Power Lunch - Tech leads the stock sell-off 2/3/26

Episode Date: February 3, 2026

Software sector slide continues on concerns around AI eating into their margins. Disney names its next CEO. And how is the relationship between Nvidia and OpenAI? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

is gold, the new NVIDIA. Well, one is up big, one is down big, concerns growing around AI spending, software getting smoked again. Other than that, welcome to Power Lunch, everybody, alongside Kelly, I am Brian, and it's a trillion dollar deal for the ages, maybe the space ages. We talk about why. Elon Musk is merging his rocket and AI companies in a trillion-plus dollar deal. Speaking of deals, the CEO of Netflix on the Hill, taking questions about their proposed acquisition of Warner Brothers Discovery, those shares are down sharply again today, Netflix are. Meantime, Disney announcing Josh DeMorrow,

head of experiences, is getting the keys to the castle. A deep dive on media is on deck. But the big move in gold and silver is rebounding following the sell-off last week. You're seeing gold up 5, 6% today. Silver was up 15% at one point. While in software, the cloud ETF, down

7% W-CLD, with names like HubSpot, Service Titan and Service Now, all hitting 52-week lows. And that's where we start with the shop, A sharp drop in tech. Despite the recent concerns about the health of the AI trade, our next guest is still bullish,

says we're in the early innings of all this. Joe Tannius as chief investment strategist at Northern Trust here on set with us. Welcome to you. Can you just unpack it? I was joking with you just a second ago. I'm mouthing to him, I'm going, it's Bitcoin.

Bitcoin is the problem. I'm being a little facetious, but it is collapsing. Again, is something like that enough to put pressure on the entire market, or is this a much more complicated software and open AI story and all the rest of it? I think you have a number of

cross currents that are just impacting the markets all at once and digesting it, processing it, trying to make sense and heads of tales of all these things is quite challenging. On the one hand, I think the underlying fundamentals are still there. I do believe we are still in the early innings of AI in terms of adoption, in terms of what it's going to do. But is that good or bad? If we're in the early innings and Google is turning on NVIDIA and they're turning on each other and oracles over here, like, early innings doesn't mean they all do well. Well, but perhaps we're sort of seeing a bit of a shift, whereas before you've had this rising tie. lifting all boats. And now markets are starting to be a bit more particular and nuanced with

respect to which companies they want to have exposure to. Let's also not forget that after a three-year rally in the markets where you've seen these double-digit returns, valuation start to get a little bit more stretch. It's not going to take a whole lot to sort of poke that bear and see markets capitulate a bit like what we're seeing right. So in midterm election years, not the, I'm going to, it's going somewhere. Trust me on it. In midterm election years, the markets tend to go 17 percent top to bottom. They create more volatility. The midterm elections result historically in more volatility, more peak to trough than a, quote, normal year.

This is a midterm election year. So the volatility, normal. Except in Lest to Kelly's point, there is a huge fundamental shift out of anything sort of related to AI and into other stuff. Do you have a take on that? I think you are going to see a broadening out in the equity markets. seeing it with respect to earnings expectations within the S&P 500. We're seeing it with respect to

earnings expectations in smaller cap companies. Last year was finally the first year in a very long time. You saw international stocks outperform U.S. stocks. So I think there is a desire to start to diversify a little bit outside of just large cap tech. But you hit the nail on the head. You're heading into a mid-term election cycle. You have geopolitical risks which remain elevated. All of these things, I think, are going to be at the center of the conversation, and it's going to manifest itself in the form of higher volatility. I think brace yourself for a bump a year. Well, look at the VIX up at 20.

So what parts of it, I mean, do you just say, it's okay, keep exposure to the market broadly. This churn is all going to happen beneath the surface, or are you more tactical than that? I think we want to be a bit more tactical. Expect non-linear returns in the equity markets. Overall, we remain- What does that mean a non-linear returns?

Non-linear returns, meaning the bull market that you've seen over the last three years where everything just kind of goes up, I think those days are behind us. There are just too many cross currents. There are too many headwinds that are going to lead to some, you know, some volatility and some back and forth.

I think you have to be very thoughtful. You still are going to see the equity markets do relatively well, but it's going to come with a few bumps along the way. I mean, usually, like I say, high risk, high return. So that's fine. I think people can, that might present buying opportunities if you've been on the sidelines

for much of this rally. What would you be watching then for? Is it eco-data? Is it what happens at the Fed, the kind of, as we said, the political environment as we move, you know, closer to November? I think you want to see that the underlying drivers, the fundamental support, if you will, still remain in place. So we are expecting additional fiscal stimulus, right? So you have the one big, beautiful bill act that was signed into law. Let's see what happens with respect to tax receipts and tax refunds and how that's going to potentially help and support the consumer.

