macro in 2026, end quote. So, McKenzie, you're with Sam Altman yesterday, and you did express some growing concerns about these numbers. Is he concerned? He's not. And part of that comes from the fact that Sam Altman told me he's all in on nuclear.

He's backed fusion and fission companies, even helped one of them to go public, and he wants to see a lot more plants built. I am extremely bullish about nuclear, advanced fission fusion. I even think we should build a lot more of the current generation of the fishing plants. Given the needs for dense, dense energy, I think we as a world need to be investing much more in nuclear buildup than we are. Now, 17 gigawatts is the equivalent of about 17 nuclear reactors and each takes at least a decade to build. Altman says they are in talks with a mix of power providers, but there are no hard answers yet. And that is the problem, Brian. The U.S. grid, it's already strained.

New gas turbines are sold out through 2028. Nuclear is slow to deploy and renewables are tied up in political roadblocks under the Trump administration. When I asked what that looks like on the ground right now, Altman pointed to the Abilene site, only a fraction of its eventual size and said that even at this stage, it shows what it takes just to deliver part of ChatsyBT's current demand. This is the first place we started building out one of the Stargate sites. This is now about maybe 20% of the size that it'll eventually be a little bit less than that. And this is what it takes to deliver ChatsyBT.

You know, when you ask Chachybt something, it gives you an answer, you don't really think about what goes into that. And it's a huge amount of work. But the real bottleneck, you said it, Brian, It is not money, it's power. Open AI has already scouted more than 800 sites across North America with nuclear wind and solar all on the table, but there are still big question marks about how this buildout will actually get done. Okay, am I wrong in that, and you track this more closely than I do, Mac, but when I look at some of the spending, it does seem a little circular, like a company, invest in B company, which invest in C company, which then invests back in a company. It seems like a lot of the same dollars. are being counted multiple times, or maybe I'm just old and skeptical? That's exactly the question that I put both to OpenAI CEO, Sam Altman,

and to their CFO, Sarah Fryer, who's handling the economics behind this. They say that a rising tide lifts all ships here. It is in everyone's best interest to see this economy rise. So that's why, I mean, I think really the best way to think about this. You've got the U.S. only expected to add about 63 gigawatts this year. Invidian, Open AIs plans alone could consume 16% of that. And that's why the circular economy dynamic that you're pointing to is so concerning. But we are seeing these multi-year deals.

And their point is, yes, these are blockbuster numbers on the face of it. But a lot of these things don't come online until the back half of 2026, the back half of 2027. And it's meant to scale along with Open AIs revenue scaling with it, $13 billion this year, targeting $130 billion in revenue by 2030. It's crazy. We went from, we're going to phase them out, oil and gas, to we need more of everything. In about five years, it's truly remarkable. Mackenzie Sagalos, back from West Texas, Mac.

Thank you. All right. So your next guest thinks that some AI cracks are beginning to form, but he is still bullish on the AI story overall. Here now is Dan Niles, founder and fund manager at Niles Investment Management. Dan, you've been doing this a while. Is there any part of you that worries that all of you that all? All of this, dare I call it, hopium around the AI spend, is a little overdone. Oh, yeah, it's definitely overdone.

And I think Bill Gates, a long time ago, said it best, which is technology is generally overhyped in the short term, and it's underhyped in the long term. And the best example I can give you is back from the Internet. And from the Internet days, you may remember Cisco was the most valuable company on the planet. It was the NVIDIA of its day as it was putting in the plumbing to enable this new thing at the time called the Internet. And I remember the CEO at the time forecasting that he thought he could grow revenues at 30 to 50 percent per year sustainably because of that. And then a couple of years later, his revenues declined. And then the year after that, his revenues declined.

