First On with HPE CFO, Tech Investing, American & Chinese Autos 9/30/26

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1:07Welcome to Power Lunch. I'm Kelly Evans alongside Steve Leisman today. Steve, welcome. Brian will be back tomorrow. Hewlett Packard Enterprise shares are hitting a record intraday high, and they are one of the best performers in the S &P today. As investors reward its growing AI opportunity, the company raising its long-term revenue outlook for its AI business, betting that data center buildouts will drive demand well beyond the chip trade. The CFO, Marie Myers, will join us shortly. Cue the Star Trek sound up. The company behind Google's initiative with AI in space, Planet Labs, built the satellite that will explore building scalable machine learning compute systems in space.

1:42The launch is scheduled for tomorrow, but we're talking to the Planet Labs CEO, Will Marshall. We're talking to him today. All right. We have a lot to get to, but let's start with a company offering a fresh read on the AI trade. That's Hewlett Packard Enterprise, she said. The stock hitting a record high today as its Networking Investor Day gets underway, where it raised its long-term growth outlook for the business. And they announced a $1.2 billion order for AMD AI rack systems that feature HPEs, networking switches, and software. Joining us now from the event in a first on CNBC interview is Hewlett Packard Enterprise CFO, Maria Myers.

2:17Maria, it's great to have you here. Welcome. Hi, good afternoon. It's great to be here. I've just come off the floor from our investor day, so super excited to be here to talk about our great news today. Wonderful. And that you're in the perfect kind of prime position then to explain to a lay person like me, HPE, what do you do? Where are you kind of in the AI trade right now? Sure. I mean, I'd say, look, HPE is right in the heart of the data center and we're an infrastructure provider, everything from data centers through to servers, storage and networking. And today we had an investor day really focused on the networking business, which is becoming an increasingly important part and strategic in the whole AI space.

2:57Yeah. And when you say networking, you know, we might think of there's so many different names from Cisco to even Oracle. I mean, many, many kind of in that space. Why do you clearly the market is reacting positively to what you've laid out there? So how much more do you think that AI can continue to power this massive build out affecting your business and others? Well, look, we're really optimistic on the outlook for the business, particularly as we see networking, as I mentioned, becoming increasingly much more strategic for data centers. If you think about it today, a lot of folks are using digital workers, digital agents.

3:34Those agents are working seven days a week, 24-7, 365. Just think about the pressure that puts on the network because the network has to be up and moving at that pace. So you've got a lot of drivers out there in terms of AI that are going to really help our portfolio and really drive the performance of our business and particularly our networking business, which we're super excited about today. And that's some of the great news we announced at our investor conference this morning. Maria, I just want to understand how this all works. First of all, we're talking about 25 percent of your revenue now.

4:08You're saying that's going to grow in the teens and not in the single digits, right? That's right. Yes. We announced today high teens, actually, to low 20s for 27 and high teens as you get beyond. So tell me about how this works. A one point two billion dollar order. How long does it take for you to fulfill that order? And are the pieces in place now for you to actually deliver it now? Or is it something you have to ramp up to provide? You know, look, data center readiness is a key part of success in AI build outs and scale outs. And so we're excited to collaborate with AMD on our first ever Helios announcement.

4:45And what's important for us is actually we have the entire AI system here powered by AMD and we have a switch that's actually the largest switch. It was on the floor this morning. I think we've ever produced in the history of the company. If you take a look at this switch, there's actually 1 ,700 copper cables in that switch. And actually, our general manager of our data set of business today actually called it literally a workabot. I never thought I'd ever say that about a networking switch. But it's phenomenal to see just the fact that all that power and capacity that, you know, AI infrastructure really demands today.

5:18And as a company, you know, we're able to do that very successfully. Yeah, go ahead, Steve. So how long is the order fulfillment on this? Is it a five-year deal? Is it a one-year deal? How long did it take? And I come back to my question. Are the pieces in place? Do you have to hire people to make this order happen? Well, we're very fortunate, actually. As part of the acquisition that we did over a year ago, Juniper, we were able to really integrate both companies successfully. We had a lot of engineering and capability that came together. So that was the power of this acquisition, actually. And in terms of timing, we announced today, actually, that the Helios revenues we expect to start flowing in 27 as these data centers come online.

5:57So it'll be through 27 and 28, which we included in our guide today. And Marie, just a quick one before you go. I'm just curious if you've seen any pushback, blowback about being in kind of the AI business or the localized kind of resistance we see in some cases to data centers. How is that having an impact if it's even having one? Look, you know, for us as a company, we've been in this business for many decades. We're really focused on helping our customers navigate this journey. We've been probably at the forefront of liquid cooling, which is really around a key technology to help run these data centers more efficiently.