Within the consumer itself, you've got this cave-shaped economy, which we've talked about before. I think you have to see how that plays out. You also have monetary stimulus. Expectations for the Federal Reserve. There's a lot of chatter right now on the Fed. What's going to happen? We're still expecting to see two more rate cuts over the course of this year. It's fair to say that with all due respect to our beloved media,

we have an East Coast bias. Kelly, is that a fair thing to say? Yeah, I guess. So Joe is based out of one of my many former hometowns of San Diego, California, where it's 78 degrees and chef's kiss. Anywho, I bring this up because if you look at the Atlanta GDP, now statistics. We're looking at over 5% or around their economic growth. Yesterday we had a guest on from small caps, Francis Gannon of Royce, who showed us a 66% possible jump in smaller cap EPS.

Is there a case for a domestic boom, not a domestic slowdown? Things in San Diego, my sources tell me, are still pretty good. And I don't mean La Jolla. And I don't mean La Jolla. in like the rich areas. You know what I mean? No, people, I think, are feeling pretty good. There's lines outside the taco shops all over the place. Look, overall- Juanitas and Incinnitas is absolutely best. Which we've talked about this.

I think overall, our view is we are expecting economic growth to accelerate here in the U.S. In fact, just over the last couple of months, we've reduced a recession odds in the U.S. I think it's very possible that you begin to see small-cap stocks doing a little bit better. Great. I mean, it's just the Russell 2000 has been showing signs about performance, and then it goes into the backseat. again, and it shows signs, and you go, okay, well, do I want exposure to the highest growing parts of the market or some of the areas that have no earnings or haven't, at least until lately? Yeah, you took the words out of my mouth. Be very careful there, because when you're looking

at the Russell 2000, for example, you know there's a lot of stuff that's not generating any problem. I'm going to put on my inner Santoli, Mike Santoli hat, where Mike will tell you, it's like quarter the companies, you're kind of, you don't have any earnings, or have any revenue. That says, that's the nice term. He calls it low quality. So I look at the SML, the S&P small cap 600. Not perfect, but maybe a better representation than the Russell. Yeah.

And I think where we are in this cycle, I mean, you mentioned the word quality. This goes for not only small cap, but also large cap, given where you are, given valuations, given all these challenges and the disruption that we keep hearing about every day within AI, this is a time to lean into quality. Joe Tannius, Northern Trust, Asset Management, we are leaning into quality by having you on the Thank you, sir. You're very well. It's how nice I am. Joe, thank you. All right, coming up, the big money race for power rolls on with a red hot stock this year that's on the move today. We'll get the name, the story, and meet the CEO. There's your chart. Next.

All right, Dow's down about 1% basically giving back what it gained yesterday. But right now, we've got some breaking news on the funding bill. Emily Wilkins with more from Capitol Hill. Emily. Ryan, we are all but a presidential signature away from this point for the shutdown being over. The House has now passed a funding bill that will fund the vast majority of the government through the end of the fiscal year. This is, of course, the one that's cleared the Senate. Trump has already said that he's going to sign it, so we expect the shutdown to end today.

And then, of course, we'll be keeping a close eye for BLS to see when they will be releasing Friday's jobs numbers. Of course, this is not the full end of the shutdown debate for the Department of Homeland Security. Remember, that one is going to expire having its funding on February 13th. And lawmakers are working to come to an agreement to potentially try to keep it open, to either fully fund it for the rest of the year or continue funding. That will certainly be a issue to continue to watch both from a politics and a policy perspective on when it comes to immigration, ICE and Customs and Border Patrol.

But the rest of the government can breathe easy. Everything is going to be fully funded, at least until the end of September. Guys? The everything's fine theme. Back on. Emily Wilkins, thank you very much. All right. Shares of Terawolf are in focus right now. Stock's only up about 3%. It was up much more later. But it's almost triple since we began speaking with the company just over one year ago. Terawolf provides energy and energy infrastructure for AI and crypto. And now it's making two big deals to grow that business by buying two industrial sites. One in Maryland and one in Kentucky. One, an industrial site with access to power. The other one, actually a power generation facility.

Talk more about these deals and more with CEO and founder Paul Prager of Terrell. Well, Paul, good to have you back on the program. What are you gaining by adding over one gigawatt, I think almost two or more of power from these two facilities? We're doubling our pipeline. We needed the power and the energy infrastructure to meet the needs of data centers for our customers. That's what we've done.

Hosville is near term. We have immediate access to 480 megawatts. And Morgantown, we're doing where the hockey puck is headed. We're bringing power and energizing data centers and still providing surplus power to the grid in Maryland, which imports 40% of its electricity, really needs it. Yeah, and you're kind of near there in eastern Maryland. So there are two different deals and two different things.

And if I get it wrong, Paul, please correct me as I'm sure a naval man like yourself would. Hawsville is an industrial site that has access to the grid, access to dedicated power, correct? The Maryland deal is actually a power plant. How do these deals differ and how are they similar in Wolf's goals for the future? Sure. There's a real urgent need for available power now from our customers. All the hyperscalers are screaming for it.

