Power Lunch - The Future of AI, Voicing Complaint, PGA Championship Winner 5/21/24

Episode Date: May 21, 2024

Microsoft is making a big push into AI laptops, unveiling a new branding called “Copilot Plus PCs” that could shape the future of its operating systems. We’ll discuss.Plus, Scarlett Johansson accused OpenAI of using an "eerily similar" voice to hers for its new GPT-4o chatbot -- despite having declined the company's request to provide her voice. We’ll get the key details.And, PGA Championship winner Xander Schauffele joins Power Lunch to talk about his first major victory, the PGA vs. LIV, the golf economy and much, much more. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody. Alongside Kelly Evans, I'm Tyler Matheson. Glad you could join us on a Tuesday. And right now, the markets are basically flat. But there is some action in individual stocks, as there always is. We have been watching the consumer closely. And today we got results from Lowe's and Macy's. We'll dig on on that. And the big movers, we've got a lot of action in crypto over the past week. Bitcoin up 13%. Don't look now. It's back over 70K, Ether, up 30% hitting record highs on hopes it'll be the next crypto with an ETF. But, We begin with Microsoft where Satya Nadella is wrapping up his keynote address at the company's build developers conference. The shares hitting old-time highs today. Steve Kovac joins us now from Seattle with more. Steve? Hey there, Kelly. Yeah, so we're here at the tail end. We have right now we have Microsoft CTO Kevin Scott on stage giving a lot of demos of chat GPT 4.0.

That is, of course, the new language model that chat GPT opening I launched last year. That's the one that lets you have these sort of natural conversations. We're also looking, hey, friend of your show, Sal Khan from Khan Academy, is also on stage talking about the tutoring benefits. We actually saw Mr. Khan last week also at the Open AI and Google events as well. And this is really the big theme of this developer's conference is giving developers the latest and greatest tools to run on Microsoft's Azure Cloud, like I've been saying for so long.

That is where Microsoft sees the most financial benefits so far. from all this artificial intelligence, boom. These developers in the room right now, they're about 4,000 of them downstairs from where I'm sitting. They're the ones who are going to be using this technology, the kind of groundwork of these open AI tools in order to make their own apps and stuff

building off of these systems. So right now we're getting that example of what the Khan Academy vision is for that. And I'm sure people downstairs are going to be experimented with more, Kelly. I'm surprised just of a minor note, see, but it's interesting that like you said, Sal Khan can show up at the Google event and the Microsoft event.

And yeah, it's just these are fierce competitors right now. We've talked about the gloves coming off in the AI wars. And yet, you know, some of the same figures are showing up. I also thought it was interesting what Brent Phil said last hour, which is that in some ways Microsoft is happy to let the consumer pay for some of the compute power by through these new laptops, as opposed to having everything done kind of back end in the cloud and being on their dime. And that is an interesting way they might be able to kind of come at this contra Google.

and Amazon. That's one way to look at it, Kelly, but at the same time, the latest and greatest and the most powerful AI models, they still need to run in the cloud. So Kevin Scott, the CTO, who again you're seeing on stage there in the colorful shirt, he was talking about, yes, these bottles can run on the device, you don't need an internet connection for some of them, but they're not as capable even of what we saw from earlier versions of ChatGBT, GBT. So yes, that's true.

Some of the cost does get offloaded to users, and of course, over time, more and more will be able to be done without the Internet, but for the most part, the most powerful stuff still needs to happen in the cloud, and that is why Microsoft spent so much time talking about its Azure developer tools, the Azure Cloud, how its cloud is capable of providing all these tools so all those developers in the room can go out there and make AI applications. And apparently, if I heard yesterday's conversation correctly, it still needs to happen on a desktop or a laptop rather than the device that most people use most of the time, which is the phone. Am I right on that or not?

You are right, Tyler. And of course, Microsoft is kind of out of the smartphone game. They've tried to experiment in years ago with Windows phone. They've tried experimenting with some Android devices, not really working. And so that's why there's so much pressure on Apple. Didn't they buy Nokia? They did. They did.

And then, yeah, oops. And then Sotianadella kind of erased that. one. That was under the bomber regime. But let's fast forward to what we're going to expect to see from Apple because that is a big one. We saw the Android vision for AI on the Android side, and we're going to find out in just a few weeks' time what that looks like on the iPhone. But that's really up to Apple. But again, we keep hearing there's reports that they're basically have a deal with Open AI to provide some of that capability on the iPhone. So you're totally right, that Microsoft doesn't make phones. And this is a PC-focused thing for an

but Nadella and his team have also said they expect this technology to be everywhere. So that's something to look forward to in just a couple weeks, Tyler. All right, Steve, thank you very much, Steve, reporting from Microsoft today. Now on to a read on the consumer from two key retailers, Macy's trading higher after an earnings beat, while shares of home improvement retailer lows are lowered despite beating on earnings. The CEOs of both companies still expressing some caution about the consumer, and here to make sense of it all, is, Melissa Repco, Retail and Consumer Reporter for CNBC.com.

