Trump-Xi Summit, Navigating Higher Yields, Oracle’s ‘Force Majeure’ 9/24/26

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0:50The summit between America and China wrapping up moments ago as markets turning around on some Hormuz hopes. Welcome to Power Lunch, everybody, with Kelly O 'Brien. A couple of big themes making you money and your money move today. Stocks bouncing as oil slips on more talk of a U.S.-Iran deal around the straight bond yields pull back. But the tenure is still about 5 percent all as China's President Xi Jinping makes his first White House visit in 11 years. We're also following the action in a couple of tech stocks today, including Oracle. Under pressure on reports, the company is seeking protection from potentially significant costs tied to its New Mexico data center build-out.

1:27putting the spotlight back on the price tag of the AI infrastructure race. Meanwhile, take a look at Everpure. Best stock in the S &P, formerly known as Pure Storage, delivered strong guidance. There's an AI angle here as well. The CEO joins us exclusively. But let's begin with Washington, where President Xi of China just left the White House moments ago. Our Megan Casella is there. Megan? Kelly, that's right. President Trump walked President Xi to his car here just to my left outside the White House about a half hour ago. We watched the two men shake hands. President Xi then got in his car, a Chinese-made car, and President Trump told reporters that it was a, quote, great meeting.

2:02So that wrapped up the first chunk of official programming for this visit. We had a formal welcome ceremony first with a red carpet and a military flyover. Both presidents made remarks inside the White House. They took a walk around the Rose Garden and then held bilateral meetings, first a small one in the Oval Office and then a broader one with Cabinet officials from both sides. Just before the departure, President Trump then took Xi back to the South Lawn to show him the new helipad, and he took him aboard the Marine One helicopter. Now, Xi will be back at the White House later today for the formal state dinner, which we know will be loaded with CEOs from tech and finance.

2:34Some of them you can see here. What we don't know yet is what exactly was said in the meeting or if we will have any concrete policy deliverables from this summit. So we'll see if the White House issues a formal readout on any of that later today. Guys. Megan, what would you say? You know, you discussed this last hour, and I'm very interested to see what Kyle Bass says in a moment. But there's kind of a meh reaction to the whole somewhere. The only big takeaways from the analysts were about the pageantry of it. What would you say we've learned so far? That's absolutely true, Kelly. What we have learned so far is on trade, there was an extension of the tariff truce.

3:06Another two months. That brings us to January. Both presidents talking a little bit about AI this morning, but President Trump really sticking to the stance that we've heard so far that he doesn't want to see anything change there. We don't know how much or whether Iran and Taiwan were brought up or rare earths, export controls, that kind of thing. So the pageantry really took center stage here. And I'll also say that's what was expected going into this. That's also what the White House seemed most focused on. The meeting was sort of the message here because they wanted to portray closeness and stability in the relationship.

3:36And both presidents, when they spoke, did talk a lot about the close friendship that they have. really both speaking to domestic audiences and trying to play up how close they are. That does put pressure on the next two meetings. We are expecting now two more meetings between these presidents this year in November in China for an APEC summit and then December in Miami for a G20. So that does mean this tariff truce will probably be extended further. Maybe we'll see a broader trade deal in any one of those meetings. But now that those are on the schedule, the pressure is on to sort of maintain this steady relationship to make sure those meetings go off without a hitch the way they're hoping that this one does.

4:11Megan Kasella, Megan at the White House. Thank you very much. All right, folks. So so many different headlines happening now. But could one of those headlines be more of a head fake than a headline? Reuters reporting that the U.S. and Iranian negotiators are exploring a possible peace deal to end hostilities around Hormuz. Let's be clear. Neither I nor anybody else here at CNBC has independently confirmed that report. Also, as you know, we've seen many headlines like this before that turned out to be bogus. Or maybe the people that we are speaking with from Iran are not the people who will determine ultimately where this goes.

4:48But disclaimers aside, the headline itself helping the market, the S &P 500 jumping and briefly turning positive, Oil prices and bond yields did tick down from their session highs. So let's kick things off with somebody who is not only deeply ingrained in markets, but also has great knowledge and contacts and intelligence, defense and more. Joining us is Kyle Bass, Rochefort Asset Management founder and co-CEO. Kyle, listen, obviously you're in D.C. You're known as like the subprime markets guy, but you're also deeply, like I said, ingrained in defense, in intelligence. as all those things, would you trade on that headline or do you think peace talks maybe just another head fake?