Hosville represents the opportunity to meet that need. the ability to bring 480 megawatts near-term, second half, 27, have a data center online for a customer. Its location is wonderful. It's right in the middle of the country. It's very exciting to have that size, that scalability for a customer available today. It's our kind of site, right? It's something where we can recognize the value of the existing energy infrastructure, power pricing, support for data centers in that part of the world.

And we could sign up a customer very near term and just grow with them. Morningtown is a different facility. It's an online existing power plant used to be one-and-half gig power in a state that's really challenged right now for electricity. We're going to repower that facility. We're already a surplus generated to the grid. We're going to make sure that we continue that March within the next 18 months. Bring 500 megawatts online, 250 megawatts of battery storage, phase one.

18 months after that, do it again. Another 500 megawatts, another 250 megawatts of battery storage. We'll have a data center customer for up to a gig of power at that site. It's very proximate to Washington, D.C., the Northern Virginia card, I think it's 38 miles. It's a very, very exciting site. And it's consistent with where the market's moving, the idea of bring your own generation. That's what Morgantown represents for this company. And we're in uniquely positioned to take advantage of that, having built power plants for the last 30 years.

Could you tell us who that customer is, and if they rhyme with Corweave or give us a sense of, you know, Paul, because in the market, people are, they want to know the economics down to, well, whose stack is going to have the greatest, you know, durability. And I'd love to do a little bit more about the casualty. What kind of cash flows you think you can count on over the next 20 or 30 years or whatever it is in order to make the economics of this look really exciting? You know, one and a half million, you know, in revenue per megawatt. And I think, you know, we will announce a customer for Hawsville when we have signed up the customer. But I could tell you that there is urgent demand for that. We're in talks with several parties at this point in time. We like a hyperscale a customer because the co-location model has us financing that facility on the back of their credit.

So, you know, you're familiar that Google is a significant shareholder of our stock. I'm sure we'd be talking to hyperscalers like that who want to partner with us in Kentucky. It's a very exciting opportunity. And you get to kind of ride on that credit. Very quickly, Paul, I got to ask you, we got to go, but I got to ask you a quick question. Got SpaceX and XAI emerging today, I think the deal is probably all about data centers in space, assuming that occurs, and I think it will, what does that mean for, you know, terra-ferma, land-based power deals like this?

I think there's a lot to figure out. We're at the nascent stage of that industry. We're still just figuring out how the evolution of the chip technology has driven the location of land-based facilities. We don't really see that as something that is driving a change in the demand for well-located facilities. We're excited about these two locations. You watch us go.

Paul Prager, Tara Wolf. Really appreciate your time, Paul. Two big deals. Thank you. Great to see you. All right. Coming up, all as well that ends well, we're going to look at the relationship

between Nvidia and OpenAI. Next. Welcome back. A lot to talk about in tech today. Two huge stories unfolding out there today. Let's start with the Mega Musk merger to combine SpaceX and XAI. Our David Faber earlier reporting,

their value would be around $1.25 trillion. We also have the tech wipeout in general, including a lot of the software complex today. Let's bring in Sam Lesson. He's a general partner at Slow Ventures. Sam, I'd love to know. Can you explain, I mean, do you think Salesforce should be trading where it is? Maybe. The market seems to.

It's a good voting system. Look, I think there's a real question of the ultimate complete commoditization of software and how much you believe the AI narrative and on what timeline, right? In the end of the day, when you look at technology, there are some big global stories being told right now. These narratives are incredibly powerful. And, you know, one of those narratives is software isn't worth much because you can just make it all yourself whenever you want. But there's a different. Listen, you, Sam, had a turn or two at coding.

Maybe I don't know. But I'm just saying, I as the layperson, I can make a silly pizza app with Claude code. I can't do a lot more than that. So can you explain to me how the pros are able to use these tools and how much of this is because of Claude's latest, you know, introductions to the software space, how much are they really going to steal from incumbents, do you think? Would you invest in, like, the narrative that these software incumbents no longer have a place in the marketplace? Well, I mean, I broadly have exited software a while ago for this reason. I think there's two ways to think about it. One is that the power of the

narrative and trading the narrative. The narratives usually precede reality, right? So even if we're not quite there yet, the narrative is clearly built that we are going there. And, you know, there's a real question about exponentials and asymptotes. Right now, we're in an era where for the last two years, we've been having an exponential story about software, and there's been enough proof points to back it up where everyone kind of believes it. Now, where is that asymptote? Is it asymptote at silly apps, or you can build your own Salesforce with one incantation?

