Closing Bell: 10/19/26

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0:56Scott Wapner: Welcome to Closing Bell. Scott Wabner live from Post 9 here at the New York Stock Exchange. This Maker Break Hour begins with today's tech bounce, a much-needed one following the worst week since June. Let's show you the scorecard with 60 to go in regulation. There you go. We're green across the board. NASDAQ's leading the way because CoreWeave and the other so-called neoclouds are trying to bounce today, doing a pretty decent job. The CoreWeave now has turned negative, and we'll have to watch that over the final stretch. See if that sort of bleeds through to some of these other areas of the market.

1:26Scott Wapner: Semis, they've been under fire, too. So NVIDIA is higher, as is Micron. We'll watch the entire space. We'll have more on those moves coming up in just a minute. Elsewhere, Apple's new foldable iPhone selling out within hours, even as some question the strength of the new 18 model. We'll watch those shares closely, too. Cleveland Cliffs, a big winner today off the back of its earnings report. Look at that, up 17 percent. All of that takes us to our talk of the tape. the state of the AI trade, whether there really is reason or not to worry. We'll begin there with our Seema Modi. She's tracking several names in the center of that action.

1:58Scott Wapner: And the action, the price action, not looking great. This intraday reversal, Scott, I think is notable. CoreWeb unable to hold on to its gains despite these two upgrades from J.P. Morgan and Goldman Sachs, where analysts say not every neocloud is built the same. So sort of trying to distinguish between CoreWeb and the rest. We have seen CoreWeb bonds come in a bit. It yields now below 15 percent at 14.9. That market still sees unsecured debt as a less likely option should Corweave decide to raise capital. In fact, I'm told don't expect any activity in the high yield debt market till after the midterms, as there is now a higher bar for financing, plus the permitting of so many data centers being a drag.

2:36This has semi-analysis put out that piece, right, predicting an acceleration in the pace of compute coming online despite ongoing funding concerns. That's providing some relief to chip stocks. Separately, Evercore ISI predicting earnings to provide further support to the long-term trade for semiconductors, with expectations that Meta could now announce an equity sale when it reports on Wednesday. Two equipment names, Texas Instruments and Lamb Research, will provide a crucial read on demand and the supply chain for chips on Wednesday. Both stocks, I would point out, are down sharply from their year high, but trying to bounce back today, Scott.

3:12Scott Wapner: All right, pretty good look there, Seema. to thank you, Seema Modi. Let's bring in now CNBC contributor Adam Parker of TriVari. It's good to have you on. So one of the benefits of selling the research that you do to the, you know, big hedge fund clients that you do, you get to talk to them on a regular basis. So what are they telling you about what they think is happening in the market now? I think, you know, it's not just the hedge funds, the asset managers along always, too. I mean, I think people think the correlation between oil and rates has been an issue. And so I think the short term was all about if oil can come down.

3:44And today you've got to wear one where Brent's down, TI's up, and the tenure isn't backing up. But I think people were focused on that because it seems like that's going to limit the price to earnings a little bit. So you need oil to kind of come in and rates come in. I think the second thing, there was definitely some more concern about midterms in the last couple weeks. And could that create an environment that's less regulatory friendly for the data center build out, the AI trade? But I think when you take a step back and you really think through it, earnings growth is going to be really strong.

4:12I don't know anybody, including me, who says I love how Micron accents they printed. On the other hand, if you take a step back, I think they might have produced the best quarter ever produced in the history of humankind by a manufacturing company. I mean, how many companies have ever done$50 billion in revenue at 86 % gross margin to make something in a factory? Like, zero. What if that's as good as it gets?

4:30Scott Wapner: What if that's from double ordering, triple ordering, and all that kind of stuff? So it looks great today, but tomorrow. Yeah, there's no question what's in the prices of collapse in the earnings in a four, five, six quarters from now. If not, it's LBO ball, right? But I mean, when you talk to these people, are they voicing concern that there are cracks forming in this trade or what? Because the market feels like it's trying to go through some things and figure that out. It's really polarized, right? If you're a value PM or if you've been underweight, this complex, you love this. You're finally kind of, you know, you were wrong when it killed you on the way up.

5:06And you're kind of loving this a little bit more since July 1. And if you're a growth person, you're loaded to the gills with the AI complex. And you're just trying to find uncorrelated alpha to help you, you know, kind of absorb some of the down days. I'm probably two-thirds of the way to the growth guy myself. Like, I think this is a long-winded multi-year trade for compute and power. We're still three and a half years into an eight to ten-year cycle. Financing is going to be an issue for some companies. So, sure, you see that with Oracle or CoreWeb or others where they have a lot of debt and a big backlog that has to come to fruition.