Melissa, welcome. Why don't you dance us through both Lowe's and Macy's numbers, and then we'll start cross-examining. Sounds good. So with Lowe's, we heard much of the same that we heard from Home Depot, which is that it's a tougher environment to persuade people to do DIY projects. People are just not doing those kinds of home projects or buying big ticket items like outdoor grills and patio sets because of a combination of inflation and interest rates. For Macy's, they put up decent results, but they are trying to turn around the company. And so much of their call, they not only spoke about this challenging consumer environment, they also spoke about progress or trying to make as they look towards the future. As we look at these numbers, I'm always struck by a couple of things. Traders may love the fact that numbers beat the estimates, whatever the forecasts were.

And in a couple of these cases here, for lows, they beat on earnings and on revenues. In Macy's case, I forget, they beat on one and fell short on another. Yes, Macy's, they were just about in line, a little bit shy. But what really matters to an investor is whether profits are growing, correct? And in neither case are profits growing. Nor are sales. If you look at year ago, sales, both of their sales fell. Both their sales fell.

So what does that tell you about these businesses? It definitely tells you this is a tougher environment. I spoke to CEO Marvin Ellison of Lowe's, and he said, you know, interest rates can go down, but then you still need consumer confidence to go up. And so he's talking about kind of the hard to measure things that people still feel price fatigue. Even as we're seeing some relief with the numbers, the CPI numbers, that doesn't mean people are seeing those grocery prices or housing prices or dining out prices go down. And so, yes, they think twice about making purchases. And that's a reality with anyone who's selling discretionary goods.

Macy's, if I'm reading correctly, is banking on a big turnaround that will mean that Macy's will be the Macy's brand will be much smaller, but more profitable, presumably? That is the hope. That's the idea. One of the things that Macy's did today that was very interesting is it teased out the stores it's closing, which are the underperformers, from the ones that are doing better. So it is planning to close 150, about 150 stores, and it broke out how its same store sales did at the stores that it will keep open, and those did better. And it also looked at the first 50 stores it invested in and talked about some of the strategies it's doing. So I spoke to CEO Tony Spring, and he said at the these first 50 stores, it's getting kind of back to basics. It's adding more employees to the sales floor. It's adding new brands. It's expanding popular ones. It's doing things like special events that drive people to stores, fashion shows, personal styling, things to get more customer traffic. And again, yes, this is a tougher environment. But what Tony was saying is that they're trying to move the needle with their own strategy, even in this tougher backdrop. Give them credit. And this is a tough one. Yeah. But it sounds like Macy's is going to a higher touch kind of

model in the stores that are that are succeeding. I mean, what a concept. Put more people on the sales floor to take care of you and check you out. I mean, I thought we couldn't afford that anymore. Technology was replacing that and all of the stuff. He actually joked about that on the phone with me. He said, you know, I wish I had some brilliant strategy, but it's a lot back to retail basics. It's fixing the things that are the same old strategies for success. But, you know, he acknowledged that Macy's has fallen short, and that's what's driving some of its customers to places like T.J. Max. Well, it also, they'll have to make sure it's profitable in the long run.

You know, it's easy to start saying, yeah, we'll put more people on the floor and comp sales are up. But if their profits can't rise more than the cost of labor and putting on all of these events, it's not necessarily going to leave them in any better shape. Exactly. He did mention that the average ticket at those first 50 stores has gone up. So by that high touch experience, people walk out with a luxury handbag or multiple makeup items, maybe that can justify the extra staffing. And when will these store closings take effect? Are the immediate or are they phasing over several years? phasing them in. So they are planning to do about 50 per year and they will. How many total you said? About 150.