These are the questions to ask. But I will say that the more that consumers and people are broadly exposed to this stuff, the more they realize that a lot of things that felt like moats before just aren't moats anymore. All right, R and R.R. and all right, let me ask you then, about an area where I know, I believe you're still long-term bullish, which would be in crypto. And this implosion that we're witnessing before our eyes, what should we make of that? Look, I mean, the story for crypto, crypto's a lot of stories, right? And again, I think you have to really understand kind of the different ways they interact. You know, my joke recently has been that

what you see in gold and silver is this great revelation that people found crypto, but without the technology risk, right? And so, you know, I do think, I think the broad story of we're not sure what stories to put value in and where to believe in how to effectively do the anti-trade on technology is an interesting one. People are looking for things for that. The problem with crypto, right, is that it is both simultaneously or historically has been part of the super cycle, right, and part of the technology story and supposed to be the counterweight to it. And which of those stories dominates is the really interesting question. You know, right now, there's no question. The story of, you know, Bitcoin trades as a risk-on asset along with the rest of technology is dominating the

story of this is where you can put money when you can't put it anywhere else. And we'll see how that shakes out. Sam, again, I'm going to ask a non-tech experts question, and hopefully this makes sense around software. Salesforce, I think the genius is, and I'm not picking on Salesforce, Mark's built an amazing company, but they have more companies that service Salesforce than people who work for Salesforce themselves. The halo around it, you go to Dreamforce. There's hundreds of companies that sell into it, service it, correct? So if something were to break on the inside, what happens to all the residual,

all the orbital moons of these planets, if that makes sense? Well, the question is what the orbital moves move on to. You know, in the end of the day, as my understanding, and it's a second-hand understanding, if the original Salesforce was sold as a platform, but really was marked building and selling separate instances of a CRM to a bunch of different,

companies and stitching it together later, right? In an era where you can make your own CRM very quickly, that's obviously a really challenging position to be. Now, the ecosystem, it can move on. You know, maybe they all become Claudebot developers, right, or do something else. I mean, there are ways that you can still be in the CRM enablement business to some degree, you know, without a central star, so to speak. Except a lot of the fair, but a lot of those companies, unlike Claudebot for now, anyway, maybe they'll go public on their own because apparently they don't need any humans to do anything. Sam, apparently, like, these companies, a lot of them are public. That's part of the problem is that we're seeing B.C. So we're looking at these stocks that are down 30 and 40 percent

in 90 days. You know, these are companies that employ thousands of people with real businesses. Yeah, it's tough. I mean, look, the reality is, you know, let's look at the other side of this, which is like the SpaceX story, you know, upcoming or the XAI story. We're in this place where the world is so uncertain that everyone is trading these. derivative narratives on top and where other people are going to go. And so you see these wild swings. You know, you might have EPS or enterprise value as a baseline story. Everyone believes. You know, everyone's going to trade it at a certain point. But so much of these things, the question is, we don't know what direction we're heading. So kind of imagine you're like, everyone's running around,

everyone's kind of at a stoplight, and we're not sure which way to go, right? We know something's changing. We just don't know where the next goal post is set. Yeah, I think that's right. And it makes it, I think what you're saying is when you have a narrative like data centers in space out there. It makes it a little harder to go, well, but Salesforce has steady, you know, EPS or what have you. Speaking of... Plus, it's like, you know, no one wants to earn, no one wants to make a little bit of money when there might be a hundred or thousand X swerve ahead of you in one direction or another, right? It's just not worth holding it, you know, for a compounding, for a small compounder. That's very well said, especially when it's down over five years.

Last quick narrative to ask you about there's been this drama playing out back and forth between Open AI and NVIDIA this week. But CNBC's Jim Kramer earlier today, talked to Jensen Wong, who said there's no controversy. Just take a quick listen. No, there's no controversy at all. It's complete nonsense. We love working with Open AI. We are incredibly honored and delighted

to be able to invest in their next round. And so we're a privilege that they're inviting us to invest for each one of their rounds. We would love to be invited, and we would consider, of course, investing in it. This is one of the most consequential technology companies in history. Sam, what do you think is really going on here?

What did you want him to say? I mean, like, in the end of the day, you know, here's the reality. You know, open AI, the narrative opening I has been one of the super cycles of narratives of the last few years, right? It's like been a wild story. They're now facing peace competition. Some of this kind of winner take-all story of what they're trying to accomplish or they've been trying to sell is threatened. You know, they're doing well in certain things. You have Nvidia, which has, you know, it's being wildly profitable, incredibly successful.

a much lower level, the whole thing. But you know what? There's a lot of GPU companies coming to. These guys are highly aligned at the high level, and they obviously want to be in locked step. But the question of who's got leverage on whom and what people are willing to pay for different things? Can open AI survive without $100 billion from Nvidia, Sam?

Direct question. What if they don't get the money? They got to find $100 billion somewhere. Yes, even these days, that's hard. Even these days. Yeah, I mean, they've been remarkable. Sam's an incredible storyteller and incredible fundraiser, you know, and I think Elon's the only fundraiser who's better.

And he's been incredible at finding those checks globally when people thought he couldn't anymore. But at a certain point, there's only so much money in the world. And he's incinerating a lot of it. Incinerating money. That's the name of my new band, by the way. Now they're down almost 7% in two days in video shares on top of all of that. Sam, thanks very much. Really appreciate it today.