5:35But I'm not sure why Micron won't print four, five, six quarters in a row like this. And the amount of money they're going to make is so great. I don't think I should pay the same normalized earnings for a company with net debt as I should for one with 30 percent of their market cap in cash. So they'll get credit for the balance sheet if they can keep delivering. And in the meantime, I think you're going to see pretty good earnings results from most of the companies here over the next 10 days.

5:54Scott Wapner: So then you're not concerned, it doesn't sound like really at all, with the actual fundamental case of where we are. A few years into an 8 - to 10-year cycle. So those are early innings. I'm not broadly concerned that we have a shortage of compute and a shortage of power for the next several years. Obviously, not all stocks go in a straight line, and there will be some nuances to winners and losers. But I want to own, at these prices, Micron, NVIDIA, and Broadcom for the next two to three years, based on what I know now, and this associated semi-cap equipment. They want to own all those. I think they're going to outperform the market over a 12, 18, and 24-month time frame.

6:29In a three-month window, of course, things can change. I think memory will act a little different. So we'll select semi-cap just because as you get to 28, 29, when more capacity is coming online, you have to see how fast the earnings degrade. But I think you still want to be long semiconductors and long power associated with the trade for a while.

6:46Scott Wapner: If you had your strategist hat on like you used to wear, would you be looking out for signs that you think earnings are as great as they are now would be peaking in 9 to 12 months? And would that color your view of what you would advise people to do in the market now? Yeah, I mean, years ago, I thought everything was so-called second derivative, like rate of change. Now, I think last March we wrote a note saying maybe it's just so much about level, like the actual level of growth. I mean, the S &P is supposed to grow 28 % earnings this year. I think the bottom-up numbers are 20 next year. Let's say there's a little bit upside this year, maybe around that next year.

7:24I don't think the market's going to be pro-rata 30 % cheaper in a year. Like, the earnings are going to grow faster than the multiple at the market level. Tech is driving a lot of the growth, so I think tech will participate in the uptrade. So, sure, there will be fits and starts, but I think tech will outperform, and I think the market will be up in any kind of 6-, 12-month view.

7:40Scott Wapner: But Goldman today is talking about 36 % earnings growth for this year. So robust by, I mean, amazing by any amount, right? But that slows to 11 % according to them in 27. So if they're right, the market will go lower. The street's got 20 next year. And so what they're saying is a huge miss in next year's numbers. And in order to go from 36, think about the shape, 36 this year, to get 11 next year, it's probably like flat or down at some point to get the growth. So I think the market won't like that. I think you need to have 20 % plus next year, and I believe it's growing in 28 as well to get the market to power through.

8:18It sounds to me like they're much more bearish than consensus on next year's numbers. I don't have any visibility in that. I think they're going to grow faster than that, because I don't think you've seen a lot of companies even manifest productivity on the earnings front related to AI. So all we're focused on is the companies with meaningful AI revenue. But what about the other side of it, which is you start seeing companies run systems in parallel, fire white collar folks who aren't adding value, started benefiting and you're going to start seeing that in 27, 28, 29. So that's really the bold case for equities is you transition from the AI revenue to the AI costs and you get above long term trend earnings for the rest of the decade.

8:52And I assign a chunky probability to that, actually.

8:55Scott Wapner: I don't even think it's a matter of them being bearish. I just think it's sort of reality of the law of large numbers. Like when you have earnings growth to the degree that you have it now and you think you're going to continue to have it and the spending levels to the amount that you have them now and to what you think is going to continue, eventually it peaks. It peaks. Oh, sure. But what if demand remains so robust and then you have the return on all of the spending? Doesn't that counteract even if their earnings growth starts to moderate or decline a little bit? I mean, there's a couple, there's a lot to unpack here, right?

9:32I mean, if you grow mid-30s and then 11, I think the market will view that as too much of a dull acceleration. If you grow 30 and then 22, 23, and then 20, I think people will be looking out a year from now thinking there's still pretty strong growth. I still have, you know, a lot of spending coming from the data center and AI trade. I'm short power. I'm short compute. There's other things to own. And I think earnings can grow. Remember, the top 100 U.S. equities are not the broader economy. They can gain share from government spending, non-U.S. spending, private company spending, et cetera. That's what they've done.

10:00They can raise, I mean, Musk can raise, you know, a lot of capital at a low cost. I mean, so I don't think this narrative that these companies are tapped out and borrowing is anywhere near true. I think everyone suspects medical access. I mean, Google peeled off, what, 80 B last quarter at six and a quarter. Well, I don't think the market's worried about those guys. But that's what those companies are driving a chunk of the spending, right? So I still think that's why earnings will grow. That's why you want to own Micron and NVIDIA. I mean, they're going to benefit. All right.