So you have to remember these CEOs, especially if they're in the businesses they are, they're all highly optimistic. That's how you get to be the CEOs. You have this vision out in the future. But don't mistake fantastical growth forecasts as, you know, this is what is going to happen, especially the further out you go. So this is where age and experience, I think, does matter a little bit because I know what you're talking about, John Chambers, who I interviewed many, many times at Cisco, and they were the biggest company

in the world at the time. And I was there when the Internet was being created. A lot of those companies went bust. and a lot of them went on to become the powerhouses that they might still be today. But Dan, I think you would agree with this, is that we have CEOs now, and I'm not going to name any companies now,

I'm not out to get anyone, okay? But we have companies now that are saying things that they have no power over. In other words, I can talk about all the data centers I want while the utility companies are sitting back going, oh, that's interesting because we're the ones that actually make the power and we're not sure how we're going to do it.

Yeah, but to me, that's not even the relevant question. The relevant question is are companies that are deploying AI generating revenues from it. So you can look at the MIT study that said, now remember, we're three years, almost three years since we all heard about this thing called ChatGPT. And the MIT study that came out earlier this month said that 95% of corporations deploying AI are seeing zero percent return. Bain came out with a study yesterday that said, we're going to be about $800 billion short in terms of revenues to fund this AI spend by 2030. And so you can look at statements like that, or a very simple one your viewers can relate to, is if you remember late last year, Salesforce was talking about a gentic AI and they were the poster child for Gentic AI, and their stock was at an all-time record high.

in August, the stock was at a 52-week low because this stuff's not getting deployed at the rate that the CEO there thought. So the revenues that you're generating from this, just like with the internet, right? You built out all this fiber. You didn't generate the revenues you needed, and then you had to go through a really brutal digestion phase after that. And I don't want to make any mistake. I am bullish right now for one simple reason. It has nothing to do with AI. It has to do with the fact that the Fed is cutting rates, and historically when that happens, and they're spiking the punch bowl, as I wrote about this last Sunday, the market's going to go up. But I said you want to be invested in a broad market of stocks, not just seven names associated

with AI. And that'll take the AI names up with them. But I think in 2026, you're going to figure out that you don't have 20 companies that are going to win in AI, and people won't fund 20 companies that are all burning cash. As long as this all happens, I think there's no reason to not be bullish because the capital spend poll is dragging earnings up for the companies that matter. But I think, I'd go back to what I said at the beginning of the piece with McKenzie, Dan. Deutsche Bank said it without really saying it. They basically said, Nvidia kind of controls the entire global stock market.

So I hope they never do this. But what would happen if an Nvidia or an Oracle, or anybody associated with this spend were to cut their forecasts? Well, that's going to happen next year. Well, then what's going to happen to the market? The market will get hit really hard. I mean, this is not, here's the thing. Like, when you have a company like NVIDIA come out,

and I talked about this on CNBC, you know, middle of September, and they did this deal with Core, it's about a $6.3 billion deal, and they agreed that they would buy back any unused cloud capacity through April of 2032. That reminds me of all the vendor financing that went on in the late 1990s with companies that were losing money and that couldn't afford to pay for the equipment. And then, who obviously had that ramped up. What you're talking about, I think, and this is an incredibly important point. I know we've got to go, but we have to make it. Where companies are investing in companies that invest in companies that invest back in that company, and the same

dollar appears to be going in circles. Yes. Yeah. And they called it vendor financing back then. Alcatel, Lucent, Nortel, Cisco did it then. You're seeing companies doing it today. And, you know, when you're counting revenues twice, based on what you just said, Brian, you know, that starts becoming problematic. But the bigger deal is, You're not generating the revenues from all this AI spend. You're not going to have 10 companies win. You have Google and search today. You have Amazon and e-commerce.

You have meta and social. It's not like you've got 10 guys. And you're not going to have 10 winners in AI. And so I think right now be bullish because I think NVIDIA will get to sell Blackwell chips in China any day now, given they invested in Intel. Probably get one more surge. But then as you get into next year, you're going to have to rationalize. which companies you're going to fund because not all of them are going to win,

and not all of them are deserving to get their cash burns funded. Yeah, and I want to be very clear to the audience. Nobody's saying this is what's going to happen, right? What we're saying is people need to be cautious. If Deutsche Bank is sending a note to all of its clients, saying basically one company controls the world, one ring to rule them all, right? You better hope that ring doesn't get thrown in a volcano. I think that's a bad Lord of the Rings metaphor, but I'll use it.