5:31Yeah. First of all, great to be here, Brian. I think that, you know, look, the U.S. certainly wants from from a let's just say political perspective. We want oil prices to go down between now and November 3rd. And so, you know, the rumors of ceasefires, as we know, the IRGC is is is decentralized. There are 260 ,000 of these people all over Iran, and they all have autonomous launching capabilities. So that's why we haven't been able to get to a real peace agreement with them. And I don't think we'll get to one. But I think there'll be a lot of headlines between now and November. The answer is no, I wouldn't trade on it.

6:10Yeah, because and you and I have talked in the past and as I've reported for months, sometimes the people we talk to today, let's hope they're talking in New York yesterday, today, tomorrow. Who knows? Because if you're not talking, hopefully you're talking, hopefully you're not fighting. It may not be the same people that control the rocket launchers, the guns, the money and the other ammunition. But to your point about the midterms, do you think there'll be and there is an economic incentive to get something done? But do you think there'll be really something done? It's only about six to eight weeks from now, Kyle.

6:43I mean, look, there's the short term, Brian, and then there's what, you know, President Trump and Secretary Besant are doing. What Secretary Besant and his team have been doing, again, tightening that noose, the last time we were on here, we talked about how he was beginning to sanction relevant banks. You know, the only blood flowing to the tumor of the IRGC is really their oil sales. And their oil sales are in RMB and their cash houses around the world and banks around the world that are trying to help them exchange the Chinese monopoly money for real U.S. dollars. And we are we are closing down those avenues.

7:20And Secretary Besant and his team have done a yeoman's job of closing down those avenues. So that economic pressure on Iran. I mean, again, think about this. Their currency is hyperinflated. Their their GDP per capita has collapsed. And now they have a scenario where they don't have any real money coming in. So how long can that be sustained? The answer is not very long, Brian. So that's the longer game. And I think we will win the longer game in the in the short term, whatever the headlines say it is. I don't think it's that relevant. Like the real the real game here is is we need to shut the IRGC down and we need we won't leave without that highly enriched uranium.

8:01And I think don't lose don't lose sight of the fact that they still have 900 pounds of something they said they were never making. Right. And their centrifuges are just highly enriched uranium to build nuclear bombs. We're not leaving without it. Kyle, it's Kelly here. And to that point, I think I'm allowed to share this from a kind of U.N. event earlier. What is Chatham House Rules? I can talk about what was said, but not who said it. Is that how it goes? OK, that's correct. So what was said was, let's say, you know, those whose interests are with the Gulf have no interest in Iran having any remaining control over the Strait of Hormuz.

8:35The Americans seem to think that some sort of Gulf Iran joint oversight is a pragmatic outcome and they are steadfastly against this. So I left that discussion thinking, hmm, I'm not sure how we do this then, because the U.S. obviously wants the straight open. They seem OK with the idea of, you know, some kind of compromise to get that done. And I think the Gulf is like, no way. Yeah, I think CENTCOM is controlling the strait. I think Admiral Cooper and his team are certainly controlling the strait of Hamus today. When you look at when these Shahed drones, the real problem is they can make so many drones.

9:18They can saturate the battlefield with these things and cause trouble. When you actually look at some of the Shahed drones that have been shot down, they're full of Chinese parts and Russian parts. So the Chinese and the Russians are helping Iran cause the problems that Iran's causing. At some point in time, we're all going to wake up and say, you know, the axis of evil. All of our enemies are working together at this moment in time. And all we're seeing so far is things are escalating. Like, where's the off-ramp in Russia, Ukraine? Where's the off-ramp in Iran and its illegitimate proxies versus Israel in the West?

9:53There aren't off-ramps. There just aren't ways to to win other than we have to get that uranium and leave. And however, the straighter horn moose ends up after that. You know, we see a lot of diversions going on in pipelines and alternative routes from the oil fields of the GCC somewhere other than the straighter horn moose. And I think that's where you're going to see a lot of focus over the next three to five years. I'm pretty sure Brian thinks that, too. I do. And I know that. And it's resiliency. It's about second pipelines, third pipelines, fourth pipelines. or even trucking oil. It's not ideal, but oil is moving out.

10:27That's why oil is at 90 bucks, not at 190 bucks. To that end, though, Kyle, I know you also very closely look at currency markets. I actually spoke with somebody today who has family back in basically a suburb of Tehran, and they do about a weekly call on WhatsApp, and they have to kind of speak in code because they're always worried someone's listening to what they say. But the general gist is that the economy is really, really starting to hurt. Their currency has crashed. Their oil revenue is drying up. It's not gone. They're still selling a lot of offshore oil from other locations. But the economy is hurting.