10:28Scott Wapner: Let's bring in some more voices to the conversation. CNBC contributors. Hightower, Stephanie Link and Capital Area Planning Group's Malcolm Etheridge. Good to see you guys as well. So, Steph, how are you feeling about what's been taking place over the last week-ish? Well, I mean, last week was not great for tech and we know tech was down 7 percent, but the equal weight S &P 500 was actually up 50 basis points. We did see a rotation. We did see a broadening. The big question in my mind is, does that continue? And I think both tech and the other sectors can do well because the economy is strong, because earnings are going to be, they're not going to be 11 percent next year.

11:06No way. It's going to be easily 20 percent in my mind. And by the way, even if they did 11 percent, that's still above the long term average of earnings growth, which is usually 8 to 10 percent. But there's so much momentum within the A.I. trade. The hyperscalers are not changing their tune in terms of spend. If you ask me what I'm worried the most about for Meta on Wednesday is that we have a 240 billion CapEx number for next year, up from 135 to 145. So I'm going to watch out for that. But I like Meta for other reasons, of course. Amazon, Andy Jassy, he likens this whole AI trend back to the early days of AWS.

11:45And he has said on record, this is not a hunch. They're not spending 220 billion this year alone on a hunch. So to me, I think this is totally normal to see a pause in this in this in technology. I think you want to be more selective in some semiconductors. You know, I like NVIDIA, Broadcom and Micron. I love their balance sheets versus CoreWeave and Oracle. But I do think you're going to see other good stuff coming from other sectors. So I'm hopeful that we will continue to see a broadening out.

12:12Scott Wapner: I guess I would push back a little on the notion of the broadening out and how what we saw last week in that regard is viewed, I think, by you as a positive where I could say I don't think it's bullish at all that staples, health care and utilities represent your broadening, especially at a time where, you know, yields were going down at the same time. Well, financials, utilities and comm services were also up. They weren't up as much as energy staples and health care, but they were up. And that's really very encouraging to me. So I'm not giving up on tech, but I'm also not giving up on what I heard from the banks.

12:55I mean, listen to what Jamie Dimon said just today at the Wall Street Journal Leadership Institute. He's talking about the economy booming. This is the same CEO who talked about a hurricane three years ago.

13:06Scott Wapner: So he's also talking about inflation and the war. So it's not. He's talking about, you know, but he's talking about better growth. And that's that's something from him. He has he has had a negative tone for the last several years. And now he's kind of switched. Sure, there are things to worry about in terms of rates and energy and inflation and that sort of thing. Of course, we're all worried about that stuff. But he's even admitting and all the other big five banks beyond J.P. Morgan said the same thing. Economy, good. Consumer, good. Credit quality, really good. Malcolm, how do you see it? Yeah, I think that I'm in alignment with Stephanie and Adam that we're probably talking about a deceleration from 37 percent earnings growth for the year down to whatever the number is, 20 percent, 11 percent, 15 percent, somewhere very short of 37 percent is going to have a meaningful impact on this market.

13:59So aside from Adam's strange head and shoulders structure he was trying to give us with his arms just now. I think that the number, the trend is probably going to go down to the right, and that is going to cause the market to freak out. So I think that what we're up against right now is an earnings period where this might represent as good as it gets when these companies start to talk about having to borrow more to continue the spend that they've been spending, where we've already seen since the summertime a market that flips out at the idea of additional borrowing, because as the companies are bringing these bonds to market, they are still getting issuances taken up by the bigger money managers, but they're also having to increase the rates that they're offering.

14:39They're also having to bake in better covenants, all those kinds of things that tell you that it's probably not as good as it was as recently as March, April time. And so that alone is a reason why I think investors should be a little bit skittish here, not necessarily be trying to time this thing and say, I'm going to step in and start to buy some of these drawdowns across the board. I wouldn't stepping in by like a Nasdaq per se right here. I'd wait until we start to get earnings from the big tech companies first. But if you see a name or two that's beaten up that you really like, that you've had your eye on, sure, go ahead and take a shot there.

15:10I just think that earnings is going to tell us a ton more than it usually does because it's such a tenuous situation right now.

15:17Scott Wapner: But there's no indication that spending is going to slow anytime soon. And you heard that from the AWS CFO? There's no indication that spending is going to slow anytime soon, but there's also, there is an indication that the market doesn't like it anymore. So where we used to reward these companies for the increase, just look at what's happening with semis, right? So semis have had a very hard time in the last couple of weeks. What's that based on? What has changed in the trade as far as semis are concerned over the last couple of weeks? The questions now are related to, is this the end? You just posed the question, I think it was to Adam, to what end?

