Nvidia Fallout, AI IPO Frenzy and Rate Hike Risks

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0:37I'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.

1:03Welcome to Power Lunch. I'm Kelly Evans alongside Dominic Chu. Today, Brian will be back tomorrow. And the markets are focused once again on the tech trade. The Nasdaq 100 leading the markets lower and amongst the worst performers is NVIDIA, adding to its losses and now down more than 30 % from its October highs. All this as Anthropic pushes ahead with its trillion dollar IPO And SoftBank takes a nearly$4 billion write-down in its U.S. data center projects. Plus, a Power Lunch CEO exclusive coming up as AI agents, which you just spoke about, Kelly, take on more work. One unintended action can ripple across enterprise data, applications, and business systems.

1:43Data protection provider Comvault is expanding its agent recover tool to help companies audit activity, reverse damage done by AI agents. Those shares are up slightly today, up about 60 % in the last six months. CEO Sandre Merchandani is coming up here on the show, Kelly. We begin with the fallout from Jensen Wang's affair with an alleged Chinese spy. NVIDIA shares continue to tumble, down 10 % in the past two days alone. And the stock is on track for its worst five-day stretch since 2022 when ChatGPT launched. As a result, NVIDIA's spot as the world's second most valuable company is in play. Microsoft briefly moved ahead in market value down before NVIDIA reclaimed the lead.

2:21All right. Seema joins us now live from the Nasdaq. Seema, what is the latest on this investigation? So, Dom, we're told that CEO Jensen Wang was in the office yesterday at NVIDIA's headquarters in Santa Clara, California, where he started the day by bringing in his top executives to brief them on what he shared on X, the affair, how he was sorry. He didn't take any questions from the employees in the room, but then quickly moved on to the most pressing matters of the day, and that is NVIDIA's business. The market certainly awaiting more details on the investigation that will be conducted internally at NVIDIA, the timeline, how in-depth it will be, and whether the investigation will show that CEO Jensen Wong passed on sensitive information to Ms.

3:01Alice Wong. The company and Wong denying any wrongdoing, but the investigation, of course, will need to prove that. The company is now one week away from reporting quarterly earnings just a few days after its arch rival AMD reported very strong results, issued a bold forecast that 80 percent of its revenue will be driven by its data center business next year. So competition is certainly a factor in play just as NVIDIA tries to figure out how to navigate what is most likely its most challenging moment yet as a company, Dom. Seema, is now maybe the time to even look at NVIDIA shares? Is there more to come?

3:39What else do we have to think about right now, I guess, in terms of the Washington response, the board response, the shareholder responses? We already know that there are shareholders who are maybe irate about what's going on there right now. Yeah, I think top of mind right now, Dom, is more details on the investigation, how thorough it will be, what are the main questions that CEO Jensen Wang will have to answer, how much communication and transfer of knowledge there was between him and Ms. Alice Wong. I think those details will provide more information on his tenure at Edmedia, his leadership at the company.

4:12Of course, most people expect him to stay on as CEO. But depending on what this investigation reveals will tell us what could happen next. And that seems to be what people want to know right now. Again, what I was told was that he was at the office yesterday. He came to that morning meeting on Monday that happens every Monday morning with his top level executives. He briefed them on, again, what he shared on X that we all saw, the affair, how he was very sorry, but then quickly moved on to the biggest points of top of mind business items for NVIDIA. And that seems to be where the company is focused on right now, guys.

4:48All right, Seema Modi, thank you very much for that. Now let's take a look at whether or not we can use this as a buying opportunity because the shares may be, quote, silly cheap. Jordan Klein is the tech media and telecom analyst over at Mizuho Securities. Julian Emanuel is senior managing director at Evercore ISI. His firm just put out a list of AI stocks to buy next year. NVIDIA actually does make that list. So let's talk about this. We'll start first with you, Jordan. Silly cheap, your words, quote unquote. Let's talk about why it goes into that kind of a bucket and can it get cheaper? It's getting cheaper by the moment today.

5:24Yeah, thanks for having me. Well, I say silly cheap because I never thought I would see the PE multiple on a forward basis drop below 10 times. Is that where we are now? Yeah, we're below 10 times. And that's usually reserved for companies that have structural impairments or a business that is in secular decline. And we know that's not the case here. So the stock has been derating for quite some time, meaning the earnings are growing way faster than the stock. So investors were aware of that. And I think now it's discounting quite a bit of uncertainty, not just with post-elections, but obviously with this uncertainty with Jensen Wong.

