Closing Bell 11/5/26

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1:35It's indeed a market sell-off. Welcome to Closing Bell, everybody. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make-or-break hour begins with the dramatic sell-off, especially in tech today. NASDAQ falling into a full-blown correction. Today's decline is the biggest for that index since April of 25. It's actually off the lows, believe it or not, which was more than a 5 % decline and really widespread from semis to power names to almost anything related to data centers and infrastructure is down sharply at this moment. NVIDIA is now negative on the year. The slide dramatic yet again, down 8 % today.

2:08We're going to show you really across the board through this hour where the damage is most acute. And elsewhere, it's not much better. Every single S &P sector going red today. So you basically have to go back to that Liberation Day low when President Trump unveiled his tariffs to see the majors under this much pressure. Let's get right to that. The very latest, bringing our Seema Modi. She's watching the AI trade for us today. What do you see? Well, the selling really picked up speed midday, Scott. Goldman Sachs' trading desk releasing a note around 2 p.m. saying the selling is a result of the view that by 2028 there won't be enough data center shells.

2:43In other words, physical assets to put semiconductors in. With today's move, as you mentioned, NVIDIA has turned negative for the year, down about 8 % on the day. And the semi-ETF, the stocks, down about 35 % from its recent high. This is the third largest peak to trough selling in the past three years. Armholding CEO Renee Haas telling CNBC that if the U.S. hesitates in terms of data centers, the rest of the world is ready to step in and take the reins. The spillover effect is significant. Memory stocks, Micron, SK Hynix, SanDisk, the move there notable, down about 19%. G.U. Vranova CEO Scott Strasek telling me last week that the data centers till 2027 are safe.

3:22The question is what happens after that. That is certainly weighing on the power trade and the neoclouds. CoreWeave and Nebius as we await earnings from Iran after the bell, where we'll get, Scott, an important read on GPU contracts and financing. Back to you. Yeah, we sure will. Seema, thanks for that setup. Appreciate that. That's Seema Modi. The midterm result has AI bull Dan Ives rethinking not only the data center story itself, but how long hyperscalers will continue spending on the AI build out. He joins us now, as you see at Post9. It's good to have you. We really needed to speak with you because you put out a couple of notes over the last 24 hours, I think with a more cautious stance on certain parts of the AI trade.

4:0210 percent fewer data centers. That's your baseline view. You also suggest that big tech CapEx, the growth rate now peaks in 2027 versus your previous view that wouldn't happen until 28 or 29. So are you putting words into action and then cutting back some of your expectations for the stocks that are in your universe? Yeah, that's essentially, I mean, you mean you talk going into the midterms that there was definitely in terms of potential blue wave, what that could do. I think what we've seen, especially in Texas, now that 10 % of data centers, and that could be low. It could be 15%, 20 % of data centers that ultimately don't happen.

4:41But our view now is that CapEx for big tech, it peaks out in 2027 next year from a growth perspective. Much earlier than you expected. Yeah, we thought that probably wouldn't happen in 2028, maybe, or 2029. The reason that's ultimately happening is that the capacity is going to be constrained. But as we've said, the reason I view it for the hyperscalers bullishly, because the market's been screaming, worrying about overbuild, worrying about free cash or worry about these ATMs, all the capital raises. To some extent, that now really gets thrown out the window. The hyperscalers are in the best position in terms of how we change our view.

5:22I think ultimately it's software over semis because my view that the use cases are going to continue to build out in terms of the capacity that's there. And then NeoCloud, it's going to be a Game of Thrones there in terms of ones that will ultimately emerge. Nebi is probably the one that you'd have to front and center. So you don't think there's any earnings fallout for any of the hyperscalers based on you paring back what you think they're going to, in terms of paring back their spending? To put numbers with it, and we've talked to people across tech, down in Texas, engineers, ones that are building data centers.

5:59So let's just say right now, from a gigawatt perspective, call about 40 gigawatts in terms that we have in the U.S. by a year end. You had about 40 to 45 that was going to come online. So let's call it 10 to 15 of that is probably now either not going to happen or it's going to get slow rolled. My view is that demand to supply today, demand is still 40 to 50 percent over the supply. So capacity, those that have it will continue to be ultimately, those are going to be the winners. That's the hyperscalers. The ones that clearly are much more threatened, it's open AI, it's anthropic. They need to bring on that capacity.