Dan Niles, thank you. Thanks, Brian. All right. Stay vigilant, folks. All right, on deck, the record rally losing a little bit of steam, but there's more at play than just the pullback in tech. The perfect guest to have today, Lizanne Saunders. I'll join you right after the break.

All right, time now for your daily bond report, Treasury yields ticking a little bit higher. The 10-year at 4.14% Wall Street. Kind of bracing for the inflation day to do out on Friday. That is the PCE report, and it's got the power to change. the Fed's thinking. Also, a little bit more growing concern about the impact of a government shutdown. That is just something else to watch. But by now, you're probably pretty used to that. All right. Let's welcome in one of our favorite guests right now. That is Lizanne Saunders,

chief investment officer at Charles Schwab. Liz Ann, I'm so glad you're here today. Did you hear the conversation we just had with Dan Isles? The latter part of it. Okay. Basically the idea that AI is great. We love all the spend, but what were to happen if something were to happen? And I just want to be on the record saying to our viewers, we've had moments in history that we live through where everything seems like it's whatever and then something else happens. I hope it doesn't. But I have to imagine that your clients at Schwab are asking about this. They are.

And I'm often asked about what are those risks out there, be they, you know, gray swans or black swans that could upend what has been a pretty powerful move off of the April 8th closing low. And especially as we approach earnings season, you always think that it could be something earnings related, either in the aggregate, which appears maybe less likely or at the individual stock level or a group of stocks. So it's something to be mindful of. I also think, though, that we're already seeing a bit of dispersion happening around the AI theme, even among the magnificent seven, only four of the stocks, within that seven are outperforming the S&P. And although NVIDIA is still the number one contributor to S&P gains on a year-to-date basis, that's via the multiplier of its cap size. It's actually

ranked number 65 in the S&P just in terms of price performance year-to-date. And by the way, it's ranked number 635th in the NASDAQ in terms of price performance. So that's another message about this, that individuals should not think they have to have the same kind of concentration problem as exists and the cap-weighted index, there's a lot of performance that can be found elsewhere in the market. Where else? Well, some of it is just the AI, the broadening out of the AI story. So you're seeing it in power generation. You're seeing in data centers. You're seeing even in adopters. And that was one of our themes coming into 2025, was you were moving away from just the picks and shovels into a broader

sphere representing the adopters. But that said, the where else in terms of pockets of strength in the market. And I'm talking more broadly now than just the S&P 500. I track a lot of these baskets that are that have been created. Goldman has a ton of them. UBS has the meme stock basket. Speaking of which, it is a, it's up over 100% just since the April 8th closing low. You've got heavily shorted stocks doing incredibly well. You've got the non-profitable tech stocks. So in the retail trader world, they've been chasing a lot of these stocks kind of down the quality spectrum down the size spectrum. What we do tell our clients on that front is that's the kind of step you probably want to fade and lean more into higher quality segments of the market.

Yeah, we've shown some names. I know it's one day, but yesterday it was energy. We showed some like fertilizer stocks that were on the rise. Can the overall market, Lizanne, go up if there's any wobbling at the top in the invidias of the oracles of the world? Well, that, that, Just by virtue of their cap size, you are going to see it drag down the cap weighted indexes. But sometimes interesting opportunities present themselves, even if the leaders are dragging down index returns. In fact, if you look at the lead-in to the mid to late October bottom in 2022, it was a pretty ugly bottom.