It'll leave them with 350. It will leave them with 350. And at the same time, they are growing two other brands, their beauty brand, Blue Mercury and Bloomingdale's, which are the stronger performers of the three. There you go. There you go. Well, Melissa, thank you very much. Thank you. It's good to see you. Coming up, the paradox of progressive conservatism. A sea change emerging in the way conservatives are approaching. economics. We'll discuss that next. As we had to break a quick power check on the positive side today, first solar up about 6%. UBS raising its price target, reaffirming its buy rating. On the negative side, key site technologies dropping around 10% after a softer than expected outlook. That's your power check,

and power lunch. We'll be right back. Shares of Trump, Media and Technology Group falling 10% today after the company posted a loss of $327 million on less than $1 million. worth of revenue. Meanwhile, as former President Trump runs for a second term as president, he is reshaping traditional Republicans' ideas about the economy. Amon Javers joins us now with that story. Amen. Hey there, Tyler, whether Trump or Biden win in November, the biggest policy fight of 2025 is going to be over the fate of the Trump tax cuts, which are set to expire at the end of that year.

Now, passed in 2017, the Trump tax cuts and Job Act lowered individual tax rates, but only for a period of years, tax rates in many categories will snap back to where they were before if new legislation is not passed next year. The top corporate rate was lowered from 35 to 21 percent in 2017, and that change was made, quote-unquote, permanent. But many defenders of low corporate tax rates worry that the corporate rate could be dragged into a fight over the fate of individual rates, and higher corporate rates could be seen as a pay-for to keep individual rates low next year.

But in an era in which many conservative Republican politicians see big American corporations as woke and working against conservatives on issues ranging from alleged big tech censorship to transgender rights or diversity policies, some Republicans privately tell me they don't think the party will be as eager to fight for lower corporate rates as it has been in the past. And there's a new movement around economic populism whose leaders have been churning out books, white papers, and speeches from new platforms like the think tank. American Compass in an effort to revise the way conservatives think about the economy. The new group rejects the idea that tax cuts are always the best policy and embraces unions, high tariffs, strict immigration limits, and a transaction tax on Wall Street designed to stop what the new economic populists see as the financialization of the economy. We spoke to American Compass founder Oren Cass on Squawk Box this morning, and he directly criticized the usual Republican position on taxes.

You said, you know, what's conservative? And I think the problem is that in, you know, Reagan, let's not forget, cut taxes, he then raised them at least five times. This idea that that Republicans or conservatives are only for tax cuts, tax cuts must always, you know, taxes must always be lower. That there's nothing conservative about that. That's actually a quite sort of absolute radical, nonsensical notion. And so, you know, I certainly understand why the, I understand why the business lobby has pushed that. A Republican critics of the new thinking say it will result in higher taxes, higher inflation, and less efficiency in the market. One critic dismissed it to me as big government conservatism, and it's not at all clear how much of this new thinking Trump himself would embrace if he gets a second term.

But something significant is changing and it's worth paying attention to, guys. Back over to you. When you say or they say embrace unions, what do they mean? Well, they don't mean union leadership, that's for sure. Union leadership is traditionally very staunchly liberal, pro-Biden, has put union money behind Biden, but they do like the idea of workers having more power in the economy vis-a-vis corporate elites. And they do think that unions that are decoupled from liberal union leadership could be an important force in the American economy. All right, Amon, thank you very much. Amon Javers reporting from Washington.

Election Day is less than six months away. And the long-awaited rematch between President Biden and former. Former President Trump is promising to be a close and an expensive one. A recent poll for Morning Consult shows they are neck and neck, with Trump having a slight lead. While E-Marketer estimates, the candidates will spend a record $12.3 billion to persuade voters, the largest sum in history. And all of this, as concerns abound about disinformation and AI. So let's discuss the advertising landscape leading up to the big day.

Joining us now for more, Nicholas Thompson is CEO of the Atlantic. And here on set with us, Paul Verna is Vice President of Content at E-Marc. Welcome to you both. Paul, I'm a little surprised to hear. I mean, it should make sense. It's always a record every, every cycle. But this one feels like there's a lot of apathy out there. And some have even suggested to do the campaigns just spend big in the sort of narrow list of swing states. And why even flood the zone right now? What do you hear is the strategy we're likely to see? I think the fact that there's not a lot of enthusiasm around the election doesn't necessarily equate to less ad spending. And you could actually argue the opposite that motivation. motivating voters when there's this sort of like malaise around the whole election is even more important. We know it's going to be a very divisive election. They all are, and they just seem to get more that way every year. In addition to promoting candidates, you have a lot of issues that are going to be on the ballots, and those are contentious. Those are places where I think voters can still be persuadable.

So the ad spending is going to come. There's no question. Nicholas, before we turn to you, Paul, let me ask you a follow-up question here. You say that most of the political advertising dollars, 57% will go to traditional TV. This is notable because in the overall ad market, TV will dwindle to around 15% of total ad spending this year. Why is that? Is it because old people watch TV and old, traditional TV and old people vote? That's part of it. Certainly the...