11:04What do you know and what do you think about how much the economic pressure may be working, if at all? Yeah. I mean, again, from an economic perspective, their economy is all but collapsed, right? Again, hyperinflated in the currency, and we are now severing what's left of their oil revenue to force a change. Most of the IRGC keeps their money in dollars and euros. Those dollars and euros sit, believe it or not, in UK banks. They sit in Kuwaiti banks. They sit in UAE banks. And a lot of those banking, let's say, regulators and provincial regulators haven't been sharing the data with us. Even where we know that where the money is lying, we're not getting action.

11:51So a lot of these places rely on capital being laundered through their banks. And, Brian, that's the next avenue I think you're going to see Secretary Besant and his team push. And that, of course, will upset some of our allied nations. But we have to shut down the IRGC's ability to access dollars. and especially personally. Kyle, it's always a pleasure to get you on. Kyle Bass in D.C. Kyle, thank you very much. Pleasure. And he will also be making an appearance at our second annual CNBC AI Forum in Dallas next week. Business leaders and entrepreneurs will all be sharing their insights on the booming AI market.

12:28Scan the QR code on your screen or visit cnbcevents.com forward slash AI. All right, so we are just getting started here on Power Lunch, still on deck. Call it a tech tug of war. Oracle is trying to drag tech down thanks to some headlines, concerning headlines, around a data center project. But Meta, it's up 4%, Kelly. Meta's added like$300 billion. Yes, in two weeks. In like two weeks? Since the launch of Muse. And now they've got this new necklace-y thing, charm. Charm, thank you. A charm. So we'll talk about that. But coming up after the break, one of our favorite people, David Harrow, noted global investor, on what he is buying and maybe selling right now.

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14:08Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting and then another meeting. Hit your booking point. Book with Southwest and enter airplane mode.

14:37Welcome back and take a quick look on your screen at what's happening with yields right now. The 10-year just a moment ago was at 516. That's a new kind of 20-year high. Across the curve, we are seeing this action this afternoon, by the way. The reason why it's significant, really, is because this is just the U.S. trading session. This isn't the overnights where we can blame Japan or the early morning where we can blame Europe, although we are selling off around the world. Germany's 10-year at a post-2009 high, France highest since 2008. And in Japan, their 10-year hit its highest since 1996 again.

15:07Let's bring in someone who focuses exclusively on those overseas markets. David Harrow is the co-CIO of International Equities at Harris Oak Mark. It's good to see you. Thank you. That doesn't mean you necessarily take a stand on rates and all of that, but I would love to know your point of view. Are international yields driving ours or vice versa or both? I think it's the same phenomenon. By the way, I'm going to preface this by saying I'm a stock guy, not a bond guy. But clearly what's happened is I think the debt buildup has been a big part of this story that's happened over the last decade.

15:38And at certain places which have less sovereign debt, like Germany, have significantly lower yields. But still, you can't just spend money you don't have. You have to borrow it. And when the demand for borrowing goes up, the cost of money borrowing goes up. So we've had artificially low rates, I think, for quite some time. If you look at the inflation rate and tack a yield on to that, we've been well below. Real yields have been very low. And I think some of this is normalization. And in economics, the pendulum swings. It never stops at equilibrium. And as we've been talking about, I think the theme of the show the last couple of days has been the 1990s.

16:15Let's just continue on that theme because I've pointed out, and if the viewers may be just tuning in today and missed the rest of the week, shame on you. But if you did, here's this. So 1994 yields soared. Borrowing costs soared. In 1995 was the best year for the S &P 500 in 30 years. So even as a quote unquote stock guy, you have to watch the credit markets. Are credit markets doing what they're doing because things are good? It's a it's a gross story or are they doing what they're doing because something is about to break and will break the stock market? Well, it's probably a little bit of both because you can't you know, in systems like this, there are many factors that influence where rates and where prices are.

16:54And the fact is that corporate profitability is good. Individual savings are not bad. And so this is what, in essence, is driving the stock market and to some degree prosperity. So even though you have the fiscal situation driven by governments, the private sector is actually quite good. The extreme example is Italy, where you have a very, very credit-hungry country, high debt to GDP, but you have huge savings, a savings rate of pushing 30%, huge household wealth, huge savings. And so you get these dichotomies that happen within these economies. So you can have higher interest rates. And if part of it's because you have higher growth and growth is a function of population growth, productivity growth.

