Power Lunch - The Tech, Crypto Slide Worsens 2/5/26

Episode Date: February 5, 2026

The software sell-off deepens. Alphabet stock gets punished after reporting higher capex. And are there areas to be rotating your portfolio into right now? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks and your money heading south today as the AI story starts to stumble, big cap tech, crypto even gold down. Welcome to Power Lunch, everybody, alongside Kelly Evans. I'm Brian Sullivan, the NASDAQ heading for its largest three-day drop since April. And now, apparently, spending more on AI is a bad thing as Alphabet drops because it's spending more money. We're confused too, but we're going to try to make sense of it coming up. And the market is acting that way as well. We were gone from off the lows an hour ago to back towards the lows right now,

they're trying to sort these narratives out. We're also closely watching crypto with Bitcoin well below 70,000 today. Around 66, a little below it last check. It's lost half its value just since October from that peak. We'll talk more about what it means for the Treasury companies like strategy, which is on deck to report this afternoon.

And two big interviews you don't want to miss, Bristol-Myers Squibb's CEO Chris Berner, following their big beat on earnings. And Bob's discount furniture, Bill Barton, will join us following the company's debut on the New York Stock Exchange. But before we get to that, let's start with the check on the most recent magnificent seven earnings. Just a reminder, Google Parenthabate beat expectations for Q4 EPS and revenue numbers on Wednesday,

joining the likes of Microsoft, Meta, Tesla, and Apple to post double beats in their latest reports. But however positive the numbers were, not enough to keep the shares positive. They were down as much as 5% earlier. Investors have high expectations for AI, and they're not so sure about how much spending they want to see on the infrastructure front. with Amazon said to announce its results, fourth quarter results after the bell today. Let's bring in Brian Noak, Morgan Stanley's senior internet analyst to break this down, Brian, a little bit more. Look, $175 billion or 185 is a huge number. But so is Gemini's 750 million users, an astonishing feat.

So can those numbers rise together and as swage investors' concerns? And does the KAP-X spending fundamentally change the appeal of holding the MAG 7? Good to see you, Kelly and Brian. Thanks for the questions. I think it is increasingly important in this market that we see real signal on incremental revenue and more durable multi-year growth from these investments to really sort of make investors comfortable

that we are going to see RIC from all this CAPEX. So in the case of Alphabet yesterday, we saw two very important signals. Number one, search has accelerated to the fastest growth we've seen in multiple years. They're paid click volume, which is an important indicator of search, is the fastest growing since 2022. Google Cloud is growing substantially faster,

and they're adding more new business that will be recorded over the next couple of years as well. So this is a very tricky tape to navigate narratives, to your point earlier. But I do think that revenue and results trump narrative. And so I would expect investors to stay very focused on revenue results in where we're seeing faster growth and more durable growth for these investments.

and the investor dollars should likely move in those directions. Brian, you probably heard the Open where we talked about, and Kelly just referenced Alphabet Spending Plans, and there was this narrative that's going around. Maybe you subscribe to it. Maybe you don't. That the stock is down in part because they're spending too much. I thought spending on AI was a good thing.

Now the narrative is that apparently it's a bad thing. What's your narrative? Yeah, I think the reaction today is largely a tactical, reaction on positioning and investor expectations. On all stocks, right? On all stocks, I feel like today. On all, but I know, that's right, on all. But I think with meta specifically, you know, I think their investors, it was very well

owned by a lot of more tactical hedge funds. And I think that the expectations for how large the earnings power could be in 2027, 2028 got a little too punchy too early. And they were under appreciating the level of investment that. that Google is going to put through the P&L, just to make sure that they are going to stay at the top of the funnel and continue to drive next generation Gen AI enabled use cases.

So it's sort of is a, it's a reaction of, wow, the numbers next year on earnings aren't quite as high as we thought because they're investing more. But big picture, this is actually one of the AI winners that investors should want to migrate toward once we're through this tactical uncertainty. The 48% growth in the cloud for a business

that mature is unbelievable. Let me just ask you, and some, Jim Kramer brought this up this morning. others are asking about it, want to get your take. Is it possible that the spending numbers are boosted this year because of the immediate depreciation in one big beautiful bill? In other words, our investors, could they say, okay, you know what, 2026 is an upsized year for CAPX?

We're going to get through that, and then the numbers are going to come back down, or do you think it's going to need to stay this high? I think CAPX will continue to grow. I think the one big beautiful bill has been a, yeah, I think we have CAPX for Alphabet going to $250 billion, in 2027. So continuing to rise next year, I think they're seeing a lot of signal on return when it comes to Google Cloud, to your point on the growth there, return when it comes to Google Search,

their biggest business that is now accelerating. I think you're going to see even more from that on YouTube to come. So one big beautiful bill is sort of somewhat of a band day to give us a little higher floor in free cash flow this year as the companies are all spending. But I would not see this is a sign that they were going to let up the level of CAPEX in 2027, because it's still very early in how we think about the long-term adopters and the long-term capabilities they're going to be built from all these models. We're not even talking about the YouTube business, which, by the way, YouTube is now doing more revenue than Netflix.