6:02So I think it's an opportunity. But that being said, there are near-term risks, and you can't hedge that out fully. Is the potential loss of Jensen Wong, if that's what we're discounting right now, I mean, you could argue that is the biggest risk to the company. 100%, yeah. Given everything that he's done, the way that he's built it, getting this company to pivot into the video game space and then into AI and then to stay at the forefront when the entire rest of the world is trying to take that position from you. Is someone other than him going to be able to justify the share price? If you get in now, it could be the opportunity of an absolute lifetime to get into this company if the leadership is either sound under him or sound under somebody else.

6:43Well, I think the company has a deep bench, and that's great. But my view is he's irreplaceable in the minds of investors. I mean, he's not only a visionary and a leader for the company, but for the entire technology industry and the AI industry as a whole. So I don't really know what plan B would be. And I don't even want to think about that, nor do I think the stock's discounting anything like that. But people don't like uncertainty. And we don't know how long this is going to take. I think that's the biggest issue. Is this going to be a week, a month, two months? We don't know. That's what Dan Ives was saying yesterday, that he thinks the board has six to eight weeks to kind of get this internal investigation right.

7:21He thinks that's about the length of time the market will give. I would hope it's no longer than that, because that kind of gets us through the end of this year. And so people early next year can take a fresh look and say, OK, now at least I have some time frame by which I know what I'm going to learn from this investigation. Right now, you don't really know what the outcome is and you don't know what the time frame is. Yeah, Julian, we want to bring you into the conversation right now as well. This is all kind of playing out very, I guess, uniquely. I don't know if we've seen a time in recent market history where the kind of poster child for AI drops substantially like in yesterday's session, but the rest of the complex goes up alongside that drop.

8:04So there's maybe a competitive dynamic. But then also what we're seeing now in terms of the overall impact today, where it seems to be that sentiment dragging down the rest of the tech shares as well. How exactly important, how important is NVIDIA to this tech story overall? And do we need to see any kind of stabilization from the shares just to get everybody feeling good about investing in tech overall? all. Well, look, there's a lot of data points in front of us. And there's no question about the fact that this is one of the key companies in the AI revolution, if not the key company itself right now.

8:41But I think when you look back at today and yesterday, yes, the market is weak today. And I think you could certainly attribute a bunch of that to stock-specific risk, as you see on the screen, but also the headwinds from sharply higher yields. But the two-day total, the Nasdaq is still marginally higher. And that, to us, is actually a surprise. And it speaks to several things. Number one, we don't think that the AI revolution is going to derail significantly if there is more chaos at this one company. And number two, when you think about it from a valuation perspective, technology stocks as a whole are now trading cheaper than the S &P 500 as a whole for the first time really in more than a decade and almost to the levels before the internet revolution, let alone the AI revolution.

9:33I mean, Jordan made that point about NVIDIA shares trading under 10 times forward earnings at this point. That feeling has led you to put out, if you will, a shopping list, right? The kind of AI companies that you want to own in the coming months and quarters that'll help you capitalize in the coming year on this kind of secular trend around artificial intelligence. Can you take us through, I mentioned NVIDIA is on the list, who else is on the list and why? And how much is valuation a part of that story? Well, I won't go into specifics other than to say that, you know, there are a number of chip companies.

10:06There are the majority of the MAG-7 and other actually several foreign companies. But the point being that when you think about what the earnings drivers have been for the course of this four years, combined with the fact that what normally ends bull markets, essentially recessions or overly punitive interest rates, we don't see either of those really shaping up. And there's an argument to be made, particularly with the results of the midterms last week, that you're going to have an intensified M &A environment just because of the potential change to the political landscape in 2028. All of that, along with double-digit earnings growth and the valuation paradigm in technology, leads us to believe that the AI theme has got further legs to run into 27.

11:00So both of you, just to highlight this for the audience, believe that NVIDIA is a buy here. And Julian, you're putting it in the context of your AI class of 2027, which has a lot of the usual suspects, but AMD, Google, NVIDIA, Microsoft, Micron, Palantir, Arm, Broadcom, Apple, Amazon, Meta, Oracle, and Corweave. Corweave makes the list, interestingly enough. So go ahead. So specifically, what we did was say, you know, we don't want to necessarily be wholly exposed to the MAG-7 or wholly exposed to software or wholly exposed to semis. We want a cross-section of all of them, noting, as we have over the last year and a half, A, there's always the chance for stock-specific risk, which we're clearly seeing in the last few days.