17:45And what are we getting a lot of right now is productivity growth. Let's talk about growing wealth by buying stocks that David Harrow is buying or just investing in your fund, by the way. So one of you have an ETF, OAKI. You can do that, too. That's even a better way. Maybe Adidas. OK. The German athletic wear company. Nike's problems here, I mean, we've been talking about them weekly. Stock just won't stop going down. Adidas, you obviously feel, is not Nike. Adidas is also a consumer story. Give us the bullish take on Adidas. The bullish take on Adidas is for the last four or five years, they've undertaken a recovery.

18:25And it's taken really strong root. And so what you have is Adidas and its various three areas, Europe, North America, China slash Asia, used to have problems in North America, had problems in China. And slowly but surely, those areas have been cleaned up. And so now you have a company that's growing at least high single digits. That's revenues trading at 13 and a half times earnings. and EPS will go up even higher because with their excess cash, they have a significant stock buyback going on. So Adidas has been in the recovery mode for the last three or four years. Nike, sadly, is just starting it.

19:05It's had deeper problems. They've done things. They've messed with their retailers. They've got oversupply certain places. A lot of the problems are idiosyncratic to Nike, which Adidas has dealt with in the last three or four years. And you also think European equities broadly are too cheap. like DSV, a Danish transport company, ProSys, Amsterdam, e-commerce. I just wanted to ask you about China because both Tencent and Alibaba are on here, and investors there have been so frustrated, as this points out. I mean, the Chinese stocks have been like one of the worst performers. So why do you think we're now due for some outperformance if that's what you think is coming?

19:41Well, the adage is buy low, sell high. And what's happened, let's take a step back. 20 years ago, 25 years ago, when China was just developing, average GDP per head,$800,$900. Zhu Junji was running a very reform-oriented economy, and it was booming. And it was booming. Remember, all people spoke about brick, brick, brick. Brazil, India, China. Everyone wanted these markets. Everyone used to ask me, what is your China play? What is your China play? What are you doing about the China market? We had very little there. Lo and behold, here we are 20, 30, 40 years later, GDP per head in China's$15 ,000,$16 ,000 on a PPP-adjusted basis.

20:23Then we get to today. What's happened? You've had this significant slowdown as a result of two major factors. One, you've had a property bust. The middle class Chinese citizens, upper middle class, rich people, all bought property. They thought it was a store of value, a place of safety. Supply curve shifted to the right. You had way too much supply. And now we've had a huge property bust, thereby impacting the willingness to consume. The Chinese consumers' propensity to consume dropped because they saw their savings fall. That's the biggest factor, I believe. The second biggest factor is the foreign direct investment.

21:04Everyone used to want to invest in China, China, China. Like Starbucks. Yep. Now with supply chain diversification, China's getting less of that. Part of that's because of their own success, their own growth has driven up wages, making it less economical to invest in the Chinese production. So now we're in this stage where they're slowing down four or five percent growth. Some say it might even be less. A lot of this is cyclical. And now no one wants anything to do with China. But China has some very strong advantages, especially on the tech side. And this is getting back to the stock place. Companies like Tencent, which process about 70, 80 percent of processes value is in Tencent, is in essence, Meta, LinkedIn, PayPal and a game developer all linked into one at 12 times earnings.

22:02And if you adjust for cash and investments, 10 times earnings. It used to trade in the 20s. Alibaba, which is the number one producer, the number one e-commerce player, which isn't their strongest growth business today. Their strongest growth business is cloud computing. So these companies have just been rolled over, and now is the time to be looking. A strong take on all things, and we would expect nothing less from David Harrow. Tencent, Alibaba, Adidas, Proces, and DSV, Kelly's favorite, Danish Logistics. Yes, that one. That's right. That's it. When they say, what's your favorite Danish logistics company?

22:40DSV. It's DSV. Who else? That's it. Very smart. They grow and they integrate and they just get bigger and bigger. And they're very smart. I do love Danish pastries for what it's worth. And Copenhagen. I think they're called Danishes. David Harrell, thank you very much. It is time now for your bond report. New York Fed President John Williams says it is, quote, reasonable to expect another rate hike this year. And markets are leaning toward another move. According to the CME's FedWatch tool, traders now pricing in a 66 % chance of a quarter point rate hike, another one at the October 28th meeting.