I mean, YouTube like is TV. Yeah, it's everything. It's unbelievable. Here's why I, and let me give you just a stupid layman's example of why I think Gemini is going to be the winner. Let's say we're going to all go out as a group in a New York City. We put the five best place to eat in Midtown Manhattan. Anthropic and Open AI will give me the results.

Gemini will give me the results generally with a map and a link to the businesses through Google search. Wow. And the ability sometimes to make the reservation. Wow. Because it's all linked up. It's little things like that that I believe are going to be the differentiator. How do you see it? Kelly led her show, Brian, with this Anthropic versus Open AI.

They're squapping at each other. pot shots on Twitter, et cetera. Does Gemini just quietly win this whole battle? Well, I think the way in which Alphabet has accelerated its pace of productization, shipping more new types of search across all of Chrome, using your personal assistant for all of Gmail, leveraging the YouTube user base, leveraging their existing corpices of users and data,

puts them in a very good position, I would argue to lead this JNI-A-I agentic transition we're going to see. And I completely agree with you. They have the history of your Gmail. They know where you like to travel. They know the types of vacations you like to take. They know your restaurants. And so when your Gemini agent wants to plan your trip to Hawaii,

it's going to know if you like beach vacations. It's going to know if you like to golf. It's going to know the type of food you like. It's actually going to have better recommendations for all of that. And YouTube, Brian, I think you nailed it. This may be the most underappreciated asset in the Alpherson. of that portfolio right now because the overall engagement stats and usage continue to be very impressive. The ad revenue is a little below expectations, but just think about where we could

go with this, where we're going to have increasingly interactive and personalized content with the genie model they showed you last week. You could have a scenario where we get to Monday morning and YouTube at some point may say, how would you like to see a custom clip of the highlights of the Super Bowl based on all the players that went to your alma mater and they know where you went to school and they could put that together. Or how would you like to play a custom video game where you're playing the last two minutes of the Super Bowl against Brian and Kelly? Sounds pretty fun. There are a lot of capabilities that we're sort of piecing together with their big user bases and their leading technology. I think they're going to drive more engagement, more time spent

and ultimately even more monetization. Look at the share. It's like as we're talking, they're like, you know what, forget it. We love the capbacks. They're only down one and a half percent. Let me just quickly ask you about Amazon. What's the read-through? What's kind of the framework there, which reports after the bell today, I believe? Yeah, no, I think the read-through is the expectations around Amazon Web Services have got to be higher. You know, we're seeing really strong growth out of Google Cloud. And I think Amazon Web Services needs to deliver from that perspective, both in the fourth quarter, showing that they are driving acceleration and growth and managing capacity, capacity constraints in the ecosystem. And then,

that they also have a very good backlog of business to give the market more confidence and durability of growth in 26 and 27. So the bar is higher on Amazon. We still like the stock a lot. I think they have been doing a good job in managing capacity. And then the other part that matters on Amazon is there is this discussion about agentic commerce and how we think about agentic shopping over time. I think it's important that Amazon addresses that tonight. So the market can have a better understanding for how they see themselves fitting into agentic commerce. and staying at the top of the funnel and at the main consumer touchpoint.

True. Can you imagine here comes Google? I say, no, we'll take that too. I mean, Amazon is down 4% today. So it's like on one hand, the bar is high because they have to be as good as Google. On the other hand, maybe it's lower because of that selloff today. Great stuff. Can we let this Brian go now?

This gentleman, let him get back to Brian Noak. We appreciate it. Thank you, guys. Thank you for your time for Morgan Stanley today. All right. Now to the crypto story because while many tech stocks are down, some tried to turn back higher, but they didn't. Bitcoin, not trying at all.

Bitcoin's below, look at that. It's 66,000. It's actually very close to breaking below 66,000, sitting just off its low. Bitcoin has now lost half its price since the highs of October. Let's talk more about it. McKenzie Segalis joining us now from our San Francisco Bureau. Here's the question, I guess. There's kind of a narrative two out there, McKenzie.

You're sitting on top of it. You hear it every day. is Bitcoin its own thing, or is it getting caught up in or maybe causing the tech stock selloff? Well, it's certainly not the hedge that it built itself as, because you've got Bitcoin now flirting with that $66,000 level. Like you said, that is a line in the sand. And I'm speaking to analysts who say that if it doesn't hold 60 to 65K is next. You've got options traders on Deribet already positioning for that. there's even open interest down at 20K.