I speak personally. And so do I. Not for a friend here. I think that demographics have something to do with that. But frankly, some of it is also just tried and true. You know, campaigns have been doing this for generations. That is what they know. They know it works.

Not as familiar with online and not as familiar with social media and advertising. That said, increasing amounts of the ad spending are going to go to streaming media and digital platforms like social. Go ahead. Nicholas, I was just going to say that I find it quite striking the way that this ad season. and maybe for some of the online platforms as well, is something the other advertisers are a little bit afraid of that they don't even want to be associated with it. And I'm curious how that might affect business for you.

Does it help? Does it hurt? Does it, is it a wash? No, I did. Well, on the advertising side, it definitely hurts. We're seeing some of our advertising partners come to us and say, you know, I think we're going to be dark from roughly September through November. And that's obviously bad for us on the advertising side. Of course, for the Atlantic, which also has a,

large subscription business, a lot of people are going to come to us and read and subscribe. So our overall business will be fine and will be resilient. Some of our advertisers will also try to stay away from our election coverage and our political coverage and move into cultural coverage or go to safer live events. But in general, very much, we are seeing big advertisers nervous about being near political content during what will be a unhappy, perhaps not inspiring election, is what people are expecting. So it's the adjacency. that the advertisers in your area are worried about. And oh, by the way, the Atlantic has been one of the great success stories in recent years in the world of magazines.

So where did you say that those ads will go, maybe into events, maybe into where? Well, they could go into events. They could go into, you know, covering our cultural coverage. We are also seeing some advertisers who are moving their spend earlier in the year, and we'll probably see some who will move their spend later in the year. December might be a better month to advertise than November, who knows exactly when the election will be settled. So you'll see some change based on timing, some change based on content adjacencies. Interesting. Paul, what else are you going to be looking out for that stands out to you about this cycle?

Well, I think what Nicholas is saying is interesting because it speaks to this whole topic of brand safety, which we've been covering. So this is the idea that brands feel kind of some trepidation going into this, really any election cycle, but this one, more so because of all the things that are happening this year. One of them is AI, which is injecting a whole new set of uncertainties into what happens when that ad gets placed wherever it might get placed, particularly around like toxic content, which now is in the, you know, in the hands of anyone to produce. So that's a concern. I think we are also seeing more dollars going to digital media in general, not just around political advertising. So there's a spectrum of risk, right?

At the low end of the risk spectrum is things like traditional TV because it's mostly premium content. At the other end is social media and increasingly some of the streaming media, particularly YouTube which has a lot of user-generated content. So I think we're going to see how it plays out, but this is definitely a year that is different from every four years when we typically get a bump in spending and we get some, you know, a lot of polarized discourse. I think this is going to be upped quite a bit.

You say you expect a higher spending by 30 percent, Paul. Nicholas, let me turn back to you. And I guess the question for me is, okay, they're going to spend all this money trying to persuade voters. And my hypothesis is that most voters are simply not persuadable. Well, I'm not sure that's entirely accurate. I mean, we do see swings in the poll suggesting that people are switching sides. We have seen people moving, for example, to, you know, third party candidates and back.

Certainly there are a lot of core voters who are settled. You have two questions there. With the core voters, can you get them out to vote? And with the undecided voters, can you move them? And, you know, the election is going to depend on a very small number of people in persuading them. susceptible to messaging, particularly targeting, and the amount of information you have on inviolable voters keeps rising. So there will be opportunities for political campaigns.

That's interesting. Yeah, I threw that out kind of as red meat and would be a provocateur. But I guess basically it goes to the idea that there are, there's a never Biden camp and there's a never Trump camp that I think is really how this election seems to boil down. Kelly, you had a follow-up. I know, Nicholas, I was just going to say that part of it, too, I think a lot of times what we say is people might change their mind, but they often might do so in response to what the candidates say in a debate or how they react in an interview or something like that. And both of these candidates are actually a little bit less out there than they were last time around. So I wonder whether the campaigns feel that they have to try harder to get advertising in front of them,

if there's just less TV coverage, fewer debates, and generally less, you know, Trump's not even on Twitter anymore. There's just kind of less opportunity to hear something that might change their mind. I think that's a suit, and I think that's probably right. And I think there's one other thing that we're noticing on our data side too, which is the public has less appetite for these stories and the social media platforms are driving fewer people to them. So it's not just the advertisers want to stay away from this. Facebook wants to stay away from this too.

If you look at the number of Facebook users who are driven to political content in the last election cycle, it was huge. The cycle before that, even more so. This election cycle, very, very little. That's a policy choice on Facebook's part. So what it means is there's less organic attention on what is said and perhaps more opportunity for advertising. Interesting conversation. You're nodding, Paul.