11:49but B, there's been this intense rotation among themes, and in our mind, technology in general has furthered to lead the rally. Jordan, we've been talking so much about NVIDIA and the ripple effects across certain parts of the tech sphere. I wonder, from your universe, there are all kinds of opportunities that are starting to present themselves because of the drops we've seen in certain key parts of the market. Tech, media, and telecom is at the heart of it. Besides NVIDIA, are there stories shaping up in your mind that make you feel as though they're ones that we should be watching outside of the ripple effects of NVIDIA directly, even though we know that that AI trade is very directly impacted by NVIDIA on a number of levels at this point?

12:33Yeah, sure. I mean, I think you lean a little bit more defensive near term, and that means hyperscalers. So Microsoft, Amazon, Meta, maybe Google, I think they give you offense and defense. They're still cheap, you know, great balance sheets. They have core businesses, you know, outside of AI that, remember, were, you know, printing money before they started spending on all this build out. And if things get, you know, tight and you can't get new data center capacity, guess what? They have a lot of it existing. So the value of that goes up. I also think people can look outside of AI. I mean, there's a company like Take-Two, which has the biggest video game launch in the history of the world.

13:13I'm excited. I used to be a GTA player when I was a kid. You're going to get pretty excited come November 19th because that's the launch of the new game. They reported last night. It's not about earnings that they just reported. It's about this game coming out and in-game monetization. I'm glad you were. This coming out next week? Yeah, it's huge. And I've seen all these takes from people who are like, I'm glad the timing of my annual work vacation. I'm taking five days off. I'm just playing. The pre-orders are crazy. The numbers are crazy. It's down like 15 % year to date, which makes no sense.

13:43So another group that I highlight recently to investors is analog semiconductors, because while it's a semiconductor and it's cyclical, if oil prices and interest rates do come in, and I think oil prices are coming down, that's really good for the macro backdrop. And these are companies like Texas Instruments, Analog Devices, even Infineon, and they have much bigger businesses outside of AI, right? But they're still levered to the semi-cycle. So there's different ways to play it. I mean, AMD, I actually think, will outperform NVIDIA probably between now and the end of the year just because there's no investigation oversight.

14:20And possibly some competitive advantage. Exactly. And remember, Intel is seeing real issues in terms of getting out more wafers, their capacity constrained. AMD goes to TSM. That's their foundry partner. They don't have this. And then TSM is the one that no matter who's making the chip, GPU, CPU, custom silicon, they win. They're like Switzerland. That's another one that both you and Julian both agree. Julian, we got to go. Are you going to be playing? What is it? Grand Theft Auto next week? Now I'm worried that my kids aren't going to come to the table when Thanksgiving dinner is called. They're going to be playing Grand Theft Auto.

14:55All right. A fascinating conversation. We could go on for hours. Thank you guys very much. Jordan Klein at Mizzouho Securities. Julian Emanuel of Evercore ISI. We appreciate it. We are just getting started here. AI safety concerns put cybersecurity on high alert. Commvault CEO joins us exclusively to discuss the threats and the company's new partnerships with the biggest names in AI, some of the names we just mentioned. Plus, Anthropic making its IPO plans official now. The key numbers investors need to know. But after the break, hotter than expected inflation heating up rate hike talk is a half point rate hike really in play at the next meeting.

15:29That story is coming up.

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16:51All right, welcome back. We've got more news on NVIDIA and the Jensen Huang affair story. Seema Modi is back with the latest. Seema, what can you tell us? Dom, NVIDIA's board has retained former acting U.S. attorney for the Southern District of New York, June H. Kim, and his firm, Wachell Lipton, Rosen & Katz, to conduct a thorough and independent investigation into NVIDIA CEO Jensen Huang and his affair. Kim, I'm just reading here on the website, is a partner in Wachell Lipton's litigation department. The company says his practice focuses on high-stakes litigation, including internal investigations, white-collar crime, and crisis management.

17:28He went to Stanford and Harvard Law. I imagine people on the street now are going to be looking into his career and his bio, guys. All right. Thank you very much. Seema, they've hired Wachtell. That's a big story here. Thank you very much for that. The odds of a December rate hike are rising yet again. CME's FedWatch tool now puts the chance of a quarter-point increase at 87%. That comes after two Fed officials opened the door to even more aggressive hiking by the Fed. Our Steve Leisman joins us now. I mean, I talked to hedge fund sources the last go around who said 50 basis points should not be off the table even for that last meeting.