15:56The companies are telling a compelling story, but what if that's not enough? And I think that's what we're up against with this earnings period. Maybe the market decides more spending is not a good thing anymore, and they decide that this is as good as it's going to get. And I think that is the thing that we can't afford to have earnings fall off the cliff by 15 percent. Earnings growth fall off a cliff by 15 % next year.

16:18Scott Wapner: I guess part of my point is this feels just like every other acute growth scare. This one just happens to be related to the dominant theme that has gotten the market to all-time highs. Look, I hear your concern. I hear Malcolm's point that historically decelerating revenue wasn't great, that a peak could mean the multiple is going to contract. I feel like every cycle has got its nuances and differences. I think this time earnings growth is going to be strong enough to offset some multiple contraction. I think it's likely that we end up in a shortage in certain areas for a while. I think the risk is to the upside for hyperscale or capex, as Steph pointed out with Meta.

16:57And I think the semiconductors will do well because they're kind of the direct beneficiaries for a while. It also depends on your time frame. I don't know. I'm not very good at kind of two-week price action going down on semis and then waiting until NASDAQ companies report. So I'm waiting three days to buy. I'm not good at that. and I'll defer to these guys. If Malcolm's good at that, then give your money to hand. But we already had multiple compression, right? We already saw that. We've had a lot all year. We're like 23 to 19, 18? I don't want to put words and stuff, but I think what she and I were saying is that if the deceleration does go from 37 to 11, that's wildly bearish.

17:30That's way more negative than what's in the price. If it goes from low to mid-30s or 37 down to mid-20s, it's still enough absolute growth that it can absorb a lot of multiple contraction without people thinking it's falling off the cliff. Malcolm used the phrase fall off the cliff. If people start really thinking it's a growth scare like that, then, of course, this is the end and that's where we're headed. I think it's really unlikely you're going to hear that from any part of the AI complex that's major during this earnings season. And frankly, in next earnings season either. I think we just have shortages across the board.

17:57So I don't think you're going to see earnings fall off a cliff. And I think the growth will be strong enough and it will end up at higher prices for the associated stocks.

18:04Scott Wapner: The problem, Steph, I guess, is that just higher interest rates have complicated things. and the Fed reintroducing itself into the situation by hiking rates already and likely again. It's just a reintroduction that people not weren't necessarily counting on at the beginning of the year. For sure. And I think if you stay at five or if you even go higher, which is not my call, but you have switchers. There's no question about it. I have advisors asking me all the time, what should they do in fixed income? I mean, fixed income last month was down, you know, like seven percent. That's a lot. And bonds have not been a good return this year, but maybe that is starting to look interesting.

18:44So I absolutely am watching yields, too. But here's the thing that I'm thinking the most about. I'm thinking that we're going to see an acceleration, maybe not dramatic in earnings, but in ROIs, because that's what got the Mag7s, people got excited about them from last quarter, because you had AWS accelerate to 37 percent. You had Azure to 43. You had Google Cloud 82. If you start to see better ROIs and maybe just good earnings, not phenomenal earnings, that might be just enough because it's saying that all this spend is leading to better results. So that's what's on. That's what's on.

19:20Scott Wapner: I mean, I think that's keeping the bulls bullish, right? You know that that that the story is, as Adam said, still early innings and we're just sort of reaping the rewards of all the money that is being spent. Last one to you, Malcolm. When Morgan Stanley's Mike Wilson says the next sell off could be time to add risk, we advise investors to be ready for either a very rapid reconciliation or a slower bleed into November, because in our view, that will be the time to add risk rather than shun it. Do you disagree with that? I don't disagree with it, but I don't know necessarily that it's going to be a playing of all the old hits.

19:58I don't know that all the companies that Stephanie just mentioned that have had that enormous cloud growth are going to be the ones that actually lead us out of the next downshift. I think that maybe this is where we make the jump instead of trying to figure out which of the companies that have grown a tremendous amount from investing the way that they have into the data centers and everything else. Maybe we're moving to where the companies that have been able to integrate AI into themselves for the last 24 months, 18 months, 24 months, that time period. Where's the growth going to come from? Where's the return on investment going to come from?

20:32Those companies. And that's where you see the market start to reaccelerate into 2027. All right.

20:38Scott Wapner: We leave it there. Malcolm, thanks. Steph, to you as well. And, of course, Adam here on set. We'll see everybody soon. We're getting a fresh read on demand for the new iPhone. Mackenzie Sigalis is following that story for us. Hey, Mac. Hey, Scott. So Apple's Duo goes on sale in stores on Friday. But the standing question is whether there will actually be any phones available for customers who didn't preorder. Now, retail employees have reportedly been warning customers not to come in expecting walk-in stock. I've asked Apple specifically how much inventory, if any, will be available without a preorder.