Got a quick final thought? Yeah, no, I think with such a narrow band of persuadable voters, I think advertising is an effective way to reach them. It seems ridiculous to spend billions of dollars to reach just a few voters, but it is worth it to campaign. Wouldn't you like to be one of those voters? Yeah, $3 billion. That was for me. Yeah. Just send me the check. Paul Verna and Nicholas Thompson, thank you. Good conversation, folks. Thank you very much. And further ahead, Scarlett Johansson is rebuking open AI, claiming the company copied her voice for their voice assistant. We'll explain why she may have a case and discuss how this could be the first of many high-profile AI copyright fights. A lot of this

is going to come down to voice. Voice, you know. usage. Welcome back to Power Lunge. You're looking at markets there. A lot of Fed speak today, but they're fractional gains in stocks at this point. Let's get a check in the bond markets now with Rick Santelli in Chicago. Rick. Hi, Kelly. You know, most of today has been in a very tight range, except for some early trading. Look at an intraday of twos and tens on one chart. You could clearly see around 9 o'clock Eastern Bostic and especially Waller comments on the Hawkins side. pop treasury yields. But after that, the equity markets open

and had pretty much been sideways action in quite a tight range. Remember, we don't have a big economic fundamental release week, so it's going to be up to Fed speak and, of course, in front of the big Memorial Day holiday for traders to decide what the Fed's going to do

and where rates are going to go. One thing I can tell you, if you look at the first quarter in 10 years, look at the range. We settled at 388, the low for the year, basically was 388, and that came in the end of January, early February, and the high yield and the low 430s. Now, let's open the chart to year to date. And what you'll find is that currently this quarter is stacked right on top of the last quarter. The lows have been in the

430s, the highs 470, and it isn't only tens. Many of the other treasury maturities are exhibiting the same characteristic. Part of that, of course, is FedSpeak, and the notion they're not going to cut as many times as we thought earlier in the year. But the other part of it is deficit, it's debt and auctions. And to that end, tomorrow we will have a 20-year bond auction. Kelly, Tyler, back to you. Can't wait. Rick, thank you, Rick Santelli. Over to Contessa Brewer now for our CNBC news update. Contessa? Kelly, the White House says the United States is directly engaging with Israel over its seizure of associated press equipment earlier today. Israel also shut down a live shot of Gaza amid its war with

Hamas. Israeli officials say the AP broke its law by supplying images to Al Jazeera, which is one of thousands of AP customers. Prime Minister Benjamin Netanyahu previously has called Al Jazeera a terror channel. New York's high court upheld a controversial abortion law today that religious groups have vowed to take to the Supreme Court. That measure requires companies with health insurance plans to cover medically necessary abortions. The groups claim the law violates their religious freedoms. And the Biden administration plans to release a million barrels of gas from a Northeast reserve and a push to lower gas prices this summer. The Energy Department says it will strategically release the fuel between Memorial Day and July 4th so that gasoline can flow

into local stations in the Northeast during the busy travel season. Gas prices right now sitting about $3.60 per gallon, according to AAA estimates. So, you know, really need those reserves. Yeah, that's what they'll say. Bring it on. Contessa, thank you very much, Contessa Brewer. Coming up, Jamie Diamond's succession plans, Palo Alto's Miss and Lamb's massive buyback. We'll break down it all, all of it in today's deluxe three-stock lunch. That's coming up next. Welcome back to Power Lunch. Time for a super deluxe three-stock lunch today. We get quarter-pounder with all this. Anyway, we give you the story, the trade on three key movers of the day. Our trader is Victoria Green. She's,

CIO of G-squared private wealth and a CNBC contributor, Victoria, great to have you with us. Let's start with J.P. Morgan, which is rallying on the back of its annual shareholder meeting. We saw a decline in those shares yesterday, pressuring the markets. Leslie Picker here with the story. Leslie, the buyback or lack thereof, his succession. What's going on here? That was a big part of it, Kelly. So yesterday was Investor Day.

Today, J.P. Morgan held its annual meeting. Those shares rebounding after sliding yesterday. Chairman and CEO Jamie Diamond's comments about not buying back a lot of stock at current levels spurred the declines. Analyst and investors at the firm's Investor Day honed in on the firm's strong excess capital position after CFO Jeremy Barnum said it, quote, makes sense for us to increase the amount of buybacks relative to the recent pace of about $2 billion a quarter. But then later in the program, Diamond poured a bit of cold water on that notion by saying, quote, buying back stock as a financial company, greatly in excess of two times tangible book, is a mistake. Diamond said, quote, we do not consider stock buybacks returning cash to shareholders.