6:39That's a huge part. You see with SpaceX, clear what's happened in Texas as well. But if you have basically been suggesting that, you know, this CapEx runway is long and we're only in the third inning of the buildout, right? You've said that, right? You're talking about the infrastructure buildout. Now you're telling me that maybe we're in a later inning than you thought, correct? I would view it that we're third inning, but now. How? Because my view is that when you look at it, it's an elongated cycle. So in other words, now if I thought it was third and at the seventh inning, that's where we've talked about maybe you now start to get much more cautious on tack.

7:21My view now is that the amount of cap backs that's going to be spent over the next three, four years, it's not changing. It's year to year how it's going to change. Yeah, but what if they call the game after five or six innings? You know what I'm saying? If things are slowing as dramatically as you think they will, and if they actually slow even more than that, You're making the assumption that it just elongates the cycle. What if it shortens it? And that's a risk. But to that point, if demand was starting to wade, that would be different. When I look what's happening on the Palantir, Snowflake, when I look what's happening from enterprises on a use case perspective, demand basically is four to one.

7:59If right now you actually go to a software company and try to actually get a project, They're basically telling you late 2027, maybe early 2028. My point is that, yes, some of that could fall apart in terms of deals that don't happen. But relative to what these stocks are baking in, when I look at Alphabet, when I look on chips, as a good example, like with AMD, when I look on the software side with Palantir on cybersecurity, Scott, I just view this as like we went through moments like this in COVID. We went through moments like this in terms of Liberation Day and tariffs. I think that's what's happening here.

8:35I think this is the market way, I think, mischaracterizing that this AI revolution build out is not going to happen. It's just going to be more elongated and CapEx is going to peak out earlier than we thought. So, OK, I can get my arms around, I think, why you would remain bullish on the so-called incumbents, the hyperscalers who already have all this compute. They have more levers to pull. Maybe by doing all this, their free cash flow goes back positive sooner than it otherwise would. So I'll give you all that. What I don't understand is that if you pull back your expectation of CapEx itself, if you lower demand for data centers by a minimum 10%, how can your view remain the same on NVIDIA's numbers?

9:23How? Because my view there is that the issue with NVIDIA, and we just saw when we were in Asia, 13 to 1 demand and supply. So let's just say that demand and supply now goes 7 or 8 to 1. still, when I look at NVIDIA numbers, I think they're underestimated by 15 to 20%. So when I look at a stock trading where it is, my view is that numbers are way underestimated. I get that they're going to ultimately have issues if you don't have the data center build that we think. But when you look at the runway to 2028, 2029, I don't see at a stock where it's trading that I could be any less bullish given where I think the street numbers are and what's actually being baked in to the capacity.

10:07Where do you stand on, you know, commitment is a dangerous word in this market. People talk about the amount of money that has been committed by whether it's the frontier labs or others in this universe to spend on compute and everything else in this infrastructure build out. And we take it as the gospel. What if it isn't? And what if some of that so-called commitment is rolled back or doesn't live up to what we think it will. Is that a significant game changer? Are you overly optimistic that commitment will turn into reality? I view it somewhere in between. So let's just say right now 40 gigawatt capacity.

10:49Commitment, let's call it is about 4x that, what's in the pipeline from a backlog perspective. So let's just say 30 % of that comes off. Relative to where the stocks are trading here, you buy every single hyperscale or you buy every single big tech name. And specifically some of the software names, NVIDIA included in AMD on the chip side. Neo Clouds, that's ones where they're clearly on the wrong side of this. I'd say Nebby is, and you can say, well, Core, we've got, you know, be ultimately one that could emerge. But it's going to be massive consolidation, musical chairs. And then the power players from GE Renova to everyone else, because you're going to have less data centers.

11:29Yeah, but you put risks around OpenAI and Anthropic also. No doubt. You said that. If OpenAI and Anthropic today were public companies, those would be the ones that I'd be coming here being like relative, it depends on valuation. You have to be more negative on those names because they're the ones that have to build out the capacity. Hyperscale is already on it, and that's where it goes to, where rubber meets the road with Anthropic IPO. Aren't you going to cover, you're going to end up covering Anthropic, don't you think? Sure. I mean, that would be definitely one that we would cover. But the point there is like, OK,$1.5 trillion.