23:13Maybe we'll be in Chicago for that, Kelly. Who knows? Billionaire bond investor Jeffrey Gunlock laying out the Fed's dilemma on X last night, saying that if the Fed hikes, it will worsen the interest expense problem since so much borrowing is at the short end of the curve. But if the Fed cuts, it will worsen the inflation problem. All right. And still ahead, Oracle down, meta up. Two AI-related moves with big implications for tech. Jay Davidson's Gil Luria joins us with his take after the break.

23:52Welcome back. Oracle is falling this afternoon after the company set a notice to the developer of its New Mexico data center project. According to reports, Oracle is looking to delay payment if the project doesn't come online in 2028. Gil Luria is the head of technology research at D.A. Davidson. Gil, as I understand it, and Simo went over some of these details last hour, but this is local pushback. It's in the desert. They have water concerns. Do these concerns need to be dispelled in order for this project to move forward, or are there deeper challenges here? the challenge is the broad challenge everybody's dealing with right now when they're trying to build data centers which is there is a lot of pushback from municipalities and states and even the federal government at some point for the construction of data centers uh specifically oracle has struggled with getting a natural gas pipeline there because of the environmental concerns in spite of the fact that they've gone above and beyond to put bloom energy units instead of reciprocal engines, which is cleaner and less noise.

24:57But the pushback is so significant right now, they just have to keep overcoming new obstacles. They have to reroute their natural gas pipeline. So this is possibly going to postpone this project, which means they had to proactively go renegotiate a contract. But again, this is indicative of the bigger problem. Building data centers is getting harder and harder because of bottlenecks, because of regulation. and Oracle has now become a poster child for that with a really big project that could get postponed. Are they going to be in trouble if this project really is significantly postponed or canceled?

25:34It's unlikely to be canceled, and this is why. We're talking about a two gigawatt project here. That's$100 billion investment that they maybe end up getting$30 billion a year in revenue,$20 billion of profit for. What that means is they will find a way. If they have to have somebody run in the desert with champagne bottles full of natural gas to get it to the site, they'll pay for that because the stakes are so high. So it's really just a matter of does it get postponed because you have to reroute a pipeline or renegotiate or pay a local municipality more than you were expecting. The likelihood of a project that big getting canceled are still quite low.

26:14Now, having said that, because Oracle has so much debt and has so much debt service coming on at that point, that's why investors are more worried about Oracle. They're very highly leveraged. They're building a lot of their capacity based on debt. So they don't have a lot of wiggle room for even for post-pobes, even if the project does end up happening. One more on this and then I do want to ask you about. But I mean, if if Oracle faces the delay here, so do their components. Right. So do their partners. So do, you know, do you expect the AI trade to struggle? You know, and this actually gets back to a point, I think it was Sam Lesson who made this observation.

26:53He said, how can I be long the CPU trade, meaning, you know, the ballast beneath the successive Muse and short the GPU trade kind of at the same time, which would be those who are skeptical of some of the momentum behind data centers? How how would you how would one express that view? Yeah, I actually think that we should expect the growth of GPU, CPU, and especially memory to be relatively consistent and solid. Let's not forget, a lot of this regulatory pushback and bottlenecks and higher interest rates, they're slowing the rate of data center construction. That may not be a terrible thing. It means we won't overbuild too quickly.

27:33We'll just build as quickly as we can and then consume all these semi-components. And we always find it interesting that CPU stocks that will grow in that case at a similar rate to memory stocks are trading at 35 times earnings and memory stocks at 7 times earnings. GPU is trading more like 17 or 18 times earnings. All three have to grow hand in hand because that's how AI works. And yet there's really big discrepancies on valuation. And finally, just want to read you an interesting post that came from an executive at Meta who's explaining that if you use Muse, you have a dedicated computer that is backing up the activity that you're performing.

28:14So in other words, Brian, it's like as if you're telling Muse to go do everything and my laptop over here is the one going and it's just for you. And you can even look up. It's weird, Gil. It's almost like you could have a laptop. But you don't have. Like I could type on my computer and have a computer. I know. That would just do what I asked. But imagine if you could have five laptops. Well, I have Mac minis, like a little mini server farm of Mac minis at my house. That's what a lot of people do now. My electric bill's high. Gil, what's your comment on that, right? Like if Muse really takes off, what are the implications?