That's giving cash to exiting shareholders. We want to help the existing shareholders. I thought that was a noteworthy quote there. Analysts at B of A in a note today also said the selloff was triggered by comments Diamond made that suggest his retirement as CEO is fewer than five years away. BFA wrote, quote, we believe it will take time for the street to gain comfort with the next CEO. It is hard to predict whether the next CEO will be able to replicate Mr. Diamond's success, guys. People understandably, a little nervous about that. Leslie, thanks. Victoria, would you buy the stock here if you didn't own it already? I do. We do own it, but I would look to buy it because, number one, I think buybacks will provide a support. They don't like it here. Let's say

the stop slips a little bit. You know they're looking to deploy some capital. But number one, The death of J.P. Morgan is greatly exaggerated. It will survive without Jamie Diamond. I think they're being very, very smart, introducing this, reinforcing it, saying, let's get this bench ready. Let's get the street used to some of these names. Let's get some good experience, promoting some managers. And that way then as transition comes up, it's less of a shop, right? So a little bit maybe of a Band-Aid being ripped off. But look, he's 18 years into this job. He's 68. We knew he wouldn't stick around forever. But now we're looking at well-ordered succession, which I see is a huge positive. Look, this bank operates just absolutely perfectly right now.

And so it's not like they're coming into a fixer-upper. They're coming into, you know, driving a Porsche that's at top speed. All right. Thank you very much, Victoria. Let's go next up to Palo Alto Network. Shares on the decline today. And Frank Holland will tell us why. Frank.

Hey there, Tyler. As you mentioned, Palo Alto lowered today on what's being called modest guidance on billings. But as you can see here on this chart, shares are down double digits since last earnings. When Palo Alto announced its platformization strategy, so, So that announcement, it hit all cyber stocks as concerns about the strategy that often involves giving free trials hit the entire sector. This report, however, ease many of those fears in the eyes of analysts, if not investors today. The numbers for next-gen security annualized recurring revenue. You can see the bar chart here.

Came in better than expected. Analyst I spoke with, say, channel checks show better than expected adoption. Paula Alto's deal to buy Q radar from IBM is also expected to help the company secure larger deals in the $215 billion security and risk. management area of cybersecurity, and more specifically, in Seam. That's an acronym for security information and event management where there's just a growing arms race. According to Gartner, Microsoft and Cisco, after his acquisition of Splunk, they're the leaders in the space. Two other private players also recently announced their plans to merge. And let's say with Q radar, Palo Alto is poised to capitalize on this new cyber landscape. Investors, however,

at least today, clearly need a bit more convincing. All right, thank you, Frank. There's the background, Victoria. What's your trade here on P-A-N-W. For me, Palo Alto is a sell, and it's because this platformization is taking too long. After last quarter,

we expected the expectations were baked in, right? We ripped the Band-Aid off. We have lower expectations. And now with this earnings, we're like, okay, wait, we maybe have to lower

them again. We never like that. We need them. We thought we reached that last quarter. Now we're looking at a longer ramp, looking at maybe lower margins because they're having to discount.

And honestly, they're also talking about corporations are focusing a lot of their spending, less on buying more platforms and modules from them, but on Gen AI and on the cloud migration. So they're kind of taking a third place back seat and where corporations are spending money. Look, they've been on a tear. They're up 140% since January last year.

For Mia to sell, because I think they're just having to reorganize. And there's just this question of, is this really priced in? Or do you have a little bit more slowdown cut to come, especially after last quarter, and then this quarter not really living up to what we thought we'd see? All right, Victoria, let's move on to our last. last name then, which is lamb research. Not on the lamb today. The shares are up amid some excitement and enthusiasm about the stock. Christina Parsonavillus bring us the story. I've got the toppings for your Wapper, Kelly. But that's because the semiconductor equipment maker announced a surprise 10 for one

stock split for early October. It's the first stock split for this company in 24 years. They also announced a new $10 billion share buyback, although there was no timeline on that buyback provided. It also runs counter to what my colleague Leslie Picker just said about Jamie Diamond's thoughts on buybacks, but oh well. These announcements, part of Lamb Research's commitment to return roughly 75 to 100% of annual free cash flow back to investors, something they've promised in the past. The stock, though, has been trading in this low range, $900 range for a month after pulling back from near $1,000 levels in March and early April. You can see that just on your screen. You can see trading at $960 right now. Investors are going to be looking to see if the stock split in the buyback can actually get shares

closer or maybe above that $1,000 mark, but the stock split won't do anything for market. We know that in terms of math, but it could invite more investors to participate. And I have to mention it. Invidia earnings will obviously play a role tomorrow in Lamb's stock direction. If NVIDIA's demand remains strong with a major uptick and guidance, expect a lot of semi-cap equipment makers to also rise because, you know, you need that equipment to make the chips. Indeed. Christina, what's your call on Lamb?