And I've been speaking to a mix of traders and analysts who are watching these moves. And they say that there are three big reasons why Bitcoin is still in sell-off mode. Well, semis and the triple Q were bouncing back at least earlier in the session. First thing here is the ETF bid has totally flipped. In flows where a major leg of support last year, tens of billions float in. Now that's reversed. 5 billion out over the past three months. Two billion in the last month alone.

Second big headwind here. The corporate treasury trade is unwinding. Strategy reports after the bell today. It's down more than 14% in the session so far today. It's staring at $17 billion in unrealized losses on its Bitcoin stake in Q4 alone. Those shares now trading below the value of their holding so that reflexive bid where strategy issues stock buys Bitcoin. Bitcoin goes up. That's broken.

Third big problem here, Brian, we're seeing liquidation cascades, $2 billion. in forced selling this week alone. And without conviction buyers willing to lean in, each wave of redemptions just triggers the next leg lower. We also saw that the Winklevoss crypto exchange is laying off 25%. You know, I watch these things. I look at Mike Novagrats. His Galaxy Digital is now, you know, for some time,

they're pivoting into data centers. We look at Winklevite. The company is now named something to having to do with space stations and they're laying off 20% percent of people. Even as people are making the case for why Bitcoin goes through these periods, of time, it might go higher. In the real world, it feels like assets, people. It's all flowing out of crypto in a way that feels more terminal to me than, I hate to put it that way, but I just, I think that people are a little panicked right now. They are. And it's because Bitcoin was

supposed to be this hedge, the thing that you own when everything else is falling apart. And instead, it's very much trading like a levered tech bet. It's correlation to the I-share software ATF. It's above 0.8 now. So it's really moving in lockstep with the names getting hammered on AI disruption fears. Yeah, exactly. And with every take care, I mean, strategy after the bell is going to be interesting. McKenzie, thanks. We appreciate it for now. Much more to come. McKenzie Sagallo, speaking of which don't miss our big interview tomorrow with Fong Lee. He is the CEO of Strategy. It's going to join us after their earnings report tonight. After the break, popular trades like crypto, as we mentioned, that's down 10 percent today. We've got other tech

moves unraveling as well. But our next guest says there are some green shoots in other areas of the market. We'll talk about. next. All right, welcome back. Let's stay on the markets in your money. Markets pretty much down across the board, but there does seem to be an interesting, longer-term trend developing in stocks. The worst performing sector so far this year is what they call information technology, IT, basically big tech stocks. That has to be sector down 6% this year. It's early but still down. But other sectors are still making you, hopefully, a lot of money, including even today. For example, energy is up 16.7% this year.

Consumer staples up over 12, materials popping 10%. But you know, the stock market's got a pretty short memory. So is this a longer-term trend or just a shorter-term move? Let's talk about that and more with Wells Fargo Chief Equity Strategist, Osang, O'Sung, great to have you back on. We've had these head fake rotations before. This feels different. You've been pushing the story.

You've been right. Is this the continuation of? of what we're going to see more of this year? I think so. Yeah, I think we're just getting started. I think this is really a reflation cycle that we have been waiting for. Okay, what does that mean?

No, I don't want reflation. That's scary. That sounds like inflation. I don't want to pay more for the burger. Yeah, it's really growth starting to pick up. You know, we're going to get the fiscal tailwinds from the one big beautiful bill, bigger tax returns that people are going to get.

So we estimate about $4,000 in tax returns per person versus $3,000 that people got last year. So that's going to be pretty stimulative for the overall economy. It's a big number. Plus, I think we are in a restocking cycle, finally, for the first time in three years, meaning we just went through three years of de-stocking cycle. And now, back in January, we saw the biggest rebuild in inventories in three years. Inventories of what?

Of everything? Of goods, yeah. So is that, let me ask it more directly. Is this then, because we're looking at like, yeah, alphabet's do info, but software we know is dumped out, crypto's been dumped out. Is it sell the stuff that you? owned for three years and now buy the stuff that will be the downstream beneficiary of what the alphabets are spending if that makes any sense at all yeah yeah no we definitely prefer the

capax takers which is basically semis within technology but even outside of that AI capax we are starting to see more green shoots more broadly in the economy and i think that's really being driven by the cyclical upturn in the inventory cycle inventories are pretty depleted and there hasn't been a demand recovery for the past three years. And now we are starting to see that. And because inventories are depleted, companies have to rebuild. And that kicks off the manufacturing cycle, which we are starting to see. We saw the ISM print that was really good.