Nice to see you guys. Sam lesson of Slow Ventures. He was great. I know he's your buddy. He's your buddy. I want to dress like that on TV. I don't want to wear this. Well, it looks like that.

Be sure to catch the rest of Jim Kramer's interview with Jensen Wong on Mad Money Tonight. People, markets will be hanging on every word. Don't miss it. Well, I think, again, not to belittle the point, but I think this is, folks, this is to me and maybe to Kelly, this is critical. Like, this is a couple that is sort of the it couple, Brad and Angelina, whatever you want to call, Jennifer Aniston, whoever, whatever, and something's going wrong, it feels like. And it's making all the headlines, does it mean anything or does it not? I don't know. Right, but that's what makes it fun, unless you're a shareholder right now who's crying. And Open AI is kind of a closed company, so we just don't know.

Yeah, exactly. All right, so while Nvidia and some other stocks are falling today, there is some good news. A different AI-related stock is soaring. It's called Terradine. It's a semiconductor testing company at a blowout quarter. Stocks at a new high, up 12%. Just another caution. At 279, stocks about $38 a share.

than the average price target. Still, Terodyne green today. Wow. Usually that's a good sign that the streets having to catch up to what it's doing. That goes back down. All right, now to the bond markets, 10-year yield. Off session high as bonds rallying. Market taking a more defensive tone, by the way, also move in Europe. German 30-year bonds, yields climbing to the highest levels of 2011. Guess why? More debt means people demand more yield. You better give me more return for my money because debt issuance keeps going up. in an economy, by the way, that is fair to say, is struggling due to some rather poor decisions around energy that they made, oh, about five or six years ago.

And coming up, Netflix testifying in Congress, Disney announcing the successor to Bob Eiger, a deep dive into media is next. Welcome back. Yes, it's a tough tape today, but Netflix shares are now at a 52-week low on today's 3.5% drop. They're below $80 a share right now. Co-CEO Ted Sarandos is also testifying on Capitol Hill before the Senate Judiciary Subcommittee committee about their proposed acquisition of Warner Brothers Discovery, which of course has been the hangover on the shares. Let's bring in CNBC's senior media and tech correspondent Julia Borsten. Julia, what should we expect from him? And he's playing this game about,

ironically, he has to convince regulators they're not going to be a monopoly. While the, really what the market wants to hear from him is that they will be or that this investment will be justified. Well, I don't want to, I think they don't want to hear it's going to be a monopoly. They want to hear that this $82.7 billion deal is going to pay off. And today, that acquisition is in the spotlight. The hearing just kicked off and Ted Sarandos, Netflix co-CEO, and Bruce Campbell, Warner Brothers Discovery's chief revenue and strategy officer will both be testifying. They will address questions raised by committee chair Senator Mike Lee about, quote, potential abuse of the merger review process. He wrote, quote, this transaction appears likely to

raise serious antitrust issues, including the risk of substantially lessening competition in streaming markets. If consummated, the acquisition could eliminate a major competitor, consolidate control over an extensive content library, and increase bargaining power over creators and talent. Now, Sarandos and was expected to say that this combination will be pro-consumer, and by offering more content for a lower cost, will pressure rivals to keep their prices down. We expect the two of them to note that 80% of HBO Max subscribers also subscribe to Netflix, and together the streamers comprise about 10% of viewing time, and that's, of course, accounting for YouTube and the like.

I think we'll hear a lot about YouTube. And as for concerns from the entertainment industry, we expect them to say that they will not reduce the amount of content that they're creating. Brian? Big day. A lot of news. Julia Borsden, thank you very much. So why don't we stick with that story and welcome in another media expert to break down

the likelihood of whether that Netflix Warner Brothers deal will be able to make it across the finish line, maybe talk a little bit about Disney. Joining us is Matt Bellany. He is one of the founding partners. Matt, great to have you back on. Do you think this ultimately, that Netflix does win Warner Brothers? Oh, that's the question of the hour. It depends on what the definition of the market is here,

because Netflix is really going to try to paint YouTube and all of these other lures for time spent on the Internet as their big competitors. Instagram Reels is now launching a television app. There's competitive competition from TikTok, all these other things. Now, the other side, the senators are going to look at this and say, well, wait a second, you are the dominant player in subscription video.