12:04Now is it$1.3? Is it$1.2? Where's the number, given what we're seeing here? Because ultimately, they have to be the ones to build out capacity. Nadella, Yuka, Jassy, they already have it. All right. We'll see you soon. Dan, thank you for coming by. Appreciate that. Many are wondering what all of this turmoil means for the coming Anthropic IPO. Prediction Market, Calci, which CNBC has a partnership with, asking when the company will officially announce an IPO. And you can see on that chart right there, the odds of that pushed off. Early Anthropic investor Altimeter's Brad Gerstner asked about that IPO during a segment on the All In podcast, said there could be an impact on Anthropic's pricing.

12:46Listen. I'm not sure it's a problem for the Anthropic IPO. But listen, overall sentiment in the market will be, you know, I think less euphoric. So it will probably, you know, this pushes it a little bit more to the lower end of the range, wherever it was going to price. But I'll tell you, there is a pretty, pretty, pretty serious demand for the offering. I know our enthusiasm for it hasn't changed. You know, we hope to be one of the largest buyers in the IPO. All right. So that's Brad Gerstner. For more now, we're joined by Big Technologies' Alex Kantrowitz. So what do you make of that comment?

13:21Could price at the lower end of the range, given this market turmoil? Yeah, that's absolutely a possibility for Anthropic. And I think important to note here is Anthropic doesn't have a lot of flexibility. It's timed this IPO perfectly, right, to show this massive growth that we've seen in the S1 because people have been spending like crazy on tokens. And it basically had enterprise all to itself before OpenAI entered that arena and has challenged it significantly. So Anthropik has to go now. It can't shift the timing. And because of the way that the market is looking at this moment, yeah, I mean, the valuation was always predicated on this story of what it could do in the future.

14:01That story has changed a little bit now because it will have to make a decision about how much compute it can allocate to training if it will have less compute. And so the price, you know, very logically could come down a bit as it goes out. Are you more negative today than you were last week on the AI story in general, given the midterm result? Well, definitely. I mean, there have been these polls all along, over the past year or so, about how negative people are about AI. And there was always this belief, well, maybe, you know, the labs will go out and they'll engage with the communities, or they won't, like, release surprise data centers on them, like has happened within Georgia.

14:38or maybe they'll speak more optimistically about this technology. But what have we seen? We've seen some of the similar tactics. We've seen change, but it's come too slowly. We've seen this continued narrative of AI going to take your job and recently how AI might wipe out the world, right? And basically the bills came due in this election. They did not do enough to counter those narratives. American people voted. 38 jurisdictions voted to restrict data centers, including more than a dozen in Ohio, which is a very big AI state. So what you see now is, you know, there's going to be this move. They will be able to build those data centers eventually.

15:14The question is where they'll happen. And a lot of this is a big planning phase. You have to figure out where you're going to build and how you're going to build and who you're going to build with. And if you have to go back to the drawing board because of the locations that you couldn't build, you know, you could build, they're now off the table. That slows the story. It shakes up the competitive balance. And it might take something that's been accelerating very quickly to the point where we've seen companies that nobody knew about a year and a half ago, you know, go to potential$2 trillion valuations.

15:41They might follow more of a normal company arc than this acceleration that we've seen from companies like Anthropic and OpenAI. Lastly, before I let you go, you saw what we showed you, that chart related to Calci and how people are betting that this is going to be maybe a little later than otherwise it might have been without this market turmoil. How much of a problem would it be for the market if that actually happens? A very big problem. Because again, this is, it's the perfect window for Anthropoc, or at least it was until what we've seen on Tuesday, right? They have to come out now because of the fact that their numbers are going to basically look the best they ever will, given the acceleration and the volume and the enthusiasm for their products in the first half of the year and even through the third quarter.

16:29So if that pushes off, it's Anthropic telling us basically we're going to come out at a worse time. It just I don't see them actually pushing off. It must be really bad if they do end up deciding to delay the IPO. And there could be even further cascading issues from that. Hey, Kay, we'll see you soon. Thanks for jumping on with us. Appreciate it. Thank you. Now to our panel, SoFi's Liz Thomas, Robinhood's Stephanie Guild, Invesco's Brian Levitz. Good to have everybody, obviously, with us today. What are your thoughts on this whole trade we're watching unravel pretty substantially? It's a red day.