You had retested the June lows. But under the surface, you were seeing better performance. So the soldiers were kind of catching up. while the generals were retreating. And that was actually a sign of better underlying breadth and made that bottom feel a little bit more resilient as a bottom than what had happened in June. We also had just as recently as this year,

memories tend to be short in the mid-February to early April period of time when the S&P just skirted a bare market, but you did go into bare market territory for the NASDAQ and Russell 2000. It was many of those leadership names that were more of the drags on performance and you had this better underlying performance. So that's what I would look for. The fuller story is told under the surface of these cap weighted indexes.

Yeah, and I don't want the viewer to think that I'm being some sort of nasty negative person up here, but I think markets, markets were sort of you're paid to worry, I'm paid to relay, your worry. That's kind of how the whole thing works. So what's the best reason to be bullish right now, Lizanne? From a fundamental perspective, it's clearly been earnings. You had the first two quarters of the year where when all was said and done, earnings at the end of reporting season were about double what was expected at the beginning. And I think that arguably means the bar is set sufficiently low as we head into third quarter reporting season, in part because analysts did not extrapolate that strong first half of the year much into the latter

half of the year or into 2026. So I think that's the most important fundamental support. Then you have the more esoteric markets like to climb a wall of worry. There's plenty of things to worry. There's plenty of things to worry about. So there's sort of this embedded skepticism, even amid other sentiment indicators that suggest there's some complacency and froth. I think that's more a function of what cohort of investors you're talking about where there might be complacency or froth or where there may still be some skepticism. And I also think that the investment side of our economy, notwithstanding the constraints on non-AI-related CAP-X due to policy-related uncertainty, especially regarding tariffs, I think the investment-driven side of our economy is probably one of the brighter, longer-term, bright spots for this economy.

Well said, as always, Lizanne Saunders, Chief Investment Officer Charles Schwab, Lizanne, a pleasure. Perfect day. Thank you. Thank you. All right. Coming up, we'll dive into maybe some of those other opportunities Lizanne just talked about. What about the banks? Is it too late to bet on some of the mid-sized banks? Your next guest, Anton Schutt, says no. and he's going to name some names coming up. All right, welcome back. We can't talk about the Fed without talking about interest rates, and we really can't talk about interest rates without talking about the banks,

because banks are not only where the money's at, it's where the interest rate rubber meets the road. And we're not just talking about the super banks, the J.P. Morgans or the city groups. Yes, those have had monster years. But we're also talking about many of the smaller or mid-cap regional banks that have made money for investors and may make even more. And no one knows more about these regional banks than Anton Schutz.

He is president and C-I-O of Menden Capital Advisors. Fair to say, Anton, banks are your... Fishing and banks are your life, right? That your family. Yes, those are the three things. All right. It depends on the order sometimes. Yeah, we'll invert the order.

It's a business show. So we'll start with the mid one. Let's start with Bank of California, B-A-N-C. big change here at the top CEO, making a lot of changes. One reason you like this company. Well, I mean, it trades below book value when you know, you buy banks below book if you can. And it's a large Southern California bank, which means it's also very attractive to others, potentially down the road. They've done a lot of things.

They've shrunk the balance sheet. They've gotten credit under control. I think they're going to start growing again into the future. They've also been very opportunistic where they're a capital. And they've bought back a lot of stock below book. value, which has added further to book value. So I really like the path here. I like what they're doing. Private equities behind this bank. So if he performs well, terrific. If he doesn't perform well, I see it for sale sign on this company. So either way, I think the investors win.

Yeah, banks in California have an uncanny ability to get bought out. I must have something to do with, you know, one in six Americans living in the state. Home Street, I don't know a lot about this company because it's pretty new to the public markets. Yeah, so Home Street got taken over by a bank called Mechanics. It's also in California. It's about a $3 billion market cap. No one's heard of it. The research is not doing any work on it yet.

We'll see some reports coming out. But because of its size and because mechanics bought Home Street, we're going to see that added to the Russell 2000. So there's going to be tremendous demand, right, even beyond the fundamentals. I believe it trades at about seven times next year's earnings. And you've got a lot of private equity behind. this bank, which also means they're capitalists. And I believe there's a potential not only to get the numbers into very good shape, but the potential to sell this bank within the next 18 months.