21:08But the company isn't weighing in beyond its statement on Friday that preorder demand has been nothing short of extraordinary. Online supply is already extremely tight. Morgan Stanley saying that duo wait times hit roughly 14 weeks on the first day of pre-orders, the longest that it has recorded for any iPhone in a decade, and says that it's seeing no indication that Apple's increased production plans despite those waits. JP Morgan saying that Wall Street now expects Apple to ship roughly eight to nine million duos this calendar year, down from about 10 million because of those supply constraints.

21:42And KeyBank, it's more cautious, saying that those pre-order wait times alone aren't enough to prove sustainable demand. It wants to see Apple actually increase production and says that some sales may simply be existing Pro Max customers trading up to the much more expensive duo. Scott?

21:59Scott Wapner: Well, I guess we'll see. Mac, thanks. Mackenzie Sigalis. Let's send it now to Pippa Stevens. She's watching the stocks that are moving into the close. Hey, Pipps. Hey, Scott. So starting here with Cleveland Cliffs, because those shares are up 16 percent Then after the steelmaker beat on earnings, the revenue did come up light. The company more than doubled its adjusted EBITDA quarter over quarter, while also posting its first quarterly profit in more than two years and lifting its full year guidance. Energy Energy in the red as Jeffries cuts its target to 131 down from 160. The firm did reiterate its buy rating, saying the stock is trading at pre-AI boom free cash flow yields, but said while they still expect data center deals this year and next year, their confidence is lower than before.

22:39The company also declaring a dividend of$1.90 per share on an annualized basis. Finally, Intel is snapping a three-day losing streak. J.P. Morgan upgrading the stock to neutral, saying although the turnaround will take years, management execution has been solid and the firm's confidence is building, while AI will continue to be a tailwind, those shares up better than 3%. Scott?

23:00Scott Wapner: All right, see you in a little bit. Pippa Stevens, thank you. Just getting started. Coming up next, Anthropic taking a big step today to try and ease public anxiety over the impact. of AI, Kate Rooney, following the money force there. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees.

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24:43All right, we're back.

24:44Scott Wapner: As polling reveals the majority of Americans remain broadly concerned about the development of AI. Anthropic taking a step today to try and soothe some of that public anxiety. The company says it will donate 5 % of shares to what it calls a public benefit fund, money that will go towards addressing labor market impacts, among other key initiatives. Our Kate Rooney following that story joins us now with more. What do we know here? Hey, Scott. Well, this is an unusual part of Anthropics' upcoming mega IPO, the AI giant, as you mentioned, setting aside 5 % of equity for a new charitable fund. So it could be worth at least$50 billion, closer to$100 billion, if this company debuts closer to$2 trillion, which is at the higher end of what we've been hearing.

25:26Anthropic does say it plans to contribute more equity as the company grows. They note a 2 % increase for this public fund on every 50 % jump in valuation. The company did say, rather, that it won't be used for lobbying or political donations. The move does come amid public backlash, Scott. We have seen it with data centers. We've talked about it on air. Some of the negative of polling around this technology. And the IPO is also about to create a record windfall for its founders and employees. So this could be a way to start to build up some goodwill with the public here. Anthropics saying some of the funds will go directly towards addressing the technology's economic consequences.

26:02The fund could support workers displaced by AI, for example. Anthropics move already facing some backlash, though, some, including Elon Musk, questioning why Anthropics would retain control of this money versus giving it away directly. Elon Musk did choose to go directly. He says he's going to donate one SpaceX share to every American child next year, Scott.

26:24Scott Wapner: Okay, Rooney, thank you very much. We're joined now by Plexo Capital's Lo Tony, also a CNBC contributor and an early Anthropic investor. Welcome back. It's nice to see you. Thanks for having me. So what's your reaction to this fund? Yeah, you know, I think it's an important step to begin to address what many expect will be a disruption. And albeit some are saying momentarily, others are saying it's not clear. But there is a lot of angst, anxiety and concern about a lot of people. I think we've seen it in the data center of build out protests, but it's really a reflection of people just not really understanding what AI will do.

27:05So I think it's an important step. Obviously, Elon makes a good point. Why not just give it away and instead of taking control of it. But I do think it's an important development to take, you know, pay attention to.

27:19Scott Wapner: But by saying he makes a good point, you think they should do that? Why you don't do you not think they should retain control of the money? I don't know, Scott. You know, this is a tough one. We're somewhat in uncharted territory. We've never quite seen donations of this size from a company for the public good. We've seen, you know, establishments of foundations all the way back. I worked at eBay. Pierre Omidyar set aside some shares for a foundation, but it was never at this scale. And we never had it in response to what can be a complete, potentially, disruption of the types of jobs that people are accustomed to.