You think it's real? Because people go, oh, it was just because they had, you know, the ISM itself said it's just pull forward in case tariffs go up. I actually think that once we see the ruling of IPA terrorist from the Supreme Court, that's going to even accelerate the PMI cycle. Because I think companies are waiting to see what happens there before. they really start to restock. So no matter what the outcome is from there,

I think companies are just going to restock afterwards. So industrial, I don't know if you can get like stocks, there are sectors specific, or to Brian's point, this represents the whole thing, but basically it's if this is not a meltdown, if it's not, you know, the leadership is cracking and therefore the whole market does. If it's just a rotation,

we've had industrials at all-time highs and transports at all-time highs, it's okay to go into those places that are still, you know, at those high levels, they're not going to come next, crashing down? Yeah, I don't think so. I think we're just getting started in terms of the reflation cycle.

And all the leading indicators are actually suggesting we are just getting started. And the best way to play that is through commodities. There has been a very strong correlation between the inventory cycle and commodities. So we're bullish energy. We're bullish materials. We're still bullish gold as well.

We're bullish. Because energy is, we've said, best performing sector this year. But again, it's one month. Okay, so as energy guy, like I'm looking at it, but it doesn't make a real trend. Okay, Exxon. at a record high, though, your bullish energy. Yeah.

Can you narrow that down a little? Energy's a big world, Osam. Yeah, more oil and gas. I mean, obviously, there's still a lot of concern on the oversupply conditions in oil. Everyone's underestimating the demand side of the story because demand has been sluggish for the past three years. And if demand really starts to pick up,

and I don't think this is really just the U.S. manufacturing recovery story, this could actually be a global manufacturing recovery for the first time in three years. Well, if you go back to, this is the whole Yardinni thesis, you know, that the outperformance of the MAG 7 is ending, they extend that to, so is the outperformance of U.S. equities as a result. And so international is doing better. The other 493 are doing better. That's a much more reassuring story, I guess, as long as you think the U.S. averages can still be fine. Yeah, I think the U.S. equities are going to be okay.

I think international equities work as well. I think it's going to be more broader, but because AI is getting hit these days, I mean, we're not bearish AI. I mean, we are certainly more bearish on the hypers, the ones that are spending. Why don't you like to spend? Brian Noak just told us, spend $250 billion for this kind of growth, you know, it's fine. Yeah, I mean, the market hates companies that are in an investment cycle. And hyperscalers are in an investment cycle today. We've rather much expressed AI through semis and some of the CAPEX takers.

I think CAPEX numbers are going much higher. I think everyone's still underestimating the CAPEX cycle. I think it's going to be much longer and bigger. So you would take a micron, anything like that right now? More semis, yeah. All right. Well, maybe like football, we have the Super Bowl Sunday. The winners, they can't win forever.

The Chiefs eventually don't make the playoffs, and we have new teams, and maybe we have new stocks. Osang, thank you very much. Two stocks we want to look at here. I know one, Kelly, you wanted to flag. I want to flag Coinbase. Coinbase is down almost 11% right now, so it's its worst day since August.

But if you zoom out, Coinbase on track for its worst week since 2000, 23 and Kelly, right basically at between our birthdays or two days off. That's right. And something very significant that wasn't just our birthdays. So hit that. So right between our birthdays in July. 18th. July, Coinbase hit 419 a share. It's at 150 now. And going back to last July is when the Genius Act passed. And the Genius Act allowed stable coins to be enshrined into the financial system.

So now when you hear J.P. Morgan or Walmart, anyone talking about stable coins, they don't need, you don't need Bitcoin to, interface with the crypto with the stable coin world anymore. And to Yardini, to some other people's point, that removed one of the main use cases or exposure cases to Bitcoin. That's when we saw those stocks making it. So even though the Genius Act was seen as, quote, positive for crypto, there's certain parts of crypto. It wasn't obviously not good for it. Look, crypto infrastructure wins. It could be a better financial infrastructure than what we currently had with. You have to settle for three days. Instant settlement. Everything is tokenized. It moves more quickly. It

settles more immediately. There's a better paper trade. All of that has nothing to do with whether Bitcoin deserves to trade at any given price. But you wanted to look at Robin Hood, too. Well, what's interesting about this, it's one thing if you're Coinbase, and now there's all these Bitcoin ETFs which have been legalized so you can just go trade it on, for instance, Black Rocks, instead of having to be on the Coinbase platform. That's fine. Robin Hood is kind of a similar story, but they're more diversified. They have all the financial services. They have the prediction markets. They have even some sports betting. And yet those shares are downbried just about as much as Coinbase, 25% over the past week.

Tells you how much of their earnings was probably coming from that engine. Let's get to the bond markets. Meantime, the 10-year yield, the benchmark actually sank this morning after some weak labor market data touching 4.2%. And that's pretty much where it sits now. We're seeing some more signs of weakness with job openings to their lowest level in more than five years. The Labor Department said vacancies fell to $6.5 million in December.