So, you know, love the upside here. It's really interesting. Underfollow it, it's going to be more followed. The next one is, it's a little wonky in our world, but First Horizon. A lot of people talk about it. A lot of people have strong opinions about this company either way. they were going to merge with TD Toronto Dominion, the Canadian Bank. That got called off. You've owned it for a while. What is it about First Horizon that you still find attractive? Well, first of all, geography.

Geography, I've said it many times on your show, Brian. It matters, right? And they're in the southeast. They're in Texas. They're in North Carolina. I mean, they have really great markets. So, first of all, great markets. Second of all, conservative culture.

So not taking a lot of risk. They've got good mid-single-digit loan growth going into next year. They also buy their own stock back. And, again, this company's very attractive to bigger banks. Does it need to sell? No. But again, you can win either way. You can win by someone paying a lot of money for this bank, or you can win by them,

just continue to do a great job fundamentally and buying their own stock back. So love the geography, love management, very close with these guys. And, you know, I had a chance to buy it back when that deal blew up. So, and that deal did not blow up because of them. It blew up because of TD getting into trouble. And that was unfortunate. Yeah, but it could be a fortunate opportunity for a lot of people, first horizon, Home Street and Bank with a Sea of California.

Anton Schutz enjoy family fishing and the banks. We appreciate your time as always. Always a pleasure. All right, thank you. All right, still ahead from banks to homes. We'll talk about home building and where there's money to be made, and a lot of it is probably right there in the middle of Texas. Talk about that coming up.

All right, welcome, but welcome back. We've got a big number for new home sales this morning. 800,000 new houses sold in the month of August. That is well above the 650,000 expectation and more than 20% jump month over month. But that's where things were. We want to know where things are going. Your next guest has a great look into the real estate market, particularly in Texas. It's company owns several commercial.

real estate buildings in Austin. They're developing around Dallas, also in Arizona. Joining us on set is Rastigar Capital CEO Ari Rastigar. Ari, great to have you on the program. Thanks for having me, bro. Okay, so you went from son of immigrants, zero money to building what may be the tallest building in Dallas. Before we get into the specifics, tell us how you did that, because a lot of our viewers are entrepreneurs as well. You've made it. I'm not entirely sure in hindsight, but I think not much sleep and a lot of getting punched in the face and continuing to get back up every time. Hopefully not literally.

I assume that's a figure, a metaphorical punch in the face. I was a wrestler growing up, so I was used to having my back on the mat. Okay, so you actually might act physically. They did get punched the face. I'm glad you're doing well. I mean, but you get my point. It's a risky business, particularly risky in real estate. Real estate is one of those things where everyone's like, oh, it's easy money.

No, it's not. Yeah, you're right. And the numbers you talked about today, I think paint a picture that's not exactly what the numbers say. Because if you have a jump, 20% fine. These are new homes being sold. So if you look at the concessions that the builders are having to give to buy those rates down and what the pricing decreases are, it is a huge number. But it's not exactly all candy canes and lollipots. Okay.

What does that mean then? What's wrong? What that means is that they're having to make a lot less money to move those units because people that, 80% of homeowners in America have a mortgage under 5%. Yeah. They don't want to move. They don't want to where they're going to go. So they're going to a 7% market.

And now if you look at the median price of a home in Texas, it's up 40%. So if you had bought your house before, God bless America. It's great. But it puts you in a very difficult circulatory issue where you can't really sell. You know, if you do sell, where are you going to go? And the houses that are actually being sold, so to speak, are having huge concessions. There was a theme or a meme or whatever you want to call it going around a couple of months ago that Texas was doomed, that Airbnb has destroyed Texas and homes are just, they're giving away houses. That's not true. Well, how's Texas really doing?