28:46If everybody now has their own computer sitting somewhere in a data center? Yeah, I mean, we're calling queries on GPUs that are relying on more and more memory to execute those queries, and they're executing them on a CPU. We need all three. The ratios are changing. We need more CPUs growing faster than GPUs and even more memory to do this stuff well. This stuff is growing hand in hand, and every time we ask, especially when we ask it for recurring things, monitor the cost of flights to Sydney, Australia, and keep me updated if the cost goes down by$500. That means every day it's submitting at least one query that's exercising a request through a CPU onto the web.

29:33So there's a whole perpetuity of compute that has to happen just because I asked it to keep me updated on the cost of flight to Sydney, Australia. Exactly. Gil, I appreciate it today. Thanks so much. Gil Luria with D.A. Davidson. We have a poll for you as well with everybody talking about Muse and this new kind of charm, this keychain-sized device that Mark Zuckerberg announced last night that can incorporate Muse. Would you buy it? That's the question we're asking in today's PowerPoll. Scan the QR code on your screen or head to our X account. The results will be later in the show, and it's supposed to be ready for the holidays.

30:10Does it go around your neck? It's got the cord. Is it like a lanyard, or is that just? Maybe like a wristband? Like a wristband where you just put it in your pocket? I guess you can do whatever you want to do. That should be the next question. Where are you going to hang it? There you go. On deck, the CEO of one under-the-radar company hitting a new high. Well, there it is. There's the answer. Everpure. His name is Charles Giancarlo. I hope he wears that hat. We're back right after this.

30:42Well, we like to be number one here on CNBC. And right now we have the CEO of the number one best performing stock in the S &P 500 today. It is called EverPure. It is formerly known as Pure Storage. They rebranded back in February. Stock is soaring on very strong guidance for fiscal 2028. CEO Charlie Giancarlo joining us now in an exclusive. And he did wear the hat. So, Charlie, we appreciate it. People are on the radio. They're missing out. It's a pretty sweet chapeau. Good numbers. Again, this is a hyperscaler. This is a data center story. Any sign, and I'm judging by your guidance and the results, no, but I'm going to ask you directly.

31:21Any sign of any slowdown anywhere in that value chain? None whatsoever, at least not at this point. And, you know, it's not just about, you know, the speed of continuing build. Remember, I mean, the entire data center market is already huge. And once a data center is built, eventually gets old, needs to be replaced. And, you know, we're part of that replacement cycle. So very exciting new business for us. So you replace obsolete-ish data centers, Charlie. Then does that make you a friend of companies like in NVIDIA? And I mean, how do you kind of, are you friends? Are you foes? Oh, no, no, we're definitely friends.

32:00We build the data storage equipment that goes into these environments and a lot of the software that allows these large scale data centers. Now, remember, our core business is enterprise, and we've been selling into both large and medium scale enterprises now for over 15 years. In fact, we have 15 ,000 customers in the enterprise. But a new part of the business is taking our very unique and differentiated technology that manages the newest type of storage, which is called flash storage, and now providing it into the hyperscale environment. And so as they refresh their data centers or build new data centers, we're an increasingly large part of the mix of the data storage that they're putting into place.

32:47I'm looking at SanDisk. That stock's up 1 ,600 percent in 12 months. Huge maker of flash storage. And one thing I know from them is that flash storage prices are up. Component costs are up. Your operating cash flow did turn negative for the quarter. Doesn't sound like analysts are too worried about it. But how much are higher costs in your component, stuff you buy, how much is that impacting your business? Well, you know, the transition was so rapid from, you know, a relatively low cost environment in terms of the components we buy and then put into systems to a much higher cost environment. That transition affected the entire industry and dealing with price increases on the order that is cost increases to us on the order of six to eight times within a period of just two quarters.

33:36As you might imagine, that's it creates a lot of work. But that being said, we've managed through that very well. And that it does result in our prices being somewhat higher on the order of on average, let's say, 150 percent. we've actually taken a policy of increasing our prices less rapidly than our costs are increasing to protect our customers from those rapid price rises. And they've rewarded us, actually, I believe, with greater market share and with greater trust in our organization. You mentioned, Charlie, and you're not seeing any slowdown. But obviously, everyone's wondering about this Oracle project and whether some of those claims about its water needs or what have you out in the desert.

34:21Will this begin a cascade of similar projects that are stalled or halted across the country? Well, you know, there's been a lot of discussion. This is just one of the latest areas of discussion around data center build speed. Right. There's also capital capacity. There's also not my backyard and community concerns, power concerns. And I agree with your last speaker. I think what this will do is it's just another sign that there is a limit to how fast these data centers can be built. But again, there is so much activity going on. Maybe it's a slight slowing of the rise, but it's not a slowing down overall of the pace of these data center builds.