It's a bud. They went from like 150 million to 10 billion. Who doesn't love that? And they manufacture semiconductor manufacturing. equipment. So they're actually getting a huge lift. They're micron, their intel, their Taiwan semiconductors. They have huge customers that are expecting to grow revenues. How can you not love this stock right now? It's a buy. Bye, bye, bye, bye, bye, bye, bye, bye, she says. Victoria, thank you so much. We really appreciate your time. It's been a fun three stock lunch. All righty, coming up,

Lost in Translation, actress Scarlett Johansson slamming open AI, accusing it of creating a voice for chat GPT that sounds just like she sounds. We'll get the details of this Hollywood drama come to life. That's next. Open AI and CEO Sam Altman are under fire from Scarlett Johansson. At issue is a voice that sounds like hers. Julia Borsden joins us now to explain this conflict and its significance, Julia. So Kelly, Scarlett-Dohansen says that Open AI's voice assistant,

which launched last week called Sky, sounded just like her. Johansen issuing a statement saying that Sam Altman approached her last September asking to use her voice, which was famously featured as an AI virtual assistant in the film called her. She declined. Then two days before the company announced ChatGBT-GPT-4-O, Altman approached her again, but they didn't connect before the launch day, on which Altman tweeted the word, sort of cryptically, her on X, saying, Altman now saying that they have paused using Sky's voice in OpenAI's products,

but that, quote, the voice of sky is not Scarlett Dohansans, and it was never intended to resemble hers. Dohansson's saying, quote, in a time when we are all grappling with deepfakes and the protection of our own likeness, our own work, our own identities. She said, I look forward to resolution in the form of transparency and the passage of appropriate legislation to help ensure that individual rights are protected. SAG after us, thanking Dohanson and saying her comments are, quote, of crucial importance. to all sag after members, saying we shared her concerns and fully support her right to have clarity and transparency. Now, protecting the rights of actors from being exploited by AI was at the center of last year's actor strikes, fears that were only fed by this latest conflict. Kelly? So has, quote, her voice now been taken down as the voice of chat, GPT 4.0, so it was only up there for a matter of days, hours, weeks, what?

Exactly. So it was only up there for a couple of days. And Sam Altman said that even though this is not Scarlett Johansson's voice, we are out of respect for her pulling it down. And she said, I want transparency. I want to know exactly how you train this. They said it was trained on a different actor's voice, but still some questions there. And the technology is amazing because eventually they're going to be able to use international films and you're going to be able to have the voice and the face synced up. So it's all in whatever language you want. Julia, thanks. All right, coming up, PGA championship winner, Zander Shoffley, joins us to talk about his first major victory, the golf economy and much more. And as we head to break, we're celebrating Asian American Native Hawaiian and Pacific Islander Heritage Month. Here's our own, Deirdre Bosa. Representation for Asian Americans in the workforce decreases the higher the level of seniority. McKinsey and Company found that the same is true of promotions. The consulting firm estimates that Asians account for 9% of seniority. your vice presidents, but just 5% of SVPs ascend to the C-suite. And women of Asian descent make up

less than 1% of those promotions. For Asian-American Native Hawaiian Pacific Islander Heritage Month, I'm Deirdre Bosa. After a tumultuous start to the weekend at the PGA Championship, the attention turned back to golf and what turned out to be a thrilling final round. Zander Shoffley won his first ever major. Joining us now is the PGA champ, Zander Shoffley. Zander, welcome and congratulations Congratulations. Thank you for having me. Oh, it's great to have you with us. I want to take you back. I was watching Sunday. It was a compelling finish. You hit your T-shot on 18 to within about, oh, a foot of a fairway bunker. And you had to take a terrible stance to get your ball in position. And you needed a birdie to win, which you got. Take us back to that shot. There, your feet are below where you had to hit the ball. What was going through your head? Because I saw you pull back, step out of the and think about it a bit. That's exactly what I was doing. I had to take a moment to, you know, capture and realize what was happening in that situation.

I've actually, if you've golfed enough in your life, you've had a stance like that before. And fortunately, I've had a stance like that before. So it wasn't the first time I've tried to attempt that shot. But lucky for it to, you know, advance close enough to the green for me to get up and down. I have stances like that a lot in golf, I have to say. And then you go up, you put your, I guess it was third shot. within about how many feet was it six feet and you sunk the put? Yeah, I was very nervous.