Well, let's talk about Austin just for a second because Austin gets beat up a lot. We have a lot of stuff. The free state of Austin. Exactly. 400 people a day are moving to Austin, Texas. So to put that perspective, that's a perspective, that's a lot. That means every four to five years, we're adding the entire city of Pittsburgh to Austin. Wow. Real geographic barriers. You have a little company called Tesla you might have heard of that they're headquarters there. Also Oracle, Schwab, Dell, keep going.

And so the point in saying that is clearly we're at a lull. Clearly construction has been a very difficult proposition. You know, if you have great land reserves and you have resilience, you know, maybe things work out. But when you have that many people moving in that are getting real jobs and there's intra-company business, meaning Tesla just did a $16 billion deal with Samsung that now has, you know, their location and Taylor just outside of Austin, you start to see that those numbers over time, one would believe is really going to push the market. You told me, I love these little facts and nuggets because I just drop in and sound smart at parties.

It's amazing. You told me that Austin has, what, the fastest rental rate in the United States? So if you look at net absorption, okay? Net absorption, Austin is at the top of the list. New York City is another issue because there's literally no housing. There's no housing. So in a city that's actually that's continuing to growing that has some leadership that allow something to be built in theory, it's at the top of net absorption, meaning the supply,

nobody's really been building anything because prices are insane. But when they are built and delivering, they're getting sewed up very quickly. So this Dallas building, you're smart enough, I guess, that Goldman Sachs is moving a bunch of people from New York and all over the country to Dallas. We don't talk a lot about, talk a lot about Houston and talk about Austin. How's Dallas doing? Look, Dallas is leading the decentralization of finance, I think, for the United States. The stock exchange from Chicago is moving to Dallas. That's once in a hundred year shift.

And Goldman has been in Dallas for the record. They've been in there since. They're adding bankers. They're adding more higher level people. 4,000 in office employees, but the funny thing about that is many of those employees are already in Dallas. So they're filling up a new build of close to a million square feet with folks that are already there and continuing to grow.

So the presence is pretty profound. How's the traffic on the 35? Oh, goodness gracious. How's Javier's? How's a margarita at Javier? How about that? Absolutely spectacular. I'm more of an Alburnéz guy,

but Javier's is quite great. Ari Rastigar. Great to have you on. Great story. Great guests. Appreciate you coming in all the way from Texas. Thank you. Thanks for having me, buddy. All right, let's get now over to Christina Partsenabalus for a CNBC News update. Brian, let's start with Homeland Security officials.

We say the person who shot three detainees out of Dallas immigration and customs enforcement facility this morning fired indiscriminately from a nearby roof. Two detainees were killed. The third victim is in critical condition. Officials say the shooter is also dead from a self-inflicted gunshot wound. Homeland Security says a bullet shell casing was found with anti-ice written on it in blue ink. And the FBI is calling the shooting targeted.

Syria's president Ahmed al-Sharah addressed the United Nations today, marking the first time any president from his country has done so in almost 60 years. He said Syria is reclaiming its place in the international community after six decades of dictators. It comes after the outseeing of president of Bashar al-Assad in just this past December. And switching gears completely. More lighter note, March Madness icon Sister Jean is retiring at the age of 106 years old. According to the Loyola Phoenix, she is stepping down as the school's minister and basketball team's chaplain because of health concerns. She won over basketball fans in 2018 as she cheered on the sidelines for Loyola during its improbable trip to the final

for great job 106 years old retiring we only we could do the same brian one day yeah she's 287 years old in tv news anchor years but sister jean was an icon on the court and i'll give you one hundred dollars in bitcoin right now if you could tell me the nickname of the loyola university sports teams the suns no phoenix rising no i'm not a sports person ramblers ramblers okay You didn't even have $100 or $100 Bitcoin. You don't have any. I don't have any. I'm negative equity Sullivan.

That's what they call me. Christina Ports and Evelace. Thank you. I don't take bets with you. No, you won't get paid. As the AI trade broadens out, we are getting you some under the radar names. It could see some big gains. You're looking at one of them now.