17:02It's like the red wedding right now. But I think we're in this environment where margin is unwinding, and that's really what it is. If you head going into this, we actually had high beta stock returns relative to low vol stock returns were like three times, and normally it's one and a half times. And in addition, margin was 125 percent. Normally, last couple of peaks, it was 75 percent. So I just think this is a sell-off that we probably needed, but it's going to be exacerbated by the margin that we've had building up in the system. Does it – I mean, that suggests maybe that it's going to be potentially more severe than it fundamentally deserves to be.

17:41How would you assess that? Yeah, I think that that's right, although we may be starting to get to that moment fairly quickly. And, you know, look, the reality is the demand over time for artificial intelligence is not changing. I think a lot of the concern that investors have was the extent of the investment build. And this slows things down a bit. But the reality is it wasn't all just the election results on Tuesday. The rise in interest rates through a lot of this year was doing that. So, look, it's never fun to go through these things. This is not the bursting of a bubble. This is not the end of a mania.

18:19Valuations, starting points were reasonable. Opportunities start to get created. The other thing I'd want to point out is the equal weight S &P 500 closed at an all-time high yesterday. So this is not broad-based. This is not end of the business cycle. It's a resetting given a significant amount of investment being planned. I mean, the question, Liz, is if spending on the AI buildout has accounted for estimates are like 75 % of GDP this year. If you take a substantial portion of that away, the market starts to sniff out a lower overall earnings picture. And I think a little more danger zone on the economy, maybe in part why you see interest rates doing what they're doing as well.

19:02How would you assess all of that? Yeah, Scott, so when I was on the show a couple of weeks ago, I talked about BEING ON THE LOOKOUT FOR LATE CYCLE BEHAVIOR. AND A LOT OF THIS STUFF DOES HAVE SOME OF THOSE MARKINGS OF LATE CYCLE BEHAVIOR. SO WHEN YOU SEE STOCKS OBVIOUSLY CORRECTING LIKE THIS, I THINK TODAY IS AN OVERSCHOOT TO THE DOWNSIDE. I THOUGHT YESTERDAY WAS AN OVERSCHOOT TO THE UPSIDE. SO WE'RE OBVIOUSLY DIGESTING THE ELECTION RESULTS STILL. BUT THE IDEA THAT ELECTIONS ARE GOING TO STOP THE AI TRADE I DON'T THINK IS WHAT'S GOING TO HAPPEN. I DO THINK THAT WE'RE STILL EARLY IN THE INNOVATION CYCLE of AI and that even though this is an overshoot to the downside in the market, it may unfortunately be directionally correct, especially in the semiconductor trade.

19:45So when you look at what's happening in the rest of the market, you mentioned yields and you think about the Fed in a hiking posture and inflation hot and rising. We're in a period where I don't think we're at the end of a business cycle. I don't think we're on recession watch by any means, but we might be in classic late cycle behavior. And what I would expect in that environment, especially if it's a stagflationary late cycle environment, is that things like commodities, energy do well. And you do start to see some of those shifts in the yield curve where we've already seen the massive rise in yields.

20:20Now we're coming back down and we're watching for whether or not the curve is flattening or steepening. So I think the Fed is in a predicament here and it's going to make a big difference what they do and say in December. And I think that some of the question marks around whether or not inflation can come back down can save us from feeling like we're catapulting through late cycle behavior. But again, I think that what happened yesterday, what's happening today is an overshoot and it will level out over time. But it's possible that we peaked in some of these places. Yeah, a couple of things about the late cycle.

20:52When rates move as much as they did, you'll start to see a few cracks here and there, right? That's obvious. In terms of spreads blowing out significantly in the investment grade space, you haven't seen that. Inflation expectations are still generally contained. So I don't think the Fed's raising rates to where they're inverting the yield curve. So all of that says to me cycle continues. What instead is happening to your point is we've gone into a bit of a slowdown period, expectations of a slowdown. Leadership over the last month has strongly shifted to staples and real estate and utilities utilities and health care and treasuries rallying.

21:27So I would categorize it as a slowdown in a cycle that we believe will continue. It's a reminder to investors why they need to have some diversification in their portfolio. It can't be all one trade, but I don't think this is end of the cycle. I think it's actually a reminder that you need to care about cash flow as well. And that kind of seemed to be forgotten for the first six months of this year. And that's why I think actually we might be heading into a time where, you know, growth style has outperformed value for the longest time. I actually think value may outperform growth for a while. And it still can mean tech, but maybe more tech becomes value.