It was a, I really didn't want to go into a playoff. So I knew what had to be done and I needed to seize the moment. So super happy that ball, as you can see, Lipped in. It looks, from my view on the green, it didn't seem that dramatic. But as I've watched it a few times, it looks like it never has a chance to go in. It wanted to go. It came in the left hand door, as I recall. It sure did.

Zander is Kelly. Congratulations again. As I understand it, you've had quite a lot of success so far. this year. What do you attribute that to? What's working for you? Any changes that you've made that are paying off? Yeah, definitely. I mean, for one, I feel very fortunate. I have a really good team surrounding me. They're sort of my foundation, my rock. They're with me most weeks, but if not with me in person and in spirit. And then I made a trainer change and a golf swing coach change. So those two have definitely been pivotal in my success. And I understand your

brother's been cooking for you. I'd like to know more about that. I'd like to know if he's available, frankly. No, he's about to get married and I'm sure he's going to have a kid soon. So I'm hoping I can keep him for a few more events. So let's talk about Live Golf. You've stuck with the PGA. There have been long ongoing talks about a potential armistice, I'll put it, between Live and the PGA. how is how important is that to you that the two tours learn somehow to coexist number one and then when you're playing in an event like the PGA

with guys who have fled the PGA tour for live, how is it to be around those guys? The guy who was trying to run you down Deschambo is a live guy. Yeah, I mean, I think that Sunday round was great for golf. I mean, I think all of us. I mean, I've played with pretty much everyone that's been on Live now for the last couple years. I know a lot of them pretty well. Are they happy? Are they happy what they're doing?

Yeah, they all seem pretty happy. I mean, I don't think they would have left if they didn't think it was the right decision for them. So, in all honesty, I mean, why was staying the right decision for you? Sorry, why I was staying? I mean, I just, because it just felt like the right thing for me to do. I mean, golf is such a, you know, there's 156 guys that competed in this tournament, and it feels like there were 156 teams out there. And you're just one of the 156 teams. It's an individual sport, but that's kind of how it goes. So everyone makes their own decision and you have to live with it at the end of the day. So for me, it was, I never really had any, any urge to leave the PJ Tourist.

It's where I wanted to be on for my entire life, basically. So, and one of these guys right here is what I've been wanting to win for pretty much my entire life. So it's a dream come true. Zandra, I'm also curious if people, you know, different companies start coming out of the woodwork, giving you offers for deals. That seems to happen, you know, endorsements faster and faster in this era. And as mentioned, this just capstones a lot of the success you've had lately. What do you see in terms of kind of that money on the table?

And as you've said, this is for you, as your dad said, you're not chasing the money as a contra lift, but you're looking for legacy. So talk a little bit about both the offers that have maybe come your way in the immediate aftermath of this victory, but also what you hope your career starts to look like, maybe a couple of years down the road. Yeah, it's an interesting thing. You know, I've, as you can see, have Calloway and Desaunt, sorry, on this side.

Those are the two sponsors I have. I have Adidas on my feet. And for the most part, you know, compared to a lot of guys, I have a pretty clean slate. So, you know, my team and I discussed that we want to, we want to have really good sponsors that we feel really confident in. And golf has been a weird landscape.

You know, I think a lot of companies have been a bit shy to, pull the trigger on entering the space in the last year or so because they don't really know what the landscape's going to look like. So for me personally, you know, I took a big risk on myself to compete and win big tournaments. And, you know, after winning this one, you know, I'm sure my uncle, who's my agent, I'm sure he shouldn't have too hard of a time shopping around for a new sponsor. No, I imagine not. A lot of new entrants in golf, PXG, L.A. golf, and lots of them buzzing around. We've got to leave it there, Zander. Congratulations. Love that want to make a trophy. We'll be right back, everybody. Welcome back. Let's give you a quick check on the Dow, which is

kind of flattish right now, frankly, a 27 points higher. 39, 833. Of course, went over 40,000 late last week, but sort of back down and waiting maybe for Invidia, though it's not a Dow component. Indeed, but the market certainly is waiting for that big message on the strength of AI. It's been catalyzing everything. How about commodities? That's one place I'd keep an eye on whether it's gold, copper, the metals, everything is rising in tandem. And as you were saying yesterday, you don't usually see copper and gold going up at the same time. It's strange. Because one is a fear trade.

The other is an economic expansion. Central bank buying, you know, maybe it's idiosyncratic. Got to leave it there. Thanks for watching, Power Lunch. Closing bell starts right now.