And we'll get the next key read on the labor market Wednesday when we release the delayed jobs report for January that we are supposed to get to more. tomorrow, and that has bond yields, as mentioned, moving a little bit down today. All right, coming up at a few minutes to wear an exclusive interview, the CEO Bristol-Myers Squibb on her their drug pipeline as investors excited right now. But up next, maybe the chart that perfectly sums up the market's mood right now, the name and the reason why. Next.

If you're looking for a chart that sums up the market's mood look no further than this one, the Momentum ETF, it tracks more than 100 stocks with the strongest and steadiest upward price trends over the past year. And as you can see, that momentum is fading fast as AI fears rattle the software stocks. In fact, the ETF is now on track for its worst weekly performance in about a year. Let's bring in Christina Parts in Nevelas. You have the pleasure of covering many of the names in this right now. It's a wild ride on the way up. And it's been 400% for some of these names and now a breather. The 10 of the largest holdings of that momentum ETF or many of the chip names. So like broadcoms in there, Invidia, but you also have J.P. Morgan and Microsoft, some others.

And what we're seeing, even from retail traders, J.P. Morgan puts out this retailer trading flow, and they said for the month of January, was the best month in a long time for retail traders. But this past week, it seems like everybody is very scared at the moment. But what is the trigger? There's been no massive deep seek in the market. And when you look at software versus chips, normally they move in opposite directions, it hasn't been the case as of yet. So there's this, like, big fear in the market. And yet there's no big catalyst, exactly. And you can blame it's possibly AI. Yeah, I think the simplest explanation could be something like Claude or what have you. But for investors, the opportunity here is say, okay, if it's all just being thrown out, because there's force selling in one area causing force selling in another, or your point about Qualcomm and, you know, there's some shortages that are creating problems. Those could be buying opportunity. I mean, this is the moment that is going to separate the wheat from the chaff in the investment space.

I mean, who can identify the high, the quality companies that are getting thrown out with a lower quality? I would give credit to Bank of America from just putting it so simply in a note saying that in the market right now, you're seeing software sell off because of the fear that AI is going to eat all of these software names. So that sectors down. But at the same time, you have many of the chip names that are lower because the ROI with their AI investments. It's like AMD is a perfect example. Their earnings are great. The guidance is stronger.

They have a new product launch, and then the stock dropped dramatically. You can't have these two narratives in the market at the same time. Because one is saying that AI is so, so good it's going to eat a whole entire sector. while another is saying that software. So I respectfully disagree because you can't have both because we do have both. We do. So we do. Right.

It just doesn't make sense. You can't say we can't when we actually have it because I saw Christina Parsonselvelas on TV the other day. And she told me that AMD's results are good and then the stock was down 17%. So what I was thinking is, is this just, it doesn't matter how good your numbers are. Is it just that sort of forced or push selling Kelly referred to where everything's kind of getting dumped. Arm is the perfect example. Their earnings report was strong, but because Qualcomm warned about the memory crunch and how they can't guide past Q2, you immediately saw Arm sell off because of their exposure to smartphones. What is the stock doing today? It's up over 7%,

a complete reversal because the market wasn't maybe reacting rationally. They were just lumping it all together. And then that brings us full circle to the momentum trade, right? We ride this momentum higher. All of a sudden, everybody's getting a little scared. They don't know what the trigger is, and now they're getting out. Yeah, and it's amazing. We were just showing a moment ago. AMD's down almost 25% this week. Why?

Well, there was a lot riding into it. Because people are dumping everything. Yes, and they're rotating into value and safer bets. We've seen that, that's for sure. Sell semiconductors by dog food. Yeah, exactly. So Petco and that was mostly facetious, but there was a true point in that.

As with everything, I say. Oh, yes. We're not allowed to talk anymore. It's done. So. Coming up, an exclusive interview with the CEO of Bristol Meyer Squib, he is here on set. Talk about Medicare negotiation, talk about most favorite nations, their drug pipeline, earnings, and more. It's been a pretty nice recent run for Farmer Giant

Bristol-Myers Squid. The stock is hired a day. It's now up 10% so far this year. Earnings were solid and bullish investors, they will point to its robust pipeline, particularly in oncology, i.e. going after cancer. But the stock still well below where it was before your next guest took it over a CEO in late 2023. Here now for a CBC exclusive. is Chris Berner. He's the CEO of Bristol Meyer Squibb. Chris, thank you for coming in. It's my pleasure to be here. All right, so you took over full-time, your interim, full-time November 2023. Stocks below where it was. It's coming up. You've told me you still have work to do. What's job one for you and your team? Well, job one is to continue to do what we did and what

we demonstrated in the earnings call that we had this morning. Look, we're a strong company today. We're getting stronger. And you see that in the numbers we posted. We've got an early portfolio of assets on the market today. They grew nicely, and they're still very early in their life cycle, so a lot of runway there. We have a slew of late-stage assets that are going to be reading out data just within a few months, more in 27 and 28. That's a second layer of growth. And then we're a very strong company financially.