We call it a mystery chart for a reason. And if wasn't for these meddling kids, we'd reveal it right now. We're back right after this. Go ramble. Crypto Watch is sponsored by Crypto. crypto.com. Crypto.com is America's premier crypto platform.

All right, welcome back. Spent a lot of time today talking about the AI trade. We've got New Edge wealth portfolio manager. Jay Peters on set with us to walk through why he think there is still opportunity there, but maybe not in the places that everybody else is looking. Jay, good to have you on set. It's great to be here. Thanks, man.

Okay, everybody, Oracle and Nvidia, we get all that. Monolithic power systems. Who and why? Yeah, so this is a company that is a semiconductor company that regulates the power and transmits all the power that goes into data centers, transmits it across thousands of GPUs. Ultimately, this is a company that makes data centers run more efficiently. And you've talked a lot about this week about the power mismatch of the bottleneck for these facilities. Yeah, I'm a little worried about it, it's clear, I think.

So I think any company that's going to help alleviate some of that strain is well positioned. And, you know, essentially, they're going to make their chips make data centers about 5% to 10% more efficient. And we think that's going to be important, given the fact that we're going to see data center capacity probably 3x in this country over the next five years. And, you know, there are concerns about the bubble. I get that. And I think, you know, the investment cycle is probably going to be bigger and longer than people think. And it's largely driven by the demand for compute, which is also probably going to have 3X over the next five years. AI, a lot of AI is moving audio and video around the Internet.

And that's kind of what interdigital helps companies do. Exactly. Yeah. This is a $9 billion market cap company, a leader in wireless and networking technology, and really a provider of technology that allows you to compress data and move very efficiently around the world. And so in our view, this is a company that's leveraged to two key secular growth areas, and that's the growth of compute and the growth of connected devices.

It's one reason why it's been a great performer over the last several years, but also it's a very well-run business. It's a high-quality company. despite the performance only trading around 25 times earnings, and I'm growing at, say, 20% annually, and in our view, a great business. There is a school of thought amongst some that AI will kill software.

You don't think so, and you think a company called Pegas Systems, not the one we talk about much, is a good bet here? No, and, I mean, we talked about this death of AI from, death of software from AI last month. As Lee Corso would say, fast, my friend. I think there are companies below the surface that have proven that they can benefit from the adoption of AI and Pega Systems is in our view one of those companies.

This is a company known for providing business automation software, ultimately helping employees increase their productivity used by the vast majority of the Fortune 500, like a Salesforce, like a workday, well ingrained into that ecosystem. Their solutions are really for mission-critical products. So think about things like loan underwriting or fraud detection, things you might not necessarily want to offload to an AI startup if you're J.P. Morgan or a large company. And, you know, we're seeing the stock has been a great performer. Reasonable valuation, sort of a high 20s PE, core business growing 20% year over year and healthy free cash flow. So just another name under the surface.

You've got to bring the Pega Systems mascot head if you're going to channel Lee Corso, one of the great legend. Do you do Lee Corso's? I challenged Christina Parts and Elvis to a question earlier. that I knew she wouldn't get. This one is a little easier. You know who Lee Corso's freshman roommate at Florida State was and who remained his good friend until he passed? I don't know. Bert Reynolds.

Wow. Bert Reynolds was Lee Corso's roommate at Florida State. That was a room I would have liked to have had to fly on the wall of. All right, Jay Peters, New Edge, wealth. That's apropos of nothing, but you can use that at a cocktail party this week. Appreciate it. You're welcome. Jay, thank you.

All right, coming up. a new media rights deal that can potentially add billions to what we just talked about. Football. Alex Sherman, joining us with the scoop next. All right, so big news, the world of football. CNBC reporting the NFL may move up the timeline for the renegotiation of its media rights deals to as soon as next year. That scoop being done by Alex Sherman.

That Alex Sherman is on set with us right now. Why would they move up the timeline? How does that benefit the NFL? Well, the NFL feels like it's not getting enough money. The NFL looks at the NBA's deal, which just happened last year. The NBA got almost a three times increase on its media rights deal from the deal before. It looks at the NHL's deal. They just struck a deal with Canada, got a huge increase.