6:30So our focus has been helping customers really navigate and be very successful in this business. Marie Myers, thank you so much for joining us today. Pleasure to be with you. Thank you for the opportunity. Great. Well, let's stick with tech and bring in one of the Wall Street's biggest AI bulls. Joining us now on set, Dan Ives, Partner and Senior Managing Director at Yorkville, Ives. Dan, thanks for being here. You just heard Marie Myers talk, and I'm fascinated by this idea that there are ways to get into AI that are not the top line names. And your thought about getting involved in the infrastructure part of this.

7:04I guess it's valued, but not maybe as valued as the front line.

7:08Dan Ives: No doubt. I mean, look at Dell. Dell's a perfect example. If someone told you a year, year and a half ago, Dell is an AI name, they say you're crazy. And then you look at Cisco. The reality is the infrastructure plays, HP would be one of them. It's about the install base. And I think what's happening here, Steve, is that the second, third, fourth derivative of AI are now starting to play out. And that's for the broader tech trade. That's very important, not just infrastructure, but when it comes to software, cybersecurity, and many other areas. Would you say these companies are generally, how shall I say this, less well-valued than the other more popular names in AI?

7:43Right.

7:43Dan Ives: Yeah, I think many of these names, I think investors are still skeptical that and the multiples that they're assigning. You know, in my opinion, they're not really giving what could be true AI potential monetization. But I think Dell being a good example, as they proved it out, the stock reflected it. But it just shows like investors are going to look at the new shiny object. But a lot of these old school companies, they're starting to get a sort of renaissance of growth. And also they could acquire. And that's another thing. That's why I was hammering this issue of how long it would be that this revenue would play out over.

8:16And is it, you know, what's the horizon for valuing this company over? Just is it a one time deal? Is it more to come? Is there more expansion to come?

8:23Dan Ives: I think we are in third inning. You can maybe even say second inning of the AI revolution. And I think as this all plays out, the trillions of dollars of capital is going to be spent. We've only spent less than 15 percent. And it comes down to the first for the first time in 30 years. U.S. is ahead of China when it comes to tech. And it's not just going to be a small group of companies that benefit, like we've seen over the last year, year and a half. It's going to spread, and I think that's bullish for this market. We had Vlad Tenevon earlier from Robinhood talking about, can you explain to me what do we mean when we're talking about 24-hour trading?

8:59Because I still experience the workday kind of like I did 20 years ago. There's a stock market open. There's a stock market close. And so for all of these headlines, what is the practical effect of that?

9:10Dan Ives: I think, look, it's going to add a lot more volatility, you know, in terms of that we see in terms of stocks. And I think, look, it's positive in some ways, negative in others, based on liquidity and a lot of the – look, you even see it a lot of times over the weekend if news hits. You know, everyone's like, well, I can't wait to see what's going to happen on Monday open. We're down 7 % on Sunday night and we open up down 2%, you know. And I think that's the double-edged sword here, given the liquidity and given as it all plays out. In the AI trade, information is nonstop. But I think it just speaks to that we are still in just the early days of more and more retail, more investors that are really looking at the market.

9:49Dan Ives: I think that's very healthy. It's very positive. Vlad talked about it. But I think it's going to be definitely like a tug of war as it all starts to play out. I mean, not to step on, but I just I think it's positive if it gets more people ultimately into real investing. Right. I don't think it's so positive if people experience trading, experience trading losses and just kind of, you know, walk away. I think that it could have a negative effect, too, because then, you know, some of the sort of moves that you could see on some of these stocks. Think about the volatility that you see on a tech stock after the report earnings are going in or whatever the rumors that come out in the market.

10:23Dan Ives: And I think that's doubled sword that we're playing. But the reality is, like, we're in a multi-year tech bull market that's being led by AI. And I think you just want to see more and more participate in it. And what is, you have a new closed-end fund, not an ETF? Yeah. Do people still do closed-end funds? Yeah. So, you know, the ETFs and all that, the Ives ETF, that still exists. And you're very happy there. But the closed-end fund, Ivy AI that did an IPO,$200 million launch today. hey, look, this is about giving people around the world access to private AI tech companies. And do you have actual ownership of them, or does this go into the whole SPV issue, where people say they have access, but they don't?

11:01Like, how does this work?

11:02Dan Ives: Yeah, I think for us, that's really our opportunity, is to go after private AI tech companies, whether it's SPV, whether it's being on the cap table, you know, with my team. And, Kelly, I just, my view is that there is so much appetite globally, not just institutional, but retail investors to own private AI tech companies. It shouldn't just be a small group of people in Silicon Valley that could own them. Now with this being the first public, it gives that opportunity. Just last comment on this, but it's fascinating to watch, and Steve, maybe you agree, all these IPOs being pulled because of market conditions when we're at basically all-time highs.