22:03Where are my buyers at? Are they flooding Robinhood looking for stocks? No, I mean, you're seeing actually yesterday, it was not really a ton of buying on our platform. But today you're seeing more buyers and sellers and they are actually buying like broad based indices and Nvidia. There's a lot of doubt. There's a lot of doubt in these markets why valuations are not all that extreme? Well, I mean, there's still good hope on earnings. There is. And we need to remind ourselves of that. Until that materially changes, should one's outlook for all this change dramatically? No. I don't think so. It's just a higher rate environment.

22:38You get timing differences that cause these corrections. That's really what it comes down to. All right. Guys, it's been good talking to you. Thanks for being here. Interesting market. We'll see everybody soon. We're just getting started. coming up next. Banks, they're feeling today's pain. Financials on pace for their worst day in more than eight months. We're all over that next.

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23:59Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

24:19All right, financial stocks from the big banks to the alts managers under significant pressure today. Leslie Picker following that money and joins us now. Tell us more here. Hey, Scott. Many of these names are seen as a proxy for AI CapEx because of the role they've played in financing the buildout. But as enthusiasm for the theme has slowed, so too have the deal and trading volumes. And that's in part why you see the big banks under significant pressure today. Investment banking volumes were down 25 percent in October compared with the same period last year, according to Evercore ISI. So far, fourth quarter investment banking fees are tracking about 17 percent on average below expectations, the firm said.

25:02Of course, it's only one month into the quarter and there is a big elephant in the data room that could turn things around. That is an anthropic IPO. However, recent market swings have garnered fresh questions about timing, valuation, which could have implications on the potential fee haul. However, over the long run, estimates say that more than$5 trillion will be needed to support the AI infrastructure development through 2030, half of which from external sources, particularly from the private lenders. Scott. Let me ask you about the private lenders. You know, because we had all these questions about private credit related to software.

25:40and we were worried about software. What about private credit and loans made around data centers themselves? And whether there's going to be attempts by alts managers to sell off some of those loans, or at least the market may be more concerned about them. You know, it's interesting, Scott, because you're right. The narrative for much of the last year has been that the private markets were too overexposed to the software sector. And that's why you saw alt managers under pressure with concerns about credit quality, what this meant for private credit, private equity, which of course is lower in the capital structure for that exposure to software.

26:23And a lot of the managers said, hey, in defense of all this, we are actually leaning into this theme of AI. We're supporting the data center development, whether it's through companies or loans outright. And we have kind of a balanced portfolio approach as a result of all this. Now you have questions still about software and you have questions about what the moratoriums mean for the data centers that are currently in the pipeline and getting developed. And so that kind of creates that renewed question about credit quality for the long run, about exposures for the long run, if there is some sort of capacity constraint as a result of all this.

27:00It was notable to me, too, Les, that a name like, just for example, Goldman Sachs, which is down the most of the major banks on Wall Street, the lead bank, for example, on an anthropic IPO. Yeah. And how we should be thinking about the fallout from all of this. You saw the Calci poll that we are the odds of Anthropic IPO being pushed off. And what the fallout to something like that could and would be for someone like that. Or a Morgan Stanley near the top of the stack as well. That stock's down almost 6%. Now, they could be pointing to several different reasons today. I couldn't help but think about that as I looked at both of those names.

27:45Yeah, no, I think it's more than a coincidence there, Scott, that those are the two biggest laggards that you're seeing among their peers today down significantly. And it's not just the Anthropic IPO itself, which usually for these big IPOs, you see fees capped maybe around$100 million per bank. So that's a lot, but it's not necessarily going to kind of, you know, make or break this company as in terms of its revenue. So it's the IPO. It's other IPOs that follow. It is other debt issuance that's tied to the IPO that they could pursue. It's all sorts of other types of financing and client aspects to what we're expecting with Anthropic that really matter for the big banks.

28:26It's wealth as well, I should mention, what it means for kind of the wealth business that, you know, garners significant revenue from these IPO windfalls that we tend to see. So it is kind of this all-encompassing aspect in Anthropik being such a sizable expected deal and such a bellwether for the AI economy is really important here. You know, the people I've spoken to have yet to say that anything is really changing with that deal. That could change in the next minute. But as of right now, it seems to be kind of, you know, the same path as it's been on. But this is a pretty wild market for an IPO of any size.