Even these smaller leagues have gotten increases on their media rights deals, more or less, in this country. Well, the NFL is the granddaddy of them all. It has by far the most popular programming in this country. Last year, 72 of the top 100 shows were, NFL games, according to Nielsen ratings. The year before that, it was 93 out of 100. It was really just the political debates and stuff that kind of interrupted it last year. So I'd have to expect this year will look kind of more like it did two years ago.

So the NFL is like, do we really want to wait around for four more years here, which is what the current deal indicates? There is an opt-out clause after the 2930 season where the NFL can renegotiate all the media rights deals. But that's a long way away. Right. So they feel like they're getting underpaid now. Part of this because they want to bring it up because they must know that Apple or Amazon or Netflix, they've all got some games, but they're going to come in with a stupid high number. Right. So here's the calculus, right? The NFL could just wait and say,

we want to wait until 2930 when all these guys, Netflix, YouTube, will come in with huge over-the-top bids. Or they can dangle that threat to the traditional media companies and say, hey, Pay us more money now, but we'll give you a few more years of football to hold off the cavalry. And otherwise, you can lock in your football past 2930. And for that benefit, pay us more money now. And maybe the legacy media companies will go for it. And they'll say the threat of YouTube and Google and Apple, potentially taking away our football after 2930 is so great that we will pay. you more money now if you give us a few more years of this.

I was in Europe recently on a Sunday. And it was a Sunday and I was in Europe and I know people are going to judge me for saying this, but I was tired. I was jet lagged. And I kind of wished I could turn on the TV and watch a little American football. But the time difference was too great. And of course, the games were at night. That's a couple hundred million people.

Why don't we have a football team? And don't say like the Frankfurt Galaxy of the World League. Why don't we have a football? I was a deep pole, by the way. Why don't we have a football team in Europe? Yeah, the rain fire. The Ryan Fire. Am I saying that right?

Jim Tom Sula. What was the Skyline name? The bombers or something, bombardiers? So you're leading right into my kickoff story for the CNBC Sport newsletter, which will come out tomorrow. From front running you. You're front running me, but I'll go there a little bit with you. That newsletter is free, by the way. You can sign up at CNBC.com slash sport.

I did talk about the idea of international expansion with Roger Goodell in this interview. And he basically said to me, I kind of think we're covered in the U.S. So to me, he didn't go quite as far as to say the next team that we have in the NFL. Alex, I'm here to break the news. He said that would be a little too hard to predict. But, I mean, you can see the exact words he said to me tomorrow morning when the newsletter comes out at 6 a.m. Eastern. But he was leading me there.

He was saying, look, it makes a lot of sense. We're doing trial runs right now. For instance, the Minnesota Vikings this year have backed. to back international games. That has not been done before. Well, it's easier to stay over there. It is easier to stay over there. But why are they doing this?

Because of the Vikings are from Denmark. But they're doing it to test it out. They're doing it to test out what would an international team look like if they had to play all 16, 17 games, 18, probably soon enough. You got affecting the jet lag of the players going over to play again. So you probably have to have a buy week ahead of time. Because let's be honest, anybody of our viewers go to Europe. You know you're tired.

This is baby steps. So it's an unfair advantage. So what do we do? Move the Jaguars to London. How about this? Move the New York Jets to like Helsinki. Right. I'm sure the Jets fans would be fine with that.

Then they wouldn't have to watch the Jets play. Same crowds. Right, exactly. Look, I think one of the hurdles is that the NFL is very well aligned right now. There's 32 teams. It's equally balanced. You can't just add a team. That would throw off the balance.

8-4-32. Right. So moving a team might be the answer. We got to wrap it up. Alex Sherman. Look forward to your newsletter. Mark Lazzery. with that as well. Thank you. Great stuff. Hope it in front running too bad. Folks, thanks for

watching Power Lunch. Closing bell starts right now.