11:38So today we had an IPO of an AI-adjacent company, and it didn't even go that well. So it's so confusing to say, yes, of course, we all want access, early stage access to these AI companies. And hopefully they're generating an enormous amount of wealth. But how can that demand be happening at the same time? There's no demand for these kind of small IPOs that are coming to the market.

11:57Dan Ives: I think you have to separate the winners and ultimately where the demand is. And look, investors could be skeptical on some. But I think the super successful companies will continue to be able to go public. We just went through a roadshow ourselves and obviously going public. But this is one where you can't just paint them all with the same brush. But we are early days, get the popcorn out relative to where this AI revolution is playing out. Hey, Dan, say the name of the fund for people listening on the radio. We had it up on the full screen. Yeah, so it's the Ives Ultra Fund, and it's IVAI is the ticker.

12:31Dan Ives: And this is really what we view as the opportunity that investors around the world could now start to invest in private AI tech companies. And you didn't talk about your concern about regulation at all relative to these valuations. Look, my view is that safety and regulatory are going to continue to sort of be there. But I just think that it's going to be self-regulation. You don't want people in the beltway, you know, stifling innovation. It comes down to if we have more regulation, you know, you spend so much time in D.C. If we have more regulation, China wins because they're just going to continue to put the foot on the pedal.

13:05Yeah, but if AI brings about the end of the world, nobody wins.

13:08Dan Ives: And to that point, I think that's where the industry is going to have to. It strikes me, Dan, that if it brings about the end of the world, it's too late to file a liability claim. That's a it's a great point. Thank you. It's going to outrun it. That's a great point. But wait, but wait, I have a claim. Thank you so much. Really good to see you, Dan Ives. We briefly mentioned earlier, Robinhood CEO of Vlad Tenev joined the network, highlighting some of the possibilities of expanded trading and integrating AI agents. Take a listen. We introduce 24-7 trading on weekends, which, again, lets our customers take advantage of opportunities when they arise, including when news breaks on Saturdays and Sundays.

13:48I look forward to this, Steve, because CNBC could be on all the time with the agents watching. I think this is genius. Anyway, even with the longer hours, would you, everyone watching or listening now, would you let your AI agent trade for you while you sleep? Go ahead and scan that QR code to vote in our PowerPoll today, and we will reveal the results later this hour. After the break, we'll be joined by one of the companies who has a hand in finding out whether putting data centers in space will be possible. And what would happen to U.S. automakers if Chinese car companies could sell here, maybe without the 100 % tariffs they're currently facing.

14:23That's all coming. But first, Paul Hickey and Peter Bookvar join us with the setup as we close out Q3 and move on to Q4. with the 10-year doing what it's doing and a whole lot more to discuss. Stay with us.

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16:17Welcome back. It looks like the Dow is down 145 points today, but there are some signs of pressure underneath the surface here. Bespoke Investment Group flagged more than half of the stocks in the S &P 500 are now oversold, 51.2 % as of yesterday's close. That's happened before, but rarely with the broader market this close to a high. The S &P is within 2 % of a 52-week high. So what does that disconnect tell us about the market? Joining us now, the man behind that chart, co-founder of Bespoke Investment Group, Paul Hickey, along with Peter Bukvar, CIO at 1.BFG Wealth Partners. Thanks for joining us, gentlemen.

16:51Good to be here. Peter, I want to get your quick take on the inflation data this morning. It looked like the 10-year liked it for a nanosecond, and then it didn't like it. Yeah, the two years seemed to have liked it a bit more. A little bit more and kind of sustained that liking of it. And on the heels of John Williams. Yeah. So 3.4 % headline, 3 % core. Something Paul and I were talking earlier, I also think that to complete the analysis of inflation, you also have to look at producer prices. Right. Because producer prices are still running about 200 basis points above consumer prices. So it's not a complete picture.

17:25If you compare 3.4 % to the Fed funds rate, the effective rate right now is about 3.9. So real rates are still like less than one. That's not to say that I think the Fed should be hiking because I think the bond market is doing it for them. And the 10-year in particular. Like the 10-year really did not blink after the number came out and has risen ever since this afternoon. So the market's written off the October hike down at 37 percent probability. If October is less likely, why is December so assured at 90 percent? Maybe maybe we should be thinking about whether December happens even. Well, I think December as of today is likely because I don't think the Fed wants to hike right before the midterms.