You saw the numbers. That allows us to continue to invest in this business, return capital to shareholders, and we're going to execute around that. We keep doing that. We're going to have good momentum this year. The pipeline, I think eight, correct me from 18. big trials, 13 oncology? Well, this year alone, we have the potential for

registrational data for six new products. We could have 11 phase three readouts, which is just a remarkable number. In between now and the end of the decade, potentially 10 new products and over 30 life cycle. So give us, because it's cold and we want to be optimistic stocks up. What's the best case scenario then for Bristol Myers

and its stock of those trials? Let's hope they all work out, cure some of these, help cure some of these terrible diseases, treat some of these diseases, what's the best financial outcome? Well, listen, I think we're focused on delivering against these late stage assets. This is the richest pipeline we've had since I've been at the company. I've been here 10 years. And I will tell you, we've got the potential to have upwards of 11 phase 3s just this year,

more next year in the following year. And along with the assets we have on the market today, I see a great future not only this year, but our objectives to be one of the leading companies in terms of growth in the sector. It's so ironic when you're out there literally treating and curing cancer as you have with some of revelmen in these others. And yet, you know, after you hit these multi-billion dollar targets, they're looking for the next big thing. What could be the next? You mentioned you have schizophrenia and the works, a few other things that could be quite powerful and have large markets. But, you know, there's the big weight loss drug out there.

I'm completely different than what you guys are working on. But what do you think could be the next thing to achieve new growth? You know, Lily's at a trillion-dollar value. this stuff that you could kind of build multiple hundreds of billions of dollars of market cap on. When you look at our portfolio today, what you see are marketed products are doing very well today. But when you look underneath that and what's coming next, Milvexian in cardiovascular disease has the potential to replace eloquist. We've got two data readouts this year. Cobenfi, you mentioned, already transforming the lives of patients in schizophrenia.

More data on new indications coming this year and next year. And I'll add one more. multiple myeloma has been just an area that has transformed over the years. We have multiple data readouts for oral medicines there that could be, again, transformative in that disease area. So really across therapeutic areas, really exciting first in class, best in class medicines to transform patients lives. One thing about this president, and we're not going to go down the political road,

don't worry, but the president can be unpredictable. I think it's a fair statement. And we've got drug negotiations, most favored nation's status. on some of the pricing for Medicare drugs and pharmaceuticals in general. You're not, safe to say, not a huge fan of the most favored nation's status. You've probably got members of the administration watching right now. What's the happy medium? Where should these negotiations go?

Well, it's a dynamic time in Washington, for sure. I spent a lot of time there. In some ways, it's always a dynamic time in Washington around pharmaceuticals. What I will tell you that we're focused on are two things. First, we're focused on simplifying the health care system in the United States. You have to do that if you're going to make meaningful progress on patient access and affordability. I'll give you one stat. 50 cents of every dollar spent on a branded medicine goes to someone who didn't spend any risk at all in the discovery and development of that medicine.

PBMs, pharmacy benefit managers? Amongst others. That is the definition of inefficiency. We have to deal with that. And at the same time, we have to ensure we keep the ecosystem we have in the U.S. the best in the world for this industry. It's where we are today, but it's not a birthright. And China, for sure, is investing to build a presence in this space and a meaningful presence. It's the case that chipmakers make. You know, China's coming. Do you view them as a competitive

threat? Does their use of AI or your use of AI give anyone an edge in that fight? Well, I say China is investing heavily in biopharmaceuticals, and they have a clear ambition, which is to replicate what we have in the United States. We have the best ecosystem here. That means Americans have more access to innovation faster than anywhere else in the world. And what we've got to think about as we implement new policies is, does that strengthen that ecosystem or not? And that's what we're going to be focused on. It's an important follow-up, actually, because it's a little wonky, but human drug testing was kind of an overhang for Bristol Myers for a few. That's safe to say. It's kind of in the past

now. We have a good friend Jack Hittery, Sandbox AQ. He's been on the show. He's been on with you. He's on a couple days ago. Super smart guy using AI to help develop drugs. I'm sure you're looking at it too. What is AI's ultimate role in making safe and effective medications? AI is going to transform, in my view, every piece of the value chain of biopharmaceuticals, everything from basic discovery all the way to commercialization. Give you a couple of stats.