18:02Right. And now it's kind of seems like it's becoming, I'm not going to say consensus. It's moving towards a more consensus type view. There's two things on the menu here that we heard this morning. First thing was from Chris Waller, the Fed governor. And he said, if it's hot, maybe a 50. And I think he got his hot maybe 50. The other one was from Lori Logan, who's been pretty consistent about needing 50 basis points. But talking about it in a sort of December, January consecutive hiking, that was not the pricing. If you look at the pricing of the market today, they're siding a little bit more with Logan on the two consecutive 25s than they are with Waller with the 50.

18:39And you can see that by looking at the probabilities, which showed 87 % on 25 for December, but only 12 to 14 on the 50. Look at the January numbers, and it's up near 60 % for a January hike. That was not the case before the hot number and before the Fed officials spoke. This is, I mean, the story, the CPI print alongside some of the price action we've seen in bonds, specifically even just the 10-year auction we saw today. Is there a feel that's maybe building right now that this inflation story is going to become even more of an issue as we head towards November and December into kind of this end of the year period.

19:18I think that's right. Among some people, they see they're gathering momentum. Now, look, the administration has a point of view and they believe inflation is about to come down with the price of oil. Waller has kind of pushed back on that as have other Fed officials where they say, you know what, we have this diesel price hike in train. We have businesses saying they're going to be increasing prices. So all of that stuff suggests, you know, We'll look, by the way, at the PPI on Friday, the wholesale numbers. That puts the pressure on the businesses to raise prices. So we'll see how that ends up playing out.

19:50But right now, there's this idea that for the next several months, it's kind of baked in that inflation is going to be a little bit on the higher side. And we're now back below 5 % on the 10-year. But that story had gone to the back burner. It feels like we thought, OK, maybe rates with oil prices down. Oil prices coming down. We were done with that. One caveat, which is, do you remember back, I think it was October? the market started to get over its skis with the fact that there'll be a rate hike. And then Jefferson and Williams came out and said, we can take more time here. So let's just wait and see what happens.

20:25But does Warsh or the troika of leadership at the Fed say, yeah, let's let this idea bake into the market or we need to lean against it? So I don't know what the story is going to be. We do have Williams speaking, I believe, later this week. And I think there's four or five Fed officials talking on Thursday. So I'll get some good night's sleep that night. Decent amount of that speak still, though, that we're getting. Steve, really appreciate it. Thanks. Our Steve Leisman. All right. Still ahead on the show here, Convault shares are up 60 % in the last six months as AI raises the stakes on cybersecurity.

20:58Its CEO is going to join us exclusively with his story coming up next.

21:09Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. Which NHL teams are scoring big off the ice? CNBC Sports' Michael Ozanian has the numbers.

21:43The IPA dot margin in the NHL is right there with the NBA. Official NHL team valuations revealed Friday in Squawk Box on CNBC.

21:55All right, welcome back. We've seen a laundry list of AI-related cybersecurity incidents in just the last few months alone, and that all culminated in the PHP programming scare from just a few weeks ago that affected roughly 70 % of all websites and homepages and had some referring to it as AI's Black October. Our next guest has a direct line of sight into both the protection and the recovery, more importantly, that process, when cyber attacks actually happen. Joining us now is Commvault CEO Sanjay Merchandani. Sanjay, you just announced partnerships today with the likes of NVIDIA, Databricks, Zscaler, your products help companies recover data after it's been hacked or disrupted.

22:37That's going to be a key thing going forward. So take us through what exactly these partnerships mean and why the recovery side is one that a lot of CEOs are focusing and CTOs and CISOs are focusing more on these days. Thanks, Dom. Thanks for having me. You know, with AI entering the enterprise mainstream with enterprises, organizations, building applications using AI, that help run their business mission critical, we are a big believer that resilience, your ability to really come back, recover, if something was to go wrong, becomes paramount. It becomes key. In the past, and I say past, maybe two years ago, having a good backup that you test a couple of times a year and you know how to make it work was good enough.

23:26Now with machine speed and things changing that are interconnected, it, it takes a whole new way to think about resilience and the ability to recovery. It's a business imperative, no different than your supply chain or your transportation lines or your production lines. So these partnerships are part of a broader ecosystem. So with NVIDIA and with Databricks, we're helping customers get access to the data that we protect in a way that has provenance, that has context. So customers should quickly start training models with the data or use it for other things. And with Zscaler, it's again at building the harness, the protection harness around what AI can do inside an organization, because not all the things that happen necessarily are cyber attacks.