18:05Right. But I still think that the Fed is in a tweaking cycle. I don't think we're on the cusp of a major rate hike cycle, a tweaking cycle. And that the bond market's doing it for them. The Fed right now is just a follower. They are not a leader of the yield curve. And I think that's a change to what people are used to. I have a working hypothesis slash suspicion. Somebody has a clue. No. Most likely the opposite. But we've talked about this. Doubt it. But is it possible, Peter, that the Fed is responsible for the rise in yields that we've seen because they've flipped hawkish? In other words, if we weren't expecting more rate hikes into the future, is it possible the yields would be lower?

18:47And I admit this theory makes no sense on a day like today because we're talking about walking back the October rate hike. And yields are still higher. Still shooting higher. It's shooting higher on days we're talking about hikes. It's shooting higher on days we're talking about not hikes. It's shooting higher on days oil goes up. It's shooting higher on days oil goes down. It's just shooting higher. Well, the one thing today that's of interest is the French 10-year yield closed at its highest level in 24 years. Wow. So just to highlight again that this is a global issue. We know the Japanese 10-year GGB yield is above 3%.

19:17So I think that's one thing, but I think it's all of the above. You know, everyone asks, what's the factor driving rates higher? It's not just one thing. It's a combination of these things. But a big part is the rise in global rates. Let's bring Paul into the conversation. Paul, I just want to ask you, it looks like there are two different stock markets here, one that cares a lot about what we're talking about and one that could care less. And that's sort of what your chart kind of showed earlier, is that there's a lot of the market where there's a lot of pain and there's this other part of the market where everything is great.

19:47Oh, I mean, there's a much bigger part of the market that's been in pain this month than that hasn't been in pain. In the S &P 500, we're up on the month, but a fifth of the stocks in the index are down 10 percent. But, you know, I think going to this part about long-term interest rates, what we've seen is the 10-year or the TLT, which is the long-term Treasury ETF, it's been down 10 percent six quarters now since the Fed started hiking in 2022. Just to put that in perspective, the last time the stock market declined 10 percent plus six quarters over a 19-quarter stretch was during the Great Depression.

20:20So this is just how weak it's been for the bond market. And you but what you've seen, you've seen this weakness. And the point is, there's multiple reasons why we're seeing rates go up. Some of its inflation, but some of it is economic growth. There's a demand for money. And when you look at prior periods where the 10 year has gone up consistently like it has over the last seven quarters now, the stock market went up during those those periods. So the there's a lot of confusion seemingly from people. Why are stocks doing so well when rates are going up? But I think it's a function of why are rates going up.

20:56And one of the reasons rates are going up, it's a global phenomenon. And I think you're seeing global growth. Kelly, I sent you a report earlier this week from Jonathan Pingel from UBS. His analysis or their analysis was if you take out AI investment, the rest of the economy has been contracting 0.7 percent. And I think that goes along with the analysis of what you're looking at in the stock market, which is picking up on that weakness XAI. Right. Some of these mega caps, you know, the top 10 companies, which are mostly tech related, make up something like 40 percent of the index. So you can have those big companies holding things up.

21:31And then when rates do go down, you'll see the opposite, like we saw earlier in the year, where you saw broad based strength and you saw the mega caps falter. I like that. I like that. I think there's some truth to that right now. But then we hear, I don't know, broad data points that suggest the economy seems to be doing reasonably well in a robust way with everybody participating. I mean, I think we're seeing the manufacturing numbers have been showing strength. The labor market, the ADP, was better than expected this morning. Jobless claims still remain low. So, I mean, it's not going gangbusters, but I think the economy overall is holding up pretty well.

22:05Retail sales were strong the last report. So, I mean, overall, I think the economy is holding up just fine. Not everyone's participating, but the higher oil prices are certainly weighing on sentiment. I don't know if this question is for Peter or Paul, but there was a moment where it was really clever to play the equal weighted S &P. And that was a way to get a piece or a better investment in the valuations that were out there. Is that moment still here, Peter, or is that moment past? Speaking of my talking, my book, I hope it's here. I didn't know that. OK, it's not. It's not. It's the part of the market that's suffering from high interest rates and higher.

22:47I love this. We say equal weight S &P. And there it is on the chart right there. You can see. I want to see. Yeah, that's great. Can you go back? I want to see that chart fold again. You can show the gap. It was it was it was moving up. March was a really good time to be involved in it. And it did better than the overall S &P. Right. Well, that's your answer to someone who says, why is the stock market hanging in there with higher rates and higher energy prices. And I'm like, well, only a portion of the stock market is hanging in there. The other half is not. And can I quickly throw into the mix of all this?