In basic research, a program that we have in research doesn't enter clinical development. until it's been reviewed by an AI model that helps us predict the probability of success and how we can improve it. Wow. In drug development, we have a goal of reducing the cycle times for drug development by 30%.

Those are just two examples, how we're thinking about AI, but if it reaches its potential, it has the ability to transform this industry. You're going to replace your software tools with AI? Go to Claude Code and build it in-house. Look, we have invested all through the spectrum of AI. We were one of the first companies

to have a partnership in our sector with NVIDIA. We continue to make significant investments and partnerships across the entire spectrum of what we do. And remember, we're still very much in the early endings of this technology and the impact that it can have. So ultimately, there's so much focus on these GLP ones, weight loss drugs. But there's a lot of bad stuff out there, right?

And to talk about Kobemfi with schizophrenia and mental health and eloquists with cardiovascular risk, I'll move on from that. There's a lot of, is the market too focused? And I mean stock investors, kind of too almost obsessed with the GLP1 story? Well, look, the GLP1 story is very interesting and exciting. You saw it just this week. And I would say we're continuing to pay attention to metabolics.

But our focus right now is in the therapeutic areas that we know well. Cardiovascularities, oncology, hematology, neuroscience. We've talked about immunology. And we've got opportunities to invest in each of those areas. And our focus is finding science we know a lot about, where we can add commercial and clinical value and ultimately deliver that value to patients and shareholders. And it's fascinating. I mean, just to see how well we've done in the fight against cancer in recent years is an

incredible story. So if AI helps that, whatever helps on that front, you know? We're a leader in oncology today. Our ambition is to continue to invest. We've got a great pipeline. A number of programs will be reading out this year. We've got more coming in the next two years. But cardiovascular and neuroscience and immunology, I'll give you one example in immunology.

We have the potential with our next generation cell therapy to not only deliver potentially durable outcomes for lupus patients, but potentially, potentially be talking about cures. It's phase two data. We need to see it continue to play out. But it has a potential to have a transformative impact there. And that's the kind of innovation we're pursuing across each of our therapeutic areas. Godspeed. You and your scientist.

It would be great. You be amazing. Chris Burner. Thank you. Appreciate you coming in. Chris Berner. pleasure. CEO of Bristramisw.

Let's get to Kate Rogers now for the CNBC News Update. Kate. Kelly, the FBI is now offering a $50,000 reward to find Nancy Guthrie, the mother of today's show anchor Savannah Guthrie. The Pima County Sheriff says authorities believe the 84-year-old is still out there, but they've not identified a suspect or person of interest. Authorities say her doorbell camera was disconnected around 1.45 on Sunday morning, and software detected a person or animal on a camera around 212. Then just before 2.30, her pacemaker disconnected from her phone.

The Trump administration finalized a rule today that would reclassify up to 50,000 federal jobs in a move that makes it easier to fire the workers. The change makes them political appointees and will affect employees who are in positions that determine administration policies. Roughly 2% of the federal workforce is affected. And New York City is joining a United Nations health network after the U.S. pulled out of the World Health Organization. the worldwide network response to public health events.

California and Illinois have also joined the organization, but New York is the first municipal health department to become a member. Kelly, back over to you. Kate, thank you. So sad. We appreciate the update there on Savannah's mom. Up next, we'll keep it on in these markets. CEO of Bob's Discount Furniture will join us. We're back with much more right after a break.

Welcome back. We have had a couple of IPOs today, believe it or not, and one of them is Bob's Discount Furniture, name you're probably all familiar with. I know I've been there a number of times, got some great rugs. Courtney Reagan joins us from the New York Stock Exchange with a very special guest. Hi, Courtney. Hi, Kelly.

Yes. Thank you very much. And thank you, Bill Barton, CEO of Bob's Discount Furniture on your IPO Day. The stock is now open for trade. It is up in the early going. Obviously, it is a name, as Kelly mentioned, that's pretty well known in the Northeast or in some regions of the country. But you right now have only about 200 stores with the goal of getting above 500 at some point. How will you expand that name, recognition?

to the areas of the country that may not be familiar with Little Bob from the commercials we see in this area. Yeah, it's a great question, Courtney. First off, thank you for having me here today. You know, we've expanded across the country already. In fact, the state that has the most number of Bob's stores is California. Okay. So we are coast to coast. We're in five regions. We spent the last 30 years building our brand nationally, and we have even more to go, right? We're 200 plus stores today, as you mentioned, 500 in the next 10 years. And those will be really a mixture of infills in our existing regions. In fact, Believe it or not, we just opened another store in New York just a few months ago. And then we have the southeast that we're moving into now.

We just opened North Carolina, by way of example. And then, of course, we have the Texas and the Midwest. So a lot of space to grow. Now, you talk about low prices. And in your S-1, you say that you're about 10% below your competitors, even discounted prices. Right. Right. How are you able to do that without humongous scale? Yes, yes.