You are now trying to buy the number three or four competitor in subscription video. That, depending on how you define it, that should raise some pretty big alarms. And within the creative community, YouTube is just a very different platform than Netflix. So filmmakers and showrunners, are they? selling shows to YouTube? No, they're selling them to Netflix. So it's just a matter of how you define the competition playground here. And how would you define that? Well, I tend to sit side on the side of the creators here, because if you are trying to sell a show or get a movie made, you are not thinking about Netflix or Instagram or TikTok. Professional content creators are thinking of the

kinds of platforms that finance and distribute their work. So this is very similar to what happened in the Penguin Random House deal, where the regulators looked at the market for book authors to sell their books to different publishers. And they ultimately found that reducing one of those buyers was a big problem on antitrust grounds. And I think that from my perspective, that's what's going on here, is that taking HBO and HBO Max and Warner Brothers Television off the table as buyers of content for creators would be a significant jolt to the system

for content selling in the industry. Regardless of what Sarando says about whether it will be great for consumers, it may or may not. That's up for discussion, but for creators, this is pretty bad. Hmm, okay. Well, so while that plays out,

I suppose we should ask you about the other main. media story, which is Disney. I mean, this is the total flip side of the story. This is not, you know, YouTube. This is not, it's frankly, it's really not much about streaming anymore. I mean, that was the lesson I feel to some extent from that quarter. I don't know what you thought. They're going to elevate the chair of Disney experiences, which makes sense. Josh DeMorrow, he's going to succeed Bob Iager as the next CEO. There's some skepticism from high-level investors. And a comment to the Wall Street Journal, the activist Nelson Peltz took a shot at Iger saying he needs a reason to stay on. And if he put the person in charge of entertainment

in the CEO role, he wouldn't have an excuse. to stay. But I can understand the rationale behind we're deemphasizing this as a media company and we're emphasizing experiences going forward. Yeah, I don't think Bob Eiger wants to stay beyond this year. I mean, he already announced he's stepping down as CEO in March, which is a lot earlier than he had planned before. This is a reflection of what the Walt Disney company is today. And it is largely an experiential company, theme parks, cruises, They need to get bigger in games. The future is dependent on these experiential businesses.

In streaming and television, first of all, television is not even a material aspect of the company anymore. They don't even break it out and there's speculation they might even spin off some of the TV assets. So it's really about whether streaming is important enough to put the person who runs streaming in charge. And they're spending less outside of sports on that. They see this as, you know, they can squeeze profitability. out of the Disney Plus brands, but the growth area here is in parks. It is in the experiential business.

That is why Josh DeMorrow is the CEO. Hold up now. Go back to what you just said, because Kelly, I haven't heard anything that they may spin off TV. I was going to actually ask you if it's possible. We're in the media. We love to talk about the media.

I get it. But media is not that big of a deal for Disney anymore. 72% of whatever they're operating income or whatever the number is, is parks and things. like that, could they spin off? They want to keep the movies because they want the Marvel intellectual property for the theme parks. I get it. George Lucas, whatever, Melody Hobson, his wife, by the way, was on Squawk Box this morning. Is there a chance they could sell off ABC and ESPN? Because why do they care?

Why do they care about TV? If you remember, Iger floated this idea. I don't remember. When he took over the company again. Yeah, and he said there was non-core and potentially, now he abandoned that idea. So Iger was not willing to do it. What I'm saying is that in the future, the next three to five years, this will certainly be an option on the table for tomorrow. And if the television business continues to get worse, which it does, if sports rights continue to get more expensive, which everybody believes that they might, and you've got Jimmy Pitaro who's still at the company and would be ready to lead a spun-off ESPN-type company, that is an option on the table. I'm not saying it's going to happen, but the next CEO of Disney is going to have to make some hard choices about where he wants to steer the company.

And many believe that Disney getting into the arms race for non-branded, non-differentiated, adult-oriented television was a mistake. The acquisition of Fox largely fueled that. Some believe that. Iger clearly does not believe that. Dana Walden represented that aspect of the company because she came from Fox and her special. is in this general interest entertainment. Will he go a different direction tomorrow? We don't know.

But it's an option. Listen, a big media company that spins off to a smaller media company led by the former head of the sports division. It's not unheard of. Although Versa doesn't have the same sports assets to ZSPA. Let's be clear. Hey, we're number one. I don't want to hear it, Matt. Get this guy off the air.

Go. Oh, time to go. Verse it all the way. Melanie. Puck's founding partner. Thank you, sir. Appreciate it. Thank you. Let's get to Leslie Picker now for the CNBC News Update. Hi, Leslie. Hey, Kelly. The Republican-led House Oversight Committee says Bill and Hillary Clinton have agreed to appear for

transcribed film depositions later this month as part of its Jeffrey Epstein investigation. The former Secretary of State is scheduled for February 26, followed by her husband a day later. The Clinton's reverse their refusal to appear before the panel ahead of contempt of Congress vote, slated for this way. week. Authorities in Arizona say they are following hundreds of leads in the disappearance of Nancy Guthrie, the mother of today's show anger Savannah Guthrie. They say there is evidence the 84-year-old woman was taken from her home against her will sometime between 930 Saturday and 11 a.m. Saturday. Sunday. And Spain and Greece are the latest countries to weigh a social media ban for teenagers. Spain's proposal would limit access to those under 16, while Greece's

would affect anyone under 15. Britain and France are weighing similar proposals after Australia became the first country in the world to prohibit access to social media platforms for under 16-year-olds in December. Brian, I'll send it back to you. Yeah, and thoughts, I mean, Savannah Guthrie, met her a few times.