35:04All right. That's a good way of putting it. Charles, Charlie, thank you so much. Really, really appreciate it. Great to have you on today. It's a great pleasure meeting you both. Charles Giancarlo of Everpure. Let's get to Seema Modi now for the CNBC News Update. Seema. Kelly, President Trump's nominee to lead the Food and Drug Administration telling senators today that all vaccines on the market are safe and effective. Dr. Heidi Overton faced criticism from Republican Senator Bill Cassidy, who is a doctor, for standing behind President Trump when he called the measles, mumps and rubella vaccine potentially quite lethal.

35:35She said today it is not lethal. The authors of a bipartisan bill that would permanently ban Chinese vehicles in the U.S. plan to use a fast-track procedure today to win Senate approval. It comes during President Trump's high-stakes meeting with Chinese President Xi Jinping. China has strongly opposed the ban. House version of the bill now has more than 100 co-sponsors. And rapper Michael Moore announcing a new slate of concerts today supporting Palestinian organizations. It comes after he was kicked off Ed Sheeran's tour from making pro-Palestinian remarks on stage. The tour will start with three concerts in Europe.

36:06U.S. dates will be announced soon. Kelly, send it back to you. All right. Seema, thanks. Coming up, Marvell is up 200 percent this year, but our market navigator says it's not too late to get in. He'll make his case after the break.

36:27Welcome back to Power Lunch as we're keeping a close eye on the bond markets this afternoon. And we did see yields go all the way up on the 10-year to 5.16. That could have something to do with reports that that buyback attempt Treasury was making. Once again, kind of didn't get as much demand as they were hoping. The issues they're trying to repurchase. I mean, these are, you know, they're 20-year bonds, I think, that, you know, they're 30-year bonds issued a decade ago. They're trading for, as Peter Bookvar points out, 63 cents on the dollar. You can see yields 5.16 on the 10s, 5.46 on the 30s.

36:58Dom Chu, what's in our market navigator today? All right. So, Kelly, we're going to check on shares of Marvell technology. They're slipping today with the rest of the chip complex. But the chip maker itself has been on a tear lately. Those shares have skyrocketed to the tune of 220 percent in the past year. They're up another 180 percent in just the last six months alone. Our next guest says it's not too late for you to get in on the action for Marvell. So joining us for that case is Jay Hatfield, the CEO and CIO at Infrastructure Capital Advisors. Jay, the chip trade is a huge focus because a lot of folks are looking towards it as a possible tea leaf or leading indicator for the rest of the tech trade in the market overall.

37:37But why is Marvell specifically one that you want to buy? Thanks, Tom. It's great to be back. Well, as you know, we recommended Marvell on Market Navigator in March, and it's up over 150 percent since then. And now it's we've after the announcement of the Oracle deal, it's now the largest holding in QVOL, our Nasdaq Option Income Fund. And the reason it is, is that that agreement is a huge game changer. We had downgraded the stock before that when it got to 300. But this deal is enormous. And the great thing about Marvell is size matters. So this is not a gigantic company. It's$200 billion versus NVIDIA,$5 trillion, Broadcom,$1.6 trillion.

38:29So this deal implies$120 billion of revenue, and their projected revenue this year is only$12. So we think this company can grow at 50 % a year for five years. And there is a near-term catalyst. October 6th, they're having an analyst meeting. We're carrying$12 for calendar 28, which is fiscal 29. the streets below 11. We think this should trade at a 30 multiple, unlike the gigantic companies, because it can grow faster. And it's also not over-owned by everybody because it's too big in the index. So we have a 30 multiple times that 12. So we think it can get to 360. But even if there's near-term disappointment about that meeting, this is a great five-year hold, just benefit from the growth.

39:17If Jensen Wong said it could be a trillion-dollar company, I don't disagree with that. Oracle obviously loves it. So really pretty to three beta stock. So it's not risk free. It's going to move all over the place, but a great long term hold. And it's we mostly hold our ETFs in my IRA, but it's one of the few individual stocks I hold in my IRA. And just really quickly, just a few moments left here. Can you view the rest of the chip trade broadly in that same way? Yes, we're bullish on the chip trade. We actually like all the AI, the hyperscalers as well. But always look at peg ratios. Actually, all the chip companies are trading a really reasonable peg ratio.