24:11It could also be just learning. This is new technology. It's powerful technology. And so bringing all of that together where enterprises can go bold with AI, but yet have the harness of protection that we provide. Hey, Sanjay, I guess my question is maybe more as a layperson, right? I'm not a CTO or a CIO, CISO. You use words like resiliency, recovery, all of these types of things. I wonder what exactly does recovery look like? What exactly is the reason why you exist? What is resilience? What is recovery? With all of these AI agents doing all kinds of things, how can you actually turn back the clock and get back the damage that has been done or the stuff that's been lost?

24:55Okay, that's fair. So recovery is the ability, if I have to really simplify it, is the ability for a business to come back to their last known good state. That includes the data, the applications, the configurations, so things the way they were before something happened. And resilience, in my simple way of thinking about it, is the ability to be predictable with your recovery. You've done it enough times that it's a core skill. It's a core muscle within the business that says, we're resilient. We can come back if this type of activity happened. Now, with agents, what's happening is, and agents is just one of the new innovations in this mix, is we're giving them the authority or the privileges to act on your behalf, to interact with other software, to make decisions.

25:43And that requires a lot of oversight to make sure that if something does go sideways, malicious or otherwise, that we have the confidence that we can hit a button or two or three and bring back the state before things went sideways. Now, we announced a product called Agent Recover that does exactly what you said, which is it has the observability around what an agent is doing, what identity it has, and the provenance of the actions it took on your behalf before something happened. And when it did happen, we know with a high degree of confidence that we can recover it back to the last good known state and the business comes back.

26:23So that's sort of the mindset. Gotcha. Okay. And before we let you go, we know that you signed partnerships with these companies. First and foremost was with NVIDIA. It's a name that's in the news a lot right now. As somebody, as a CEO who operates in this cyber and AI native type field, I wonder if you could give us your view on what you think about what this NVIDIA story means for the broader AI ecosystem, what it kind of means for those in your capacity who operate in this kind of larger field around AI. and have to, by the way, seek funding and financing for it as well? You know, Dom, they're a leader.

27:01You can't say AI without NVIDIA. I mean, they're an absolute leader, and our partnership with them has been in the making for a few months. And this announcement and this technology that we're bringing is a really deep technical partnership. We're excited about it. I think it brings incredible value to customers as they embark upon their AI journeys inside their enterprises. And we feel good about it. All right. Sanjay, it's been great to have you here on Power Lunch today. Thank you so much. Thank you. CEO of Commvault. Let's get to Mackenzie Sigalos now for the CNBC News update. Mackenzie. House Republicans voted today to make Jim Jordan the party's leader in the next Congress.

27:40The Trump ally from Ohio beat out Representative Steve Scalise to become the minority leader. Democrats will seize control of the chamber in January. Partners at Weill, Gottschall and Manjis reportedly voted today to wind down operations. For decades, a 95-year-old law firm helped to steer landmark bankruptcies, corporate takeovers, and litigation. According to the New York Times, a three-person committee will oversee the firm's dissolution. And the Justice Department is accusing Lyft of discriminating against passengers with disabilities. In a lawsuit filed this week, the Justice Department says the ride share service is aware of but fails to prevent a number of discriminatory practices, including allowing its drivers to routinely deny rides to people who use wheelchairs or travel with service dogs.

28:21Lyft firmly denied the accusations. DOJ filed a similar lawsuit against competitor Uber last year. Don, sending it back to you. All right, Mackenzie Cicalos with the latest there. Thank you very much, Mac. Coming up on the show, Anthropic takes its IPO pitch on the road ahead of next week's public debut. The key numbers investors need to know. That story's coming up next.

28:45The countdown is on for one of the years and maybe history's most anticipated IPOs, Anthropic is targeting a debut sometime next week with an IPO price range of$70 to$78 per share. Those are the headline numbers. Leslie Picker joins us now with more of the details on the other numbers and metrics we should be watching. Leslie. Hey, Dom. Yeah, Anthropic launching what could be a record-breaking IPO based on the terms the company set this morning. Anthropic and its founders and executives plan to sell up to$64 billion. Additionally, the company has signed up a whole host of strategics, including AMD, Broadcom, Google, Micron, Microsoft, NVIDIA, and TMC, to invest another$26 billion in a concurrent private placement.

29:30So if you include the green shoe at the high end of this range, the total offering size would be about$100 billion. Now, today's terms imply a fully diluted valuation of$1.4 trillion at that high end. And in chatting with a few sources this morning, it sounds like they've already covered the book from an institutional standpoint at the $70 to$78 range. So they're technically oversubscribed already, and that's before even accounting for retail demand, which is expected to comprise about 20 % of the final allocation once that's decided mid-next week. Anthropic will spend the next seven days marketing its offer and kicking things off today in New York City.