28:02So, you know, it's hard to say. We're in uncharted territory. I think it's a very positive step. And whether or not Anthropic retains control or whether or not it's a complete donation, as Elon is doing with his shares for children, it's still a good thing.

28:19Scott Wapner: What do you think it says, if nothing else, about where the company views itself in terms of public opinion on the issue itself of this deep unease about AI in so many different forms? Yeah, you know, we've reached a point where models are becoming so powerful that we do need to start thinking about what types of controls are in place. And, you know, I think there's a couple of ways to do this. There's the approach that this announcement is making, which is more of a philanthropic approach to being able to potentially maybe even offer some type of job training. And then there's the other approach which Anne Prophic was talking about as well, which is how are we going to put guardrails around these models because they're so powerful?

29:07And so this proposal has a piece on the philanthropic side. We've got a proposal on the establishment of maybe some type of FINRA-type equivalent for context because people can understand that to be able to put the guardrails there. But, you know, I think what's really interesting is, you know, how does the company strike this balance between protecting the public and preserving innovation? And that's the thing that's very hard to get right. You know, I think it's difficult to look at the counterfactual when you start to think about, oh, but what if what if they did this? Because we just don't know with the lack of examples that we have in this new era that we're entering.

29:51Scott Wapner: Speaking of the guardrails, I mean, there are those reports that they've been, you know, quietly marketing to lawmakers a framework for some degree of regulation. Isn't isn't that the very definition of regulatory capture that some had worried about to begin with? Sure, we want regulation and we're up for it, but we want to help write the regulations. Well, there's no doubt that it would put the company in a very enviable position to have the ability to understand what that legislation is going to look like to establish those guardrails, because clearly Anthropic has been moving in that direction.

30:34I don't think that's necessarily a bad thing. Remember, when we've talked in the past about why we decided to invest in Anthropic, it largely was because of this emphasis around thinking about the constitutional AI approach and having those guardrails in place. So, you know, again, we're in somewhat of uncharted territory. Look, I think you could make the argument on both sides. That does have the optics of regulatory capture. But then on the other side, I think it's important for not only Anthropic and Dario, but the peers as well for the companies and those leaders to also have a perspective and a point of view.

31:15There's no monopoly on making a proposal. And the question is just going to be, how does it come together and whose proposal does it most look like?

31:23Scott Wapner: I've got to go. But lastly, I mean, what do you make of what's been happening in the market over the last week or so? Are you feeling any anxiety or caution over where this story currently is? And are you hearing from others who might be? Because clearly the market's trying to figure out something. Yeah, we've lost a little bit of momentum, you know, quite honestly. And I think there's so many different things converging right now. The core we've story and looking at their cost of capital and the effect that interest rates is having. You know, it's a different business model than the hyperscalers.

31:57But nonetheless, that's one component. I think with the upcoming earnings, things that we want to see are indications that the demand is still there. I believe it's still there. But second, we need to look at the payback, especially from the hyperscalers. It's one thing which Microsoft is talking about, about being able to monetize it quickly. The bigger question is, how long is it going to take to pay back? And then finally, again, it's just, you know, what does the cost of capital look like? And if that cost increase is going to slow down the ability for these companies to be able to deploy the compute necessary, what impact might that have if the demand is there but the compute's not there?

32:38What would that do to the revenue growth?

32:41Scott Wapner: Appreciate it as always. We'll see you soon. Lo, thanks. Thanks for having me. All right, Plexos, Lo, Tony. Coming up, how AI is reshaping the role of women in the workforce. Exclusive new reporting from our very own Steve Leisman when we come back. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools, no extra logins, just one subscription that gives you personalized AI right inside your actual workflow. Make work less work.

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34:23Scott Wapner: We have some breaking news out of Washington. The president making some remarks. Eamon Javers has that for us. Hi, Eamon. Yeah, Scott, that's right. The president talking to reporters at the White House just a few moments ago, And he was asked about that report from The Wall Street Journal this morning, which said that Vladimir Putin of Russia is proposing a three-way summit to decide the fate of the Russia-Ukraine war. But that three-way summit would involve Russia, the United States and China, not reportedly Ukrainian leader Volodymyr Zelensky. The president was asked about that. He said he would go, but he put some conditions around it.

34:57Here's what he said. we would schedule a meeting based on the denuclearization and that's a very positive

35:04Scott Wapner: thing for the world so i would do it if they want to have a i just heard about it if they'd like to have it i think it would be held in china he just left here uh if president she wants to have it i'd have it i'm sure we're talking about other things like trade too but uh yeah i would do that So the president saying such a summit might happen in China because President Xi was most recently here in the United States. And he said he would attend even if Zelensky did not. He was asked specifically about that in a follow up question, Scott. And he said, well, it doesn't matter if other people are not there.