39:56Sure. All right, Jay Hatfield at Infrastructure Capital, thank you so much for the case on Marvel. And Chips, Brian, I'll send things back over to you. All right, Dominic Chu, thank you very much. Coming up, a sort of breaking-ish energy story involving two stocks that should be on your radar. That's next.

40:18I got a bit of a news alert from the world of energy. According to Reuters, BP, the old British Petroleum, has been evaluating acquisition targets to try to grow its American shale business. The report says the BP reportedly been studying deals for assets between$2 and$5 billion. So not a huge deal, but maybe a bolt-on deal. Kelly, those might include, according to report, Devin Energy's Eagle Ford shale asset. Again, just a report. But I will say Devin has a big hedge fund called Tom's Capital, top five shareholder. They've been agitating for change, maybe a sale of all or part of Devin. That's been reported, by the way, a couple of days ago.

40:56So will BP make a deal to grow shale? What's interesting is the transformation of BP. They went from oil and gas to try to be wind and other stuff. and now they're re-pivoting back to more oil and gas. At a time when the White House is complicating matters with this possible diesel export ban or voluntary participation program, I don't know. Stay tuned on that. The big names hitting fresh 52-week highs today include Meta and AMD. No surprise there, okay? But there are a few more low-key names doing the same thing. Take a look at Waters Corp, ticker W-A-T. That was the mystery chart. Software manufacturer based in Milford, Massachusetts, having its third straight positive month.

41:35The last time that happened was a couple of years ago, two years to be exact. And check out Mettler Toledo International MTD. It is based out of Columbus, Ohio, makes lab instruments up 30 percent since June. I know a company with the name Toledo based in Columbus. At least it's Ohio. It's still Ohio. Still Ohio. You go Ohio. More Power Lunch right after this.

42:06It's time to reveal the results of today's Power Poll. We asked you whether you'd buy Meta's keychain-sized Muse charm. And the survey says no. 75 % don't see a reason to do that. 25 % say they wouldn't. We've got some time still until this is really hitting the market. But there are stories, this won't surprise you, Brian, that people who use Muse get excited by the first one or two or three interactions and then don't know what to do with it. And so I think until or unless it becomes really sticky and you start wanting to do everything with it and it doesn't screw up, it doesn't make mistakes, and maybe it's too soon to really need an assistant like this.

42:47And maybe in the meantime, they'll figure out ways for people to stay engaged. So that poll doesn't mean they're not going to use Muse. It just means they're not going to buy that thing. Correct. Right? That physical device. They're related. device. You know, if you found that you couldn't live without it and you just could tell it everything, I think the need for it would go up. All right. Time also a good time for an RBI, random but interesting today. It's not about baseball. It's about football and finance. Take a look at this video from Las Vegas Raiders quarterback Fernando Mendoza. Let's flip and go.

43:19So get pumped for my educational video series. Finance with Fernando. Finance. Finance. So Mendoza is announcing his beginning, as you heard, Finance with Fernando, a new series of videos helping younger folks build better money habits. It is a brand partnership with U.S. Bank, who last month declared Mendoza its, quote, chief financial playmaker, this after winning the national championship as the quarterback of the powerhouse Indiana University Hoosiers. I'm joking because they won the title but were like the worst team in football for 20 years. I'm a fan of his for multiple reasons. You love little Mendoza.

43:56But also because now he's the face of the franchise that's been a long time. The Raiders? The Raiders. Well, guess what? They're better than my Chargers. Yes, but I like that coach, too. He's fun. You do? I do. You don't like the offensive coordinator, though, do you? No, but the way. Because we're going to have beef. Am I thinking of Sean McVay? Is that my name of the right coach? That's the Rams. Okay, never mind. That's the other. Let me get off the top. Her husband is also from the L.A. area, so we're going to forgive the Rams comment. By the way, they're just trying to steal the Chargers' look.

44:25Before we go, I want to take a look at this. The German ETF, EWG, not at a record high, but guess what? Ten-year yields keep going up in Germany. Stock market there also keeps going up. And as people keep telling us there is some deregulation going on in this market, there are reasons for optimism. David Harrow said he still thinks European equities are cheap. He loves Adidas. In spite of everything. Adi Dossler. Maybe Mendoza should take a look. Maybe Mendoza should come and do Power Lunch. Thanks for watching Power Lunch everybody. Closing Bell starts right now.