23:17So as we try to figure out kind of what the broad read is, what's going on in the housing market? No, it's just more bad news. Listen, as someone who might be involved in some real estate transactions right now, let me tell you how bad the news really is. The 30 year mortgage rate is above 7.5 % now, 7.54 % to be exact. Paul, I don't know if you want to pick up on this, but there does anecdotally seem to be a shift. There are not the buyers, not the interest, not that kind of, and this is in the strongest area remaining, I thought, of the housing market in the Northeast. What impact is this going to have?

23:52You know, I mean, housing's been weak for several quarters now, but I think the whole equal weight trait that Peter was just talking about, I think if you see some relief in oil prices, you'll start to see that broadening out happen. If you look at the we're at the end of the third quarter now, everything that worked in the third quarter didn't work in the first half. And everything that didn't work in the first half is working in the third quarter. It's been a complete reversal of the trend. So and part of that is we saw oil prices really shoot up towards the end of this quarter. And that's negatively impacted the broadening out trade, which was holding up early on.

24:27I think coming forward to you, we were talking about, Steve, early on, AI has been driving this market. We've called it an AI bull market from the start. So in order for the bull market to keep going, we're going to need AI to keep powering things going. And the AI models keep getting better and better as time goes on. And I think that's just going to justify further investment in the sector. And as we see that, I think the two keys to watch are the semiconductors and the memory stocks. But you're saying that if we let's say you want the mortgage rate back below 7 percent, You need oil. I mean, oil's not.

24:58Show the oil chart today. Maybe show it for the past week. Now you're testing them in the back. One one thousand to one. Look at that. 90. We're down over the past week. You know, I'm looking for the rate relief. Well, so I was saying oil and you're looking for rate relief. But the question is, why are rates going up? Is it all inflationary or is it partially? Have you seen 10 year tips, by the way? Peter, have we talked about it? The 10-year tips are at 2.9%. Yeah. 2.9%, but that implies... On a real yield. Yes. Kelly, I just want to make a point here, and I'm testing them in the back again here.

25:34Don't keep your eye on crude. Keep your eye on diesel. That's been the concern about inflation here. The diesel high was on the 22nd. And that's been going up quite a bit. I know, but... If you plus six... I just paid, you know, not for my boat, but somebody else's. They paid it. and a fortune to fill up their tank. And so I think that's plus$6.50, something like that. That's a big inflationary impulse. Peter, just leave us with one thought here. If the Fed were to hike again in December, you think that's it? And can the bond market maybe relieve some of the pressure in terms of the 10-year yield when that, if there's some sense that the Fed has done?

26:19I don't know if the Fed's going to be done. Fair enough. I do think that, to my point earlier, that they're just tweaking rates here. Yeah. We're not on the cusp of a major rate hike cycle. I do think that maybe we get one more. But that said, the 10-year yield is already adjusting. And the five-year, I mean, many businesses, it's not just someone who's interested in buying a house that is relying on the 10-year with a mortgage. There are plenty of businesses, both real estate businesses and operating ones, that are borrowing money off the 10-year as well. Yes, you have your SOFR plus borrowers, but a lot of it is on the back end of the curve.

26:57And whether the Fed hikes again or not, the long end is going to go its own way and respond to all the factors that we discussed. You can go your own. I feel like we have a musical group. Here we go. We could really work with that. Yeah, exactly. We could have the whole thing going with every part. Peter and Paul and Mary. No. Appreciate it. All right. Coming up, the rocket launch tomorrow that holds implications for whether data centers in space could become possible. Can I hear the Star Trek soundtrack? You want to do that? No one. We'll speak to the CEO of one of the companies trying to make this a reality.

27:31That comes up next.

27:40Hey, this is Will Arnett, host of Smartless. Smartless is a podcast with myself and Sean Hayes and Jason Bateman where each week one of us reveals a mystery guest of the other two. We dive deep with guests that you love, like Bill Hader, Selena Gomez, Jennifer Aniston, David Beckham, Kristen Stewart, and tons more. So join us for a genuinely improvised and authentic conversation filled with laughter and newfound knowledge to feed the Smartless mind. Listen to SmartList now on the SiriusXM app. Download it today.

28:40Gemini on Google Cloud. Check response, subscription required. Black Friday is around the corner. It's your biggest chance to grow sales this year. Don't wait. Realize is Taboola's advertising platform for businesses, letting you launch campaigns on top premium websites beyond search and social. Add Realize to your media mix and scale this Q4. Exclusive for podcast listeners, new customers get$700 credit back. Just search Realize Podcast on Google or use the promo code podcast 26. Don't miss out on this limited time offer. Terms apply.