35:39We can have that meeting. We can have a sit down there. Clearly, that's not going to sit well with the Ukrainian side who don't want to see their country divided up in a summit that they're not partaking in, Scott.

35:50Scott Wapner: Yeah. Eamon, thanks. That's Eamon Javers in Washington. Every major technological revolution has reshaped the role of women in the workforce. Today, AI is poised to become that next great turning point. Steve Leisman is here now with more. Hey, Steve. Hey, Scott. Our AI Economy series continues with a special look at how women could be affected by the new technology. We look back at how technological change from the past could inform the future. our online documentary begins looking at women who lost work from the automatic telephone switch. That was one of the most massive CapEx investments at the time.

36:25Here's the part that looks at the washing machine and household appliance that played a role in allowing millions of women to enter the workforce, asking the question, how did the economy put them all to work? The washing machine. It used to be the girl who worked the hardest got her clothes the cleanest. Oh, she was tireless. Dubbed by economists engines of liberation, washing machines and other appliances dramatically reduced the time women spent on unpaid housework. She knows that confining hours around the wash tub are a thing of the past. That meant time could be reallocated to a paycheck outside the home.

37:10But something happened, seemingly at random. One, the very entry of women into the workforce meant tasks once done at home moved into the paid economy, introducing new demand for services like child care and food preparation. Two, as American businesses grew, they needed more people to handle the paperwork, from payroll to customer accounts. And three, the number of female high school graduates more than tripled between 1920 and 1940. That expanded their opportunities as new technologies reshaped the job market, and it produced new jobs in education.

37:57The comparison offers hope for the age of AI, that people who lose work from the advent of a new technology find work, in part because of the advent of the new technology itself. Trouble is, by all accounts, the appearance of new jobs when women entered the workforce in the 60s and 70s was mostly random. And there's no guarantee that displaced workers today will be as lucky, either landing new jobs or finding good-paying work. you can see the full documentary and written piece on cnbc.com my personal takeaway from the research there's no perfect historical analog but there will likely be job losses as well as new opportunities what's different this time more women are more highly educated professional and managerial jobs that offers some protection compared to past innovations but then again scott the whole promise and threat from ai is that it's going to move up the human value chain

38:53Scott Wapner: All right, Steve, thank you. That's our Steve Leisman. We're tracking the biggest movers into the close, as we always do, closing Bell back in two. We're about 10 from the Bell. Let's get back to Pippa Stevens for the stock she's watching. Hey, Pippa. Hey, Scott. SpaceX is advancing ahead of tomorrow's third quarter earnings after the market closes. The report will come just one day before Tesla's Q3 financial results on Wednesday, as Wall Street continues to speculate about a possible combination of the two Musk-owned companies. And Palantir is also in the green after announcing a partnership with Knox Systems, a federal cloud service, to accelerate deployment of software within U.S.

39:29federal government environments. The stock is up some 4.5 percent on the news. Scott?

39:34Scott Wapner: Yeah, but Stevens, thank you very much. Coming up next, we'll tell you what has shares of Amazon rallying today. That and much more inside the market zone, which is next. We're now in the closing bell market zone. Mike Santoli and iCapital, Shonali Bassic, here to break down these crucial moments of the trading day. Oliver Rennick, standing by live from the CBO Global Markets in Chicago. And Kay Rooney is following a big call on Amazon. It is sending those shares higher as well. Michael, go with you. Not exactly the highest conviction move today, but because the Nasdaq's green and some of the chips are bouncing, I suppose people will take it.

40:08Yeah, for sure. I mean, I don't think we necessarily settled the big picture today, but it was a net positive, I think, that you did not see a continuation of the two-day urgent, very aggressive selling that we saw in the hardest hit parts of the AI trade Thursday and Friday. So you maybe got a little bit of a circuit breaker hit in there. High yield credit spreads, they calmed down just a little bit, but did not reverse most of last year's, last week's expansion. So similar kind of reversal, but only partially of last week's risk aversion trade. So again, I think that everybody can agree that semis are overdone on the downside in the very short term.

40:45The big debate is whether, you know, you can really give them the benefit of the doubt again as we go into earnings season. And, you know, presumably everybody's going to have positive things to say about CapEx and the whole supply chain. But that hasn't been enough in the last few months to get the group going.

40:59Scott Wapner: Well, meta is looming, especially large. Speaking of earnings this Wednesday, right, comes at a pretty important time. Without a doubt, an important time. All of the valuation discount that we were able to point to in recent months has mostly been kind of evaporated in this move higher in the stock. So you have, I think, almost you had the excitement over Mews and now the backlash to Mews. So I do think it's interesting how they're going to characterize things. I think there's a sense out there that they may just narrow the range for their own CapEx. So we'll see what's built into the stock. The reactions to the early reporters across different industries haven't necessarily been really all that positive.