Not going to say she's a friend, but obviously thinking about her mom and her whole family. 100%. Awful. What a terrible story. Leslie Picker, thank you very much. Up next, Walmart. It's a hard transition.

It is. One trillion bucks. Talk more about why next. And welcome back to Power Launch. It's time for your market navigator. I'm Dominic Chu. Walmart is the latest company to join that Volunted $1 trillion club with its market cap

topping that threshold for the first time today. It's especially notable for the country's biggest retailer and grocer and private employer because it's joining a list of mostly tech companies. That stock is up almost 30% in the past year, but our next guest says it's still got room to run. So joining us now for that case is Bob Lang. He's the founder and chief options analyst over an explosive options.

So, Bob, take us through what exactly your thesis is and how exactly then do you play it? Great to be with you, Dom. So it's hard today to find anything in green other than gold, silver, or apple. But, you know, Walmart is really sticking out like a sore thumb. It's been very, very strong the last few days. It hit a new all-time high today. It, as you said, mentioned, hit the trillion dollar club. Great to see that widespread move.

for Walmart. But trading into an all-time high, you'd think that maybe it's a little bit overbought. We need to see some of that come off. But I'll tell you what, momentum is very, very strong in a stock like this. Volume trends have been real solid and bullish of late. The stock is in a firm uptrent with higher highs and higher lows, which is our textbook definition of an uptrent. And I don't see the stock slowing down much. All right. So how exactly then do you play it? Well, I would play it with some options here, Dom. And I've seen some really strong options in February and March at the 120 and 125 strike. So I'd be looking at the March 125 strike trading at about 660 to 680 right now. And the reason why I would go with March is because the stock

is going to be exposed to some earnings at about a week, week and a half. And the implied volatility is actually rather high. It's expecting about a 7.5% move on Walmart, which is a little bit higher than normal, but I think if we get past the earnings and volatility that's going to be present with Walmart here, I think the stock has got a good chance to get up to 150. And if that's true, we're going to get a good, nice move on those options. All right. Bob Lang with the bull case for Walmart and Kelly and Brian, just so you know, it trades at 44 times forward earnings and is pretty much above its target price right now from an analyst standpoint. We'll see what happens with the stock. Back over to you guys. I'm not dumb, too, but doesn't 44 times 4 times 4?4 times?

forward earnings for a big box retailer seem like a little rich. Tech name, they're in the NASDAQ now. NASDAQ 100. That's it. That's right. You got a heck of an online ad business, by the way. They're phenomenal. They are a tech name.

Coming up, once seen is AI beneficiary software stocks falling again on fears that Claudebot, MaltBook, AI will just basically take over software and kill us all. Talk more about it next. All right, another rough day in a brutal run lately for software investors. Yeah, Palantir is hired. today. They had nice earnings, but almost every other big software stock is lower. Atlassian, ServiceNow, DocuSign,

Intuit, all wiping out over 30% or more in just three months, and many also eating new multi-year lows. Let's talk about more about the news. It's kind of where this may go. Sima Modi joining us. Now, what's going on? Here's what happened. In the last 24 hours, there's been an act of debate around Claude's new

plug-in, and how quickly the question is, how quickly Fortune 500 companies will embrace Claude, and to what degree that poses a challenge to the software incumbents. Now, this new plug-in, Brian and Kelly, is supposed to help customers automate legal and marketing tools, and so that gives you some type of understanding behind

why we're seeing a sharper sell-off in certain names like a Salesforce, Adobe, that do help companies with their sales and marketing. Legal Zoom, you'll see, is down over 9% Adobe, Shopify as well, Workday, which specializes in financial and human resource management software tools. What is notable is the unjustified software. We're seeing even names and software that are not seen as, they're seen more as AI winners, beneficiaries. They, in fact, look at a name like Snowflake and Datadog. Okay, these are some of the top names and software, according to analysts.

They, what they essentially do is they aggregate complex pools of data and help the large language models sort of sift for through, dissect all of that data. These companies, again, they benefit from AI, and yet you're seeing these names down a lot. And then we talk about ServiceNow. Last week, we saw those earnings which came in better than expected. Yes, the guide was a little bit conservative. Goldman Sachs adding this name to its conviction buy list. RBC Capital saying this is a stock that sees a lot, we'll see more momentum going into the future months.

Goldman Sachs, their price target of 216, that would be about an 80% upside from current levels. And again, just to this point around, you know, what is selling that is warranted versus names that perhaps are just selling based on the broader sentiment, the stock is down. seven percent today. I was told by one hedge fund off record that this is now starting to become just broader software. They're starting to look at more shorts in this space, which may be

playing into just the time. They're now looking at shorting certain names in software because of this sentiment concern and AI as well. They've gone from, I mean, look, the entire finance industry was like long the software space for the past, you know, decade plus. So the only, I mean, I think it's interesting we said that they could be helpful in implementing AI. Right. I would love to know from, you know, from all of you out there who, can Claude really replace? Can you build your own CRM? Can you build your own, whatever these companies do? I mean, it's going to be interesting to see.