29:08So we'll see if Anthropic is kind of the anomaly in that. Yeah, we needed your insight, Les. Thanks so much for it, Leslie Picker. Thank you. We're all over the sell-off, as you know. Coming up, FunStrat's Tom Lee, he joins us next.

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30:02And the women I talk to aren't waiting for the future, they're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

30:29I want to show you what the markets are doing here. We'll call this the lows of the day, or just about. NASDAQ down by 5.25%. The Dow Jones Industrial Average is down by near 1 ,800 points. Right now, that's a 3.3%. You've got to go back to April of 2025, the so-called Liberation Day, to find anything in the market that looks remotely close to what we're witnessing now with less than 30 minutes to go. Let's bring in Tom Lee of Fundstrat, who's joined me here at Post 9. I don't think you're expecting this based on what you told me yesterday. No, not expecting it at all. But, you know, as you're pointing out, this is a lot like Tariff Liberation Day, coupled with DeepSeek and coupled with situational awareness.

31:14You know, we got a policy shock because of that blue tsunami, some rhetoric that scared people. And I think today's drop, especially the overnight session in Korea, I think has caused a lot of liquidation. I think there are stories of some large hedge funds actually being liquidated now. I mean, the difference between this and, say, a Liberation Day is just as the president held up the now infamous board with all of these large tariff numbers, he could just as easily take that away, which he essentially did, which is why the market rallied so far back. What's the mechanism for reversal here? It's not as simple.

31:55Well, yeah. I mean, foremost, you know, there's just a lot of fears building about what could happen with AI progress. But I think we have to just keep some things in perspective. One is that the demand side for AI isn't going to slow because there's still a lot of discovery and companies are benefiting. And the supply side, there's not really new AI competition or something that could wipe out the industry. What's really being discussed here is a slowdown in the U.S., but that means a lot of opportunities are going to emerge for either states that embrace AI or other nations that have lower power.

32:29So I think in some ways this is sort of a speed bump question, but does that warrant the massive, massive repricing of these stocks? I think that's overly done. Well, I mean, unless the speed bump becomes a pothole and you have a more sizable sort of clamming up of the money. Yeah. And that people just are forced by market forces, market turmoil, other things in the environment that just cause either a delay or an absolute rethinking of some of the spending. Are you considering any of those? I am, but I think we should just have some perspective on the consequences. You know, 10 gigawatts of AI construction is equal to almost 350 ,000 homes or like 5 ,000 hotels.

33:17So a state that wants to prevent this construction is going to have a gigantic hole in their budget, number one. But number two, I think we have to remember that this is really completely changing the narrative around inflation risk and even the Fed hikes. today's productivity number means I think the September hike looks like a mistake. The December probably doesn't happen. But then I think the Fed put comes into play if it becomes a employment risk story. So I think that there's inherent stabilizers. And again, I think it's just too early for people to say AI construction won't happen. If you saw the Texas governor-elect says they're going to actually allow the existing projects to be completed.

33:58So I think there's a lot of doom saying that's maybe overshot. What if growth, total GDP slows if, let's say, 75 % of it was directly tied to the AI infrastructure build out for 2026? What happens if that slows? Isn't there a ripple effect through financial markets? Yeah, I think we have to give companies some credit. They were very ingenious about dealing with the tariff shock, the tariff liberation day, because earnings held up. I think companies are going to find ways to deal with this policy shock of the blue wave. And I think we even heard stories that, for instance, you may be retrofitting empty industrial plants and office space to put in data centers.

34:42So I think there's going to be ways for power and gigawatts to be constructed. So I look at this as an opportunity for American businesses to be, oh, use some ingenuity. Would you be a buyer of many of these names today? I just want to point out, tariff Liberation Day, Deep Seek Day, Situation Awareness Day, the bottom, the longest it took to bottom was three days. And then it was a V-shaped symmetrical recovery with some six-month gains of over 20%. I know. Are those really analogous, though? Like I said, Liberation Day was a scare about numbers that weren't real numbers at the end of the day.

35:24That's why the market had a V-shaped recovery. The DeepSeek thing was a scare. It didn't materially change the fundamentals of any story whatsoever. This has the smell of a fundamental shift in a significant part of the AI story. Yeah, just want to point out a few things. One, the market, there's still a very tight supply market for memory and semiconductors. that's still going to be very tight, and the multiples have come in. So we've now priced in skepticism of earnings and then a belief that the market is actually going to get loose. I think compute's going to get quite expensive if we don't actually build data center capacity.