30:11Here's some exclusive footage we captured of Morgan Stanley, which reportedly hosted CFO Krishna Rao at their offices. Anthropik is planning to price next Wednesday night and begin trading on Thursday with a listing on the NASDAQ, guys. All right, Leslie, thank you. Leslie Picker, let's get to another big story in the AI trade and its impact on power demand. GE Vernova shares are under pressure, erasing most of yesterday's gains, comes after SoftBank reported a$3.7 billion loss tied to changes in its plans for power equipment at USAID data centers. SoftBank says it had made advanced investments to secure equipment amid shortages in long lead times.

30:51J.P. Morgan calls the news a negative, saying it raises questions about whether a major data center developer is reconsidering its power needs. But our next guest says that while concerns about AI spending are real, demand remains strong. Joining us now on the CNBC Newsline is Milius Research's Rob Wertheimer, who has a buy rating on GE Vernova. Rob, I know you're running around, but thanks for making the time. Can you give us some context around this decline in shares of GE Vernova today and the soft bank angle? Yeah, of course. So if you look across the past year, power demand has been absolutely extraordinary.

31:26And that's come with some favorable terms for power providers like G.I. Vinova and Turbine. So they've had very strong pricing power. They've been sold out into 2030 and beyond. And I think as this announcement shows today, or at least possibly shows today, they've had very healthy down payments and flat reservation agreement payments to prevent against risks like this one. So if that is all the case, that SoftBank just overextended themselves or as kind of is their want, doing unusual financing moves that don't speak to the broader AI cycle, are these headline-induced sell-offs an entry point?

32:07Yeah, I don't have an opinion on SoftBank itself. But look, I think that we are in an era where there's demand for power. And yes, a lot of it is AI. You also see electrification proceeding around the world that may have a little bit of a longer tail on it. But as autos and other vehicles electrify in Europe and China, that does change the balance long-term of electricity demand. You saw NRG earlier this week sort of say they had more long-term demand for turbines than with healthy returns. And so, look, I think if you stepped back a year ago, you would say, as we do this mad rush, will we have projects that are delayed, canceled, and or, you know, hung up by various parts of the supply chain, you would have said yes.

32:53Obviously, you know, there's a question as to whether this one pretends something more broadly. But so far, I think what we have is a strong power demand environment. All right. Well, it's reassuring to kind of get that firsthand view when there's so many headlines swirling around. Rob, we really appreciate it. We'll check back in soon. Thank you. Rob Wertheimer with Milius Research. Let's get back to Eamon Javers, who is in D.C. with more on Jensen Wang, NVIDIA, and the president. Amen. Kelly, that's right. A potentially significant news story now just dropping from the New York Times. Their reporting is that, remember that trip to Beijing that President Trump took last spring and he picked up Jensen Wang of NVIDIA on the way to that trip.

33:34The president was asked yesterday if he knew at that time that Jensen Wang had been in a romantic relationship with a woman who was believed to be a spy. And the president said yesterday, you know, I didn't hear about it then. Well, the New York Times is out with this news story just moments ago, and they are reporting that the president was told on Air Force One by Secretary of State Marco Rubio that Jensen Wong was in a relationship with a woman who was believed to be a Chinese spy. That conversation, according to the New York Times, his new reporting just breaking, happened before President Trump picked up Jensen Wang in Alaska on a refueling stop and brought him with the presidential delegation to Beijing on that trip.

34:17So a fascinating chronology here. The president seems to have been aware of these concerns and pushed ahead with this trip anyway, whether that was out of a fear of embarrassing Jensen Wang, a fear of revealing U.S. intelligence, or a dismissal of U.S. intelligence concerns here. It's not entirely clear. The president said yesterday, of course, that he talked to Jensen Wong yesterday and that Wong told him that he did not know that the woman he was having an affair with was believed to be a Chinese spy. And the president expressed sympathy for Jensen Wong, saying that he's really going through some emotional pain right now as he's dealing with his family and the embarrassment of the affair being revealed on the global stage.

35:01But Kelly, a fascinating report now from the New York Times suggesting that the president was aware during that trip and was in fact informed on the airplane before he picked up Jensen Wang that Wang was in a relationship with a woman believed to be a Chinese spy. You know, he, I remember at the time too, we were saying, why isn't, why isn't NVIDIA on this trip? You know, and it seemed a little odd. The State Department obviously wanted him left out of it and the president overruled them and had him come on the plane at the last minute. And now he will not obviously be traveling with the president, according to Trump, for the big China summit next week, although perhaps other tech executives will.