29:20Welcome back and take a look at shares of Planet Labs. $16 stock up a percent today. It's partnering with SpaceX to send 20 satellites up into orbit on Thursday from the Vandenberg Space Force Base in California. And joining us now for an exclusive interview to discuss the importance of this launch is Will Marshall. He is the co-founder and CEO of Planet Labs. Will, it's great to have you here. Welcome. Thanks for having me. So explain again, 20 satellites. Google's involved here as well. We're kind of testing out whether we can build data centers in space. Is that the idea? Yeah, you got it. So we're launching 20 satellites.

29:54It's actually our fourth launch this year, and we've got another one coming up in a couple of weeks. So it's exciting times. Our teams are very busy. Yeah, we've got 20 satellites on this one. Yes, the first time we're flying TPUs to space. The fastest and best computers for doing machine learning are going up. It's a tech demo. We're just testing that technology with Google to see how those TPUs fare in orbit for the idea eventually of getting towards data centers in space. Yes, it's a moonshot. It's a pretty exciting one. And then in addition, we've got our second Tanager spacecraft that does methane tracking all around the world and 18 of our SuperDove satellites.

30:30And these are the ones that enable us to scan the entire world's landmass every day. So this is the most unique thing the planet does. We scan all of the Earth's landmass every day. And really, let me step back and say there are two global stories unfolding right now, the geopolitical realignment in the world and AI. And space is relevant to both. Space can really help with all the nations trying to understand the threats around their corner in an increasingly volatile world. We've seen this in Ukraine. We've seen it with NATO. We've seen it for the US. And then there's AI. And space has a tremendous amount of data.

31:10You see, AI is only as good as the data it's trained upon. And the planet, we have 3000 images for every point on the Earth's landmass, enabling us to train what we call real world models. And that can enable us to do all manner of applications around the world, from helping farming to helping stop deforestation to helping track security challenges around the corner. AI plus satellite data are sort of getting merged into real world models, or as I call it, planetary intelligence. And I think that can have a boon of applications. And this launch is just demonstrating new capabilities that enable us on that trajectory towards planetary intelligence.

31:48So I just want to understand, like, why space? And I think one of the reasons is there's no neighbors out there, unless the aliens complain, of course, right, about putting a data center there. But is it because it's cold up in space? And what I don't understand is the transmission of data. Does that take longer from space down to Earth than it would if you're running on a fiber cable in Earth? So roughly speaking, the reason that data centers in space make sense is because data centers are primarily an energy question. How do you get the energy to power all the TPUs or the GPUs. And in space, you have five times more power for every solar panel, because you put it in a sun-synchronous orbit that's always facing the sun, whereas a solar panel on the ground, obviously you have the day-night cycle, there's clouds, so on.

32:37You don't have any of that. So you get five times more power. And on the ground, solar power would be the cheapest way to do it, but then you have an intermittent data center. So then you need to add batteries, or you need to have nuclear powerpoint, or you need to give gas. And now we started to get into a lot of complexities. So in space, all you really need is the chips, the solar panels to power them, and radiators to dump the excess heat into the cold darkness of space. And what about the communication speed? And then the communications is pretty simple. That's a solved problem. We know how to send data up and down.

33:09We do that all the time. It's a small latency, but not significant for consumers to, they won't even notice. So So this is the easiest infrastructure we can take from Earth and put it into space. And it's the most obvious thing. It's just about launch costs and satellite costs. And that's where we are specialized in. So just one quick question. How do you know that this thing has succeeded? Well, it will primarily be about how the TPU performs in space. Will it get upset because of the radiation environment? How well it will deal with cooling on our radiators and so on? And it's all about, so we've taken the TPUs, taken them apart, put them into a spacecraft setting that enables them for that new environment.

33:52And we're testing all the pieces of that. And we'll follow up with another mission with Google as well, where we will fly two spacecraft because they have to do formation flying to keep all of these computers close together in order to do data sensing in space. Look, for us, what it means is that having more compute in space actually enables also us to process all of our satellite data on the edge so that we can get answers faster. So take the L.A. fires that happened and the Palisades fires. We got imagery in a couple of hours and we got AI analytics within a short time after that. But imagine if we could have got that in minutes, then we could potentially have helped save more lives.

34:35So doing intelligence upstairs really helps speed time to value for our users all around the planet. Will Marshall, Planet Lab CEO, I could talk about this all day, actually. He could, too. Your information world is incredible. It's terrific. It's worth a whole special at some point. It's a very exciting time for space. And as I said, it fits in with how the world is changing and defense and security. and it fits in with how this AI is changing because it's gobbling up new data and we're supplying it. And no aliens to complain about the next door data centers. Thanks, Will. Appreciate it. Not yet.

35:11All right, coming up. Would Chinese cars be allowed into the U.S. market? Does that mean a total collapse of U.S. automakers? We'll ask former Ford CEO Mark Fields next.