36:09I think the overall economics get better. So I think in some ways, Scott, we've repriced the whole AI trade on a belief of things that actually haven't happened yet. So in some ways, I think it is equal to deep sea plus tariff of liberation day, plus, of course, because there's real liquidations take, you know, situation awareness. I mean, it's three shocks in one. OK, Tom, thanks. Appreciate it. That's Tom Lee up next. The few green spots in today's Sea of Red. We'll break down what is working in this sell off next.

36:43All right. Welcome back. Less than 15 to go. There is some green on the screen. Sema Modi joins us now. You found some? We found some, Scott. Not a lot, but a couple of names amid this widespread route are outperforming in today's trade. Take a look at AppLovin. It is up sharply on strong earnings. The company reported a beat on its top and bottom line, driven in part by AI capabilities. It also increased its share repurchase authorization to$3.6 from$3.2 billion and saw higher free cash flows from the previous quarter, stock up 31%. Corpay, also an earnings winner. The payments company reported revenues that increased 18 % year over year and hiked its full-year outlook.

37:22Chinese tech names also rallying for the second straight day. Alibaba, JD.com, the broader Cranes Internet ETF on this notion that an AI slowdown in the U.S. could help China push ahead. Staples broadly holding up. Names like Costco leading higher, General Mills, Smuckers, Kroger as investors take a more defensive posture. Scott. All right, Seema, thanks for that. Sema Modi all over the sell-off. We're towards the close now. Dow's off by 3.25%. The market zone's next.

37:56All right, we're now in the closing bell market zone. Mike Santoli, Solis' Dan Greenhouse, Trivariats' Adam Parker, all here to break down these crucial moments of the trading day. Oliver Rennick, as you see, standing by, plays some options action at CBO in Chicago. Michael, your thoughts? Yeah, I mean, obviously we're seeing really months of this sort of forced mechanical rotational action finally coming to a head and everything down at once. In other words, we were unable to rescue the tape the way we have many times before. Not saying I saw that much coming. It seemed like semis were under-owned and washed out enough coming into this week, but apparently not.

38:32And I do think there's something to be said finally for a day when almost everything is down. You have 80 % of downside volume and all the rest of it. And so you get away from this idea that what we have wanted to see is defensive stocks always working when AI stocks are down. So I don't know if that resets the mechanism at all, but I do think that it's a different tone. And it probably begins a process of where you can finally kind of get full shakeouts in some parts of this market. I don't think it's a one-day event, but we're coming towards some interesting areas. Maybe it'll just be a 200-day moving average test for the S &P 500.

39:09We're like a half a percent above that right now. But I do find it noteworthy that it's happening after you had that kind of exaggerated rally yesterday to some degree in some areas of this market, unwinding. And I think every time you have both bears and bulls looking foolish within 48 hours, that's a start. You know, markets like this always have you grabbing the flashlight, as you know, and going to every corner and looking under the covers and everything else. You know, you have talk of, hey, is there a hedge fund liquidating? Is there and there's stories, you know, circulating about an alts manager trying to unload a block of data center loans and things like that.

39:53There can be fundamental reasons to why a market looks like this exacerbated by either those activities that I said are taking place or mere concerns that they might. Absolutely. And I think that I almost invite that. You know, I want to see an actual body bobbing to the surface and saying, well, that's what was going on, at least in part. Everybody knows about the levered ETFs that have to have this automatic, you know, kind of liquidation into a down day the way we know that it's happening right now. And so everyone gets a little bit nervous around that. Retail finally backing away and actually being heavy net sellers.

40:30That's according to some data this morning. So it's all part of the mosaic that I think you would almost want to see, whether any of it is causal or not. I do think it is a feature of when the market is trying to have some kind of a reckoning. And by the way, the macro pressures aren't even there, right? You have rates in, less fed, oil off the highs. And so it is mostly the market reacting to its own kind of pockets of crowding and excess. We'll see you in about five. Can't wait to see how you and Mel tackle this. Mike, thank you. That's Mike Santoli. We go to Chicago. Oliver, what are you watching?