35:35And the bigger questions remain about whether the U.S. changes its tune on NVIDIA's export policies and whether Wong keeps his job. Yeah, I mean, so much is hanging out there right now. I mean, what we know is that the president's expressed support for Jensen Wong staying in that job. And that might help Wong make his argument to his board of directors. But this is just a very difficult set of facts for any CEO. First of all, you've got the affair with a woman who was a manager at a prominent customer of the company. Right. So that is something that the H.R. department would have to deal with in the normal course.

36:09Then the fact the geopolitical fact that she is alleged to be a Chinese spy and Wong appears to have not known that or not realize that. And then on top of that, the initial denial of this affair to the to the board to allow the board to make this statement last week that this was just a normal relationship and nothing romantic at all about it. and then having to reverse that. On top of that, as many as four separate investigations now into this on different timelines by different entities with different political intents. All of that is just going to be very, very difficult for Jensen-Wang to deal with in the coming weeks and months.

36:44Eamon, for now, thank you. As NVIDIA shares are basically at session lows, down 6.5%, Eamon Javers. Coming up, if you're looking for a hedge against some of this volatility in tech, Our Market Navigator has a biotech pick that's on pace for its best year in nearly three decades. That's next.

37:05Welcome back to Power Lunch. Time now for your Market Navigator. If you are looking for a break from all the volatility in tech, our next guest has a hot biotech name he thinks will continue to make gains and is on pace for its best year, by the way, since 1999. Bob Lang is the founder and chief options analyst over at Explosive Options. Bob, let's talk about biotech vis-a-vis the whole tech trade. Why do you want to go here and which stock are you looking at? Great to see you, Don. So I'm looking at Amgen here. This is one of the Dow industrial names. It's been one of the strongest names for the past two and a half, three months.

37:42Stock's right near all-time highs here. When earnings came out in October, they came in with some great cash flow numbers. basically at 32 % margins. Stock is selling only at 19 times 2027 earnings, so it's really not that expensive here. And getting away from AI names, you have to take a look at names that are in pharmaceuticals and in biotech. There's several names that Amgen has that are in stage three trials right now. And once they get approval, they're going to be getting some good cash flow, good money in from selling some of those drugs. So I really do like Amgen. All right. So because you're the chief options analyst, what's the options trade?

38:21Well, I've seen a lot of options flow, Dom, in the December 460 calls, also out to January 2027, 500 calls. And even if you go beyond that, Dom, actually in 2028, we saw a big cluster of options being bought at the 550 strike for 2028. That's a little bit too far for me. I'd be more inclined to take a look at the January 470 call. It comes in at about$20. Maybe it's a little bit less than that right now. Expect a move between now and then is about 12%. That puts us up above that$500 level that I'm looking at for the stock in the next two, two and a half months. And above that level, at least a 50 % to 70 % gain on those options.

39:03So I really do like that 470 strike for January. All right, Bob Lang using the options market to take advantage of an opportunity perhaps in Amgen. Ben, thank you very much for that. Kelly, I'll send things back over to you. Didn't realize they were having such a good year either. Dom Banks, coming up, renewable and clean energy stocks are losing steam as those rate hike fears return. Pippa Stevens on this up and down couple of weeks for the sector after the break.

39:28Welcome back to Power Lunch. CoreWeave shares are moving lower ahead of its big earnings results after the closing bell. Let's get out to our Oliver Rennick in Chicago with the options action ahead of that big print. Hey, Don, bulls are going to have to get over some very big hurdles if they want Corweave back on track. The first is the 16 % earnings move that's currently getting priced into earnings, which sounds massive, but is actually right on par with Corweave's typical swing across its six reports since going public. Catch number two, five of those six reactions were sell-offs. Right now, there are a lot more puts open within the implied range than calls, in particular at the 44 strike, which is one of the more expensive puts you can buy, which suggests strong demand for downside protection.

40:19There's also bearish speculation happening deeper down at the 30 strike, which would be a new low for Cornweave. On the call side, the biggest open interest is way up at the 60 strike, which is well beyond the implied move. So it seems like the message is if you think a rebound is coming, far away calls are the best value to go with. But the options odds say Corweave is more likely to drop, Don. All right. By the way,$47.82, the last trade on Corweave right now. Oliver Rennick, thank you very much for that. Kelly. And turning to the renewable energy sector, a number of those names are selling off today.