Of course. And the other thing I've been hearing from companies is just also having the right talent in place to ensure that they can build and develop the tools using Claude. Yes, Claude may be amazing, but do you have the talent in house to ensure that they know how to actually build these tools and ensure that your company is continuing to operate? Talk about Anthropics Claude or Claude bought? Both. I mean, Anthropics Cloud is what we're really, the big construction.

today and what's behind to the gel. Because it can do the coding for you. You basically give it an instrument. Make me this. You'll make it. You tweak it around the margins. Then you've got this clawed bot, which is the Maltbook thing that we sort of talked about. Yeah, I know. I know. It's crazy. Jack Hittery

of Sandbox AQ was on CBC yesterday. He's a great guys. Been on with us many times. And he basically said, do not let Claude bot onto any of your enterprise service. Correct. Yes. That would be a little scary. Because it might take over your company. And then start telling it about it to everyone. And telling all your secrets. Sure. By the way, can I just put today's move into perspective? I'm a big nerd.

I like to look at price to earnings ratios every day. Take a look at Microsoft now. Now, trading at 23 times earnings versus a historic average of 30. CRM at 15 times versus 25. I mean, these are big numbers and trading at a big discount. Getting that trader hat, itchy. Anyway, Seema, thanks very much. Appreciate it. As always, Seema Modi. All right. Breaking news right now to D.C. Netflix's co-CEO. Ted Serendos. on Capitol Hill, talking about the potential purchase of Warner Brothers. Listen in. Broaden choice and deep in value.

No matter where you lived, you had access to nearly every TV show and every movie ever made. But you had to stand around waiting by the mailbox to rent them and return them. So in the late 1990s, we saw how the Internet was about to change entertainment, as we know it today. So we built the technology to stream shows and films. Finally, fans had access to thousands of choices. with total control of how and when to watch them, and at a tremendous value relative to TV. Over a decade ago, we began programming our own programming,

like House of Cards and Stranger Things and The Crown, movies like The Irishman and Marriage Story, Red Notice. Netflix productions have already created more than 155,000 American jobs, contributed $225 billion to the US economy. We have filmed in all 50 states. While other media companies have been cutting back their content spending, we have increased ours. If you're wondering if we're in this for the long haul, we're spending $1 billion right now to transform the old Fort Mammoth military base in New Jersey into a state-of-the-art production facility, revitalizing the local economy there. We also export American stories to the world.

About the only place you won't find Netflix is China, because they censor us and block us. With Warner Brothers, we're going to create more economic growth and create more value for consumers. Warner Brothers assets are very different from ours. They have a century of iconic IP. They have a world-class theatrical distribution business. And their studios produce and licensed TV shows to other networks and other streamers. We plan to operate those businesses largely as they are today. Again, that was Netflix co-CEO Ted Sarandos testifying about the WBD deal,

which has put pressure on Netflix shares, which are down 30% in the past six months. Meantime, AMD is reporting after the bell today. Those shares are also lower today, although they've doubled in the past year. Street's still looking for 21% growth in earnings, 26% growth in revenue year on year, and don't miss AMD CEO Lisa Sue.

She'll be on Squawk on the street at 9 a.m. exclusively tomorrow morning. I will be listening to that, Brian, and look at their results to help clarify what's going on between the Open AI ecosystem, which are kind of seen apart and the Google one. This is the story to watch right now.

Now, where is AI, where is investment in AI, Nvidia, OpenA, all that, AMD. By the way, we got PayPal, but can we guys, I'm going to call an Audible, Peyton Manning of business news, we're the same size. Can you bring up NUGT nugget? It is the ETF for the gold miners. I know that software stocks are down. There's a lot of macro markets are down. Thank you.

Great, best of the business. Look at that. 7% gain for the double nugget. So a lot of people, and I'm not talking about chicken, although I am humble. I will say that the gold and the gold gold gold is the new invidia it feels like. This is in percentage terms of one of the best things we've seen for gold. Interesting, Coda to the story, which is we started to see that volatility, the big swings. We saw the crash last Friday, but we're seeing some traction for gold and for silver.

Where are we not seeing it? Put up the chart of Bitcoin. There we saw falling through several key thresholds, say 75, then 74, I believe even 73. There it is right now. So you can see a nice pop there, only down 4%. I do think this is putting some pressure on the market to these leverage. Absolutely. And by the way, Koda, the best movie of the last five years on Apple TV.

Check it out. And the worst lead Zeppelin album. Thanks for watching, Power Lunch, everybody. Closing Bell starts right now.