41:05This day went from composure at the open, Scott, to double-checking circuit breaker math at lunch. The battle for the S &P 500 is very clearly at 7 ,400, which is still an area of heavy put open interest, which is what bulls are trying to cling to. The next stop, if that breaks, based on options flows, looks like 725 for SPY, which should give us solid support from here to the weekend to not break that first circuit at 7%. But the NASDAQ may be a different story. The only standout put wall I see in the queues is at 600, which is 8 % lower. Now, if you're zooming out, though, as an investor, the picture looks better.

41:47According to bespoke data, when the VIX jumps at least five points, the median S &P 500 return the next three and six months is more than four and four and a half percent respectively, which by my math is better than the average. But for a year timeline, it's a lot like starting on any other day. And in the one month timeline, the average return, thanks to a few nasty bear markets, is actually negative, Scott. All right. Great look for us, Oliver. Appreciate you. We thank you, Oliver Rennick, Dan Greenhouse, Adam Parker, joining us now. Your thoughts? It's not good. There's no way to spin it unless you own Apple 11 or Costco.

42:25You're having a pretty rough day. And I think the question, obviously, that has been posed on the network all day, I'm sure, is whether this is, quote, unquote, the end. I would offer something of a positive take on things. The worry, of course, is that the Dem wins in Ohio and in Texas, et cetera, in Georgia, are going to bring to a halt data center construction. And I would just note that the conversation is not about 2026, certainly, or even 2027. Permitted, already permitted data centers are probably, almost surely, going to go on without a hitch. The question is about 2028. Do I think that means the core weaves and the neoclouds, et cetera, should be down 15 or 20 percent on that?

43:06Probably not, but at least for the moment until the market gets clarity on that topic, this is what you've got. But if even somebody like Dan Ives is sort of pulling well forward his CapEx growth peak to 2027 instead of 28 into 29, and he's as bullish on this story as you'll find, does that influence how we should be thinking about this whole story in any way? Well, it doesn't influence it. But listen, I was on the other day arguing that the election is going to bring forward when a lot of people were arguing that data center concerns would die down. I was the one saying, no, no, no. Once the election happens, data center concern is going to ramp up.

43:46So I don't mean to suggest otherwise. But I think Dan is right. You do have to rethink your math. All I'm saying is there is talk about some immediate impact on data center constructions, halts, et cetera. I don't think, especially in the case of Texas, I don't think that's going to be the case. I don't think, Adam, people are rethinking their math, to use Dan Greenhouse's words, on earnings. And thus, I'm not sure they're rethinking their math on stock prices outside of semis and some of the more acute infrastructure plays. I don't think they're willing to go there yet for, say, the hyperscalers.

44:22It's getting close for me. I mean, sometimes when the market's down, I actually like the stocks less than I used to. It happens. were all influenced by negative momentum. But today I was thinking, Mike, what's on sale? What do I want to buy? It's like stocks are getting treated equally. They're all getting punished. But I look at Micron as one that I like, as you know, and it's, what,$750 billion market cap. I still think they're pretty good to do$300 billion in free cash in the next seven, eight quarters. So I think some of the stuff where they're earning money now, I'm comfortable kind of buying in here on a three-month view, whereas some of the, as Dan said, some of the new cloud and other stuff, they have a little bit more tenuous business models, some of the growths out in the future.

45:02So I'd rather buy the immediate stuff. I would dip my toe there. And, of course, as you said earlier, I always recommend looking under the covers, especially the hotels I stay in. So I would say you've got to balance it with health care, energy, hospital, et cetera. It's always got to be diverse. You've got to get a bigger travel budget at Trivarian. We'll work on that. Get back to us if you do. The point being is until broad earnings numbers get cut, there's no real reason for alarm, is there? Well, no, I don't think that's fair. And I'm guilty of this also. But to remind viewers out there, it's not always that fundamentals move and then prices move.

45:40Quite often, prices lead fundamentals. And I think this is why we say that the stock market has predicted nine of the last five recessions. Maybe this is one of those moments now where price is telling you sentiment is wrong. got too enthusiastic around the whole story. We'll see. Guys, thanks so much. Adam, be careful in that room. Greenhouse, we'll see you soon. The smell's ringing, and I think a lot of people are saying, thank goodness that this trading day is over after one of the worst we've seen in a while. I'll send it in overtime to Mike and Mel. Snoring, gasping for air during sleep, daytime sleepiness?

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