35:32Ford CEO Jim Farley is again sounding the alarm on Chinese automakers. He says the U.S. must strike the right balance between welcoming competition and protecting the country's economic and national security. We have to have a level playing field in the United States between their subsidies. You know, all the national security risks, cars are automated now. They have a lot of camera data and PII data. Farley points to Europe as a cautionary tale where its auto industry is already feeling the consequences of China's advance. And globally, market share for Chinese brands jumped nearly 70 percent from 2020 to 2025.

36:08Joining us now is former Ford CEO Mark Fields. He's also a CNBC contributor. Mark, thanks for joining us. And I hate to ask it this way, but I really want to know why I can't drive a cheap Chinese EV. Well, you can. You just have to go outside the United States to do it. But if you think about here in the U.S., I mean, listen, near term, this production buys Detroit some critical time. And the reason for that is, you know, in your graphic there, you've seen what happened with global sales for Chinese vehicles. They used to have, I don't know, five years ago, about 14 percent market share. Now they have over 25 percent.

36:47And a lot of their cost advantages have really been driven by a lot of heavy state subsidies literally over the past 15 years. And, you know, they have enormous scale. They have a lot of excess capacity. About a third of their total capacity in China is now exported. And you need to give Detroit some time to kind of it's tough enough competing against competitors. It's another when you're competing against governments. The danger here is you create a potentially protected U.S. kind of island. And, you know, in that case, the Detroit automakers could remain profitable at home, but progressively can become less and less competitive around the world.

37:30And they need to be competitive around the world. But, Mark, haven't we given up this competition? We were providing certain subsidies and incentives for EV development in the United States. And we've backed off of that, haven't we? Well, we backed off the consumer incentives. The state subsidies that happens in China is not just consumers. The amount of subsidies they've given their automakers over the years in terms of research, development, capital expenditures, et cetera, dwarfs anything that's happened in any other part of the world. And the reason for that is, you know, 15 years ago, the Chinese government said, hey, you know, we missed out on internal combustion engines.

38:08We are not going to miss out on EVs. And so we're going to invest in the entire supply chain, everything from mining minerals to processing them, to making batteries, to ultimately manufacturing and selling vehicles. Mark, I'm just a little older than you. And I grew up when we made those lousy cars in the 70s in the United States. And we let the Japanese come. And I'm afraid we're on the cusp of that again. Is that a misplaced fear here that we're missing out on where the auto industry is going and we're not competing? Well, I do think there's something to be said. It's very important to compete at the coalface, so to speak, of the toughest competitors in the world.

38:49And, you know, it's interesting, Steve, what took the Japanese probably 50 years to do and what took the Koreans about 30 years to do, the Chinese did in about 15 years in terms of their not only cost but quality. Because the narrative used to be, you know, China wins because China is cheap. And that was true in, you know, aluminum, steel, solar panels. But it's increasingly demonstrating something different in autos. And that's that China can be cheaper and technologically competitive or in some cases even technologically ahead. And I think that's the challenge and the opportunity for the automakers to be able to keep up with the Chinese.

39:29So at the end of the day that, you know, the question, I think the strategic question for the automakers, the U.S. automakers, is not how do we keep China out of America, but it's how do we become competitive enough to beat the Chinese automakers anywhere in the world? Right. And it's going electric. That's what gave them, you know, the toehold mark. They famously could never build the diesel engine, you know, like the Germans could. And going electric meant that they could compete in an area where they do very, very well in cars. So all we know is it didn't work very well trying to keep out the Japanese in the 80s.

40:03It just made our car industry worse. And so at some point, like you said, they're probably going to have to to respond to those realities or they will be left behind. Mark, yeah, go ahead. Yeah, absolutely. And listen, Canada is a great example. That's just a test run for the Chinese. They're not going into Canada because they're going to make any money. I mean, at 50 ,000 vehicles that they're going to let in, and the fact that Canada is one of the least profitable markets to sell vehicles because of their exchange rate, et cetera, that's a test run for the Chinese because the Canadian consumers are very much like U.S.

40:38consumers. And so I think that's a test run. But I do think, to your point, that the U.S. automakers have a number of bullets in their chamber that they can pull. And one of the most important ones is they really understand the consumers where they do business. Here in the U.S., they understand truck customers. They understand commercial customers. They understand commercial vehicles in the case of Ford in places like Europe, et cetera. that intimate customer knowledge is going to be really important for them to develop products, not only products, but then services that will keep it very sticky for those consumers.