41:36So we'll see if that shifts.

41:37Scott Wapner: All right. Seeing less than five in overtime. Mike Santelli, look forward to that. Let's go to Chicago. Oliver Rennick, what are you watching? One of the most popular international markets this year, Scott, the Brazil ETF EWZ. Prices little changed today as the country's election narrows a week ahead of final results. But options traders are very active in placing some big bets. Options volume is more than five times the 30-day average. And what had been very heavy bullish bias in trading after the fund's 20 % pop to start the month has turned to much more balanced flows. More puts were actually bought than calls today, but there was even more puts selling, in particular at the 34 and 36 strikes expiring this month, which gives traders room to absorb a big reversal and fade further upside.

42:28For bulls, the most heavily bought call was the 46 strike expiring November 20th, which needs a 20 % further rally to work, Scott.

42:37Scott Wapner: Alip Orenic, thank you very much for that. Kate Rooney, what's got Amazon on the move today? Scott, well, it's this Morgan Stanley upgrade. The firm arguing that Amazon is a clear winner right now in AI. They name it a top pick today, upping the firm's price target as well. They took it to 350 from 335. That's about 30 percent upside from where it's trading into the close today. Analysts at Morgan Stanley call out accelerating growth at AWS. They argue the runway is underappreciated by investors. They also call out its Bedrock AI platform as part of that, where Amazon offers this access of a variety of different AI models.

43:12They talk about the robotics driven efficiencies in logistics as well. Shopping has been one open question for investors in Amazon. Meta's Muse has been gaining popularity. Some have worried that it's going to take share from Amazon, which has actually blocked Muse and other AI agents from its e-commerce site. Morgan Stanley, though, calls out a very loyal user base. They talk about holiday shopping season, say that's really going to be a test for Amazon coming up. Shares have not been spared from the recent AI jitters. Stock was down more than 4.5 percent last week, but very much clawing back those losses today.

43:43It's almost more than 5 percent higher now into the post, Scott.

43:47Scott Wapner: All right, Kate, thanks. Kate Rooney, Shanali Bassick sitting to my left. All right, so you raised your targets a little bit. Everyone came in bullish on Monday, just a little bit. Yeah. I mean, are you feeling a little bit better that this was overdone, the fears? Or what do you think? I think it's going to be bifurcated from here. If you look at a chart of operating margins in the AI trade, what you really see there, and you have to look past growth to operating now, right? We have the cost of borrowing higher. It's really only the chip designers and the hyperscalers with a lot of flexibility in that margin.

44:18And I do think that the market is now sussing that out. When you look at the Nero clouds, it was always a higher risk proposition, not just because of the margins, but also because their maturity wall is much shorter. Five to six years rather than the hyperscalers closer to 12 years.

44:33Scott Wapner: I know. But are we making too much of that? As you said, we knew it from the beginning. Yeah. Now interest rates have risen. And I guess that's made the focus a little more acute. The truth is different. I think this earnings season is going to be interesting for a couple of reasons. You might have seen the news this morning on N-Scale, for example. Every time you see a deal, people's feelings change, right? And same with Corweave. Yes, the margin is thinner, but let's see what they say in terms of what it means for them to protect those margins headed into the cycle and what their pipeline could look like.

45:04Scott Wapner: There's a lot of noise out there anyway. It's like this happens as earnings season is about to start. We're, you know, two and a half weeks or whatever from the midterms, too. I mean, this isn't a lot for the market to try and figure out. It's a lot of nervousness. And what we haven't really heard from the central bank, excited to hear from them in just really days from now, because they might pause, right? It's about a coin toss in our minds. And if you look at even one more hike in December, then the question is, to me at least, can the central bank really engineer a softer landing when we know that some of the AI CapEx buildout here might be constrained?

45:39This is at a time where the cost of the AI buildout is also rising, so that margin pressure gets more profound.

45:46Scott Wapner: Gosh, we're talking about soft landings again? We're not worried about recession risk here. But again, this is a fine line that the central bank has to engineer here as growth begins to slow down. Fine line and a new Fed, a new chair trying to engineer that fine line. Shinaldi, it's good to see you as always. Shinaldi Basik right here. You can hear the clapping because they're going to ring the bell. Dow's looking negative. He's going to fight it out right to the end, though. Elsewhere, a pretty decent day, especially for the stocks that suffered the worst last week. So, Sunday conductors getting a nice bounce while the Nasdaq jumped more than 1 % into overtime, and I'll see you tomorrow.

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