40:55adding to their recent declines. Pippa Stevens joins us now to explain what's behind this action, Pippa. Well, Kelly, so solar stocks typically do move in excess of the overall market, so it's not surprising to see the TAN ETF down 4%, with names like Enphase, SolarEdge, First Solar, Next Power, and Sunrun, all down here more than 5%. Now, utility-scale solar depends on debt financing, and residential solar loans and leases are sensitive to the 10-year, which is why the move back above 5 % is weighing today on the group. Now, it also unwinds some of last week's post-election rally. Democrats won both chambers of Congress, raising hopes they'll restore renewable energy incentives that the One Big Beautiful Bill Act cut, including the tax credit for homeowners who buy systems.

41:40Now, recent earnings have also missed estimates, including Enphase, which also posted a disappointing Q4 guide. Still, CEO Bajikathandaram telling me the U.S. residential is never dead. This is merely cyclical. The industry has sometimes been known as a solar coaster. Now, on the utility side of the equation, the data center backlash could be contributing to negative sentiment here for power demand forecasts. But solar is still the fastest way to get new generation online. And it's increasingly being paired with storage, which is stores energy midday to then power during the evening peak, guys.

42:13Right. And they had a big pop after the midterms, did they not? So have we already unwound that? Yes, we have. And a lot of that is just tied to this move in the 10-year because they're so sensitive to rates. And they're completely dependent on project financing, as well as if a homeowner wants to loan or lease our system, it's going to be tied to that 10-year. Also, notably, the housing market is frozen right now. So if you're thinking about delaying upgrades to your home, you're probably not going to get solar rent. I mean, it's not a huge part of the AI story, at least for right now. But people have looked at it down the line as being a huge part of the AI story.

42:45How much of the AI wind down is factoring into the kind of renewable space as well? It's certainly something, particularly on the utility scale side. And they do have project backlogs in place. So they have said we have this demand that is going to show up. But, you know, they are seen as the fastest way to get new power. When you think about things like, you know, of course, GE Vernova is down sharply today. But they have a huge backlog for their gas turbines. And so solar, then if you add storage, you can then have power even when the sun goes down. Can we just hit really quickly? I know solar is what you're talking about right now, but we were looking at some of these nuclear alternative energy stocks.

43:18Yeah. I mean, Oklo was down 77 % in the last 12 months. This was a darling for the market for a good while. Yeah. And I think that, you know, nuclear still does have bipartisan support. And so ultimately, the long term is still we are going to build new nuclear. But particularly on these more speculative names that have yet to actually establish and build their reactors, they're going to swing wildly. And you see this all the time. I mean, it's not uncommon for them to have double digit percentage moves in one day. reminds me of the quantum stocks a little too. It kind of whipped up. What's the solar coaster?

43:47I mean, that's what everyone always says. I say, why is it down so much? And they just say, hey, it's the solar coaster. And that's been known in the industry. Pippa, thank you. All right. Let's get a quick check on quantum computing. Speaking of, because it's almost like we planned it right now. They are under pressure after D-Wave's disappointing quarterly results and a broader pullback in more speculative technology names. Now, D-Wave's revenue did top estimates, but its loss per share was wider than expected. spaghetti computing, quantum computing, also trading lower in sympathy. You can see right there many of these moves to the downside.

44:20Power Lunch is back after this short break.

44:30All right, welcome back. There's some relief at the pump coming up. The national average for gasoline has fallen below$4 a gallon for the first time since July. It's down about 17 cents from just a week ago. This comes as crude oil prices continue to slide after President Trump signaled that further U.S. tracks on Iran are unlikely. Brent crude, the international gauge, briefly dipped below$90 a barrel for the first time going back to August. And Kelly, you and I both drive, we know this. Gasoline prices have been coming down markedly over the last two to three weeks already. Just gonna say Robin Brooks is among those who think a lot of the Fed's inflation that they're seeing is energy and oil related.

45:10Do you know what happened 25 years ago today? 25 years ago, Apple released the first iPod. The first-generation iPod went on sale for$399. It could hold 1 ,000 songs and had a 10-hour battery life. Not much improvement since then, really. By 2007, Apple had sold 100 million of them, less than six years after the first model. Wow. Iconic. I had an iPod at one point. I had an iPod. Yeah, that's the square, little tiny square. Yeah, I like the truffle. Anyway, thanks for watching Power Lunch. Closing about right now. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you.

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