41:14It's a perfect storm right now. They haven't refreshed a lot of their models because of the whole EV shock back and forth. The prices are high. Consumers are frustrated. Mark, thanks for now. We'll check back in soon. You bet. Former Ford CEO Mark Fields. Let's get to Julia Boorstin now for the CNBC News update. Julia. Kelly, the Justice Department filed a judicial misconduct complaint today against the federal judges in Minnesota over remarks they made to the media. The DOJ says interviews they gave to The New York Times about the Trump administration's immigration enforcement surge in the state were unethical and partisan.

41:47Russia warned NATO today it would resort to nuclear weapons if the military alliance attempted to cut off the heavily militarized region between Poland and Lithuania. Several Russian embassies said this week they had information NATO is preparing a naval and air blockade of the area. NATO's secretary-general said the alliance is defensive and told Russia to stop the nuclear threats. And the Jersey Michael Jordan wore in Game 3 of his last championship run with the Bulls in 1998 just sold at auction for more than$12 million. The sale through Pharrell Williams' auction house Jupiter beat the previous record for one of Jordan's jerseys at$10 million.

42:27Meanwhile, Jupiter is also auctioning Jordan's custom 1997 Ferrari with bidding now above$1.3 million. Back over to you. Thanks very much. More Power Lunch right after this break.

42:44Let's reveal the results of your Power Poll today. We asked whether you would let an AI agent trade for you while you sleep, which is kind of what you can do with Robinhood and other tools now. Most of you say no. 67 percent, only 33 percent say they would let an agent trade for them without doing much. All right. Coming up, the big earnings report coming after the bell. Can Micron meet the market's expectations? That's next.

43:15Welcome back. As the Dow is tipping towards session lows, we're going to get a big read on the health of the AI trade in about two hours. And those are Micron earnings. The earnings are expected to grow nearly a thousand percent year over year. But I mean, look at the performance of stocks up 200, 300 percent. Let's bring in CJ Mews. He's a semi-analyst at Cantor Fitzgerald. CJ, when the bar is this high, what are what are people really looking for in order to signal that both Micron and the entire AI trade can remain intact as we kick off Q4? Yeah, yeah. Good afternoon. Thanks for having me. You know, I'd say that expectations are high, but I think some of the key signals we'll get from management will be, you know, number one, you know, the outlook for memory is only worse from a supply perspective in 2027 than 2026.

44:02And that, too, you know, the earnings power into next year, we think, will approach$200 for the company. And so if you look back to prior cycles before we had kind of AI and these long-term agreements, the stock would trade typically six, seven, eight times peak earnings. And so if we're right on$200 next year as a stretch goal, you're talking about a stock trading roughly five, five and a half times. So just to normal cyclical metrics, there's upside. And then I think when you factor in AI and, you know, our view that we will see multi-year undersupply, then we see considerable upside. CJ, I was sure somebody made a mistake in the notes that there was a decimal point missing, right?

44:47Right. 950. And then the revenue, 350 percent. I actually want to ask Kelly's question again. I mean, is there a whisper number on the street that's that's four digits? Is it twelve hundred percent? Is it thirteen hundred percent? And then real quick, do these guys have pricing power? Sure. You know, I'd say the key metric is gross margins. I think the buy side is probably looking for a guide of around eighty seven and a half to eighty eight percent. We previewed 87 percent. This is historically conservative management team. But I would note that DRAM pricing is up, you know, 10 to 15 percent in the Q4.

45:28NAND pricing is up 5 to 10 percent. And so when all is said and done, you know, they will put up at least an 88 percent gross margin. I would note also that, you know, 50 to 60 percent of their bits are still not under these long term agreements, but under three month contract pricing. So they do have leverage there. Right. So, again, gross margins will push higher. And, you know, to your point around pricing power. Yes, we are in undersupply. You know, we have talked to our contacts throughout Asia. And, you know, we are hearing that bits going to smartphones and PCs are flat next year. We have to cut you off, unfortunately, because we've come to the end of the show.

46:12But thank you ever so much for these incredible numbers and making sure that we didn't have a decimal point error in our notes. Thanks to CJ Musop's Cantor Fitzgerald. He says the tightness in calendar 27 could be worse than calendar 26. Wow. Steve, thanks for being here. Thanks, man. Thanks for watching Power Lunch, everyone. Closing Bell with Brian, I think, starts right now. Hey, this is Will Arnett, host of Smartless. Smartless is a podcast with myself and Sean Hayes and Jason Bateman where each week one of us reveals a mystery guest of the other two. We dive deep with guests that you love, like Bill Hader, Selena Gomez, Jennifer Aniston, David Beckham, Kristen Stewart, and tons more.

46:54So join us for a genuinely improvised and authentic conversation filled with laughter and newfound knowledge to feed the Smartless mind. Listen to SmartList now on the SiriusXM app. Download it today.