Well, we have a very unique merchandising strategy. Number one, we don't sell any third-party brands. Everything we sell is made for us. Number two, we follow trends. We don't lead trends. So we'll follow a trend. And when we see one that we want to really get into, we'll come out with the design that is in that space,

but we add features and benefits. And then we set the retail price at the beginning before we ever go to our long-standing manufacturing partners. And because we follow trends, we have confidence in placing large orders. So we do a narrow and deep strategy. We have fewer skews. We buy deep. We get the lower cost. We pass that through to our consumer.

Are you following trends by using AI? We are in some cases, yes. In fact, we've got 12 AI projects going on within the company right now. And we do have some going on in merchandising. One that's very exciting for me is we're using AI for synthetic focus groups. So believe it or not, you can use AI to set up focus groups and you can set up the kind of demographics you want and test product ideas against these synthetic focus groups. That's just one area that we're using AI. I do find it interesting when you bring up demographics that, yes, low prices are sort of part of your value proposition, but you do have a higher income consumer to some degree as well.

Incomes of $100,000, $150,000. Yeah, well, in fact, that $150,000 cohort has been one of the fastest growing ones in recent years. So today, 27% of our consumers have household income above $150,000, and that's up 3% in the last couple years. So we believe there is a trade in effect going on. We organize our products by good, better breast price tiers, and we think that our quality, stylish furniture, are compelling everyday low prices as attracting even the higher-income demographic. So obviously the administration has delayed, at least right now,

these additional tariffs on upholstered products. You've moved out of China completely, but most of your manufacturing is done in Vietnam and some of the U.S. So what will happen if these tariffs go into effect? How will it affect your pricing or your margins? Well, we've already taken care of the tariffs that went in effect last year. So even going back to 2018, 2019, when the first round of tariffs came to a place, we developed a playbook to address tariffs and to protect our margins, while at the same time making sure that we give our consumers the everyday low prices they expect from us. So this tariff playbook that we used in 1890, while we had to dust it off in 2025, right? And we did, and we were able to mitigate the impact of tariffs across the board.

You know, our manufacturers over in Vietnam, as you quite correctly call out, had been longstanding partners. We went to them and we got cost concessions. The other thing is because all the products made for us, we can move between venues and factories if we need to. So we can move to more tariff favorable locations. And then lastly, if we need to, we can take price. But we hate to take prices. The everyday low-price player protecting our values, everything does.

I'm out of time, but I have to ask you really quickly, how do you see the U.S. consumer right now? Yeah. Well, I tell you, the U.S. consumer is still buying furniture. I mean, we're clearly outperforming the category and growing. You know, those life moments when you buy. furniture. You think about the young person who's setting up their first apartment or the young couple sitting up their first home. Those are still happening. People are still buying.

What we're noticing is they're a little more stress on the financing side. They're not as willing to take consumer financing as they were, which is fine. We'll find a way to help them regardless. But that's what we're noticing. Thank you very much. Bill Barton, really appreciate you being here with us today on IPO Day for Bob's discount furniture. Brian and Kelly, back over to you. Hey, Courtney, appreciate it. Thank you very much. All right, coming up. Musk posting a rather cryptic message that money can't buy happiness. Huh. Maybe not, but we're going to show you just how rich that guy is. I mean, really, really, really rich. Next. Let's get random but interesting about a very rich man getting a whole lot richer.

According to Bloomberg's billionaire index, Elon Musk has added about 50 billion, give or take a few billion, to his massive net worth this year. You know he's rich. But did you know that Elon Musk has made more money this year than the next four richest people combined one man versus four super ultra billionaires and Musk at a net worth somewhere around 670 billion, Kelly. You know, still on top. I was one skeptical we'd have that many trillion-dollar companies. And then I thought, well, the people think he's going to be a trillion-dollar man. I don't know.

Then I see these numbers. And I'm like, it's just a matter of time. A billion is a thousand million. It's just Carl Sagan-type stuff. Listen, if he wants to disrupt the entire automotive industry, do as good as NASA in space, give us humanoid. Fine, go for it. Although he says it doesn't buy happiness.

So, well, look. But a good long walk, by the way. What would have Thomas Aquinas say? Glass of wine, a hot shower. More power lunch after the break. Welcome back. Quick check on Estée Lauder. It was supposed to be the comeback.

Finally, the stock was turning around again. But today, a different story. Brian, down 20%. And by the way, tomorrow, big interview here. Fongley, he is the CEO of Strat. We'll join us. They've got their earnings, their results tonight. That is a big, big one for crypto, which is also down. Thanks for watching, everybody. Yeah, closing bell starts right now.