10AM Hour: Midterms Market Impact, Marvell Buys Lumentum, & Applied Digital CEO Talks AI Buildout Concerns 11/2/26

0:00Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

0:33Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.

1:03Good Monday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla and David Faber. We are live, as always, at Post 9 of the New York Stock Exchange. Stocks are recovering this morning as oil prices ease after the Nasdaq turned in its worst month since March of 2025. We'll talk about what comes next for tech and beyond with Rockefeller's Rashir Sharma. Plus, Anthropic just releasing its amended S-1 filing as the street looks for more clarity ahead of its IPO. We've got the details that you need to know. And also I had Apple holding up well during October's tech wreck. And a big test comes after the bell when it reports its first results under the new CEO, John Ternus.

1:39We'll get you ready for that print. And we'll talk to the CEO of data center company, Applied Digital, getting caught up in the latest AI fears. That stock trading around 60 percent off its recent highs. As for the market, trying to look for some stability here. Dow's up almost 600 points. It's ISM manufacturing data is crossing. I think Steve Leisman has had time to look at it. Morning, Steve. Morning, Carl. Yeah, coming in with a bit of a beat. We're looking for 54.5 when we came in at 55.5. So that's a good number. Still elevated on the prices paid. That is these days the second most important number here.

2:15And that's coming in at 75 and change here, 75.2. And that is versus 77.9. New orders looks good. I'm just looking for the employment index that I don't quite have. There it is, 52.4. That's down just a touch. But hey, I think this is the 10th month in a row the manufacturing sector has been above 50. So that's a good number. It looks like there's some manufacturing going on in the country, Carl. Not sure how much of this is all picking up data centers. There is a debate in this country as to whether or not a lot of what we're seeing on the manufacturing side, on the production side is all from data centers, or is it broader than that, especially when it comes to the investment story?

2:57But back to you guys, 55 and a half a beat on the ISM. Yeah, it's been a good story for manufacturing lately. Thank you, Steve Leisman. We're going to get a lot of data, a lot of earnings, a lot of market catalysts this week. It's a busy one. Just take a look at what we've got, some big earnings. I mentioned Apple after the bell, Palantir as well today, Marriott Hotels. And then, you know, you'll learn more about the consumer. Wednesday is McDonald's. Some big health care giants tomorrow, like Pfizer and Amgen. AMD will be important as well. And then Thursday, we've got Airbnb, Lyft, Affirm. On terms of data, tomorrow we'll get the job openings data.

3:31The Jolts, which I always love, which is a good snapshot of how tight the labor market is usually. It's cooled off a little, but still plenty of openings. And then the private sector jobs read on Wednesday, all leading up to the big October jobs report from the government on Friday. And that's going to obviously be a biggie. We haven't seen as much job creation, but still a pretty low unemployment rate, which shows that the job market overall has been good. The biggie is the midterms, which we're watching obviously tomorrow. And I thought I'd pull apart a few important economic charts to sort of show the state of the economy and how people are feeling going into the midterm elections.

4:07And again, this is just broad and national gas prices. You've got to start there. Obviously, this is the most sort of psychological pain point for consumers that we're feeling across America right now. And this is a chart that shows gas prices since President Trump has been elected. Look, at$4.17 a gallon where we are, it's about$1.13 more expensive than a year ago. They've come down a little bit lately, but they're still really strong. They're almost 40 percent higher than they were a year ago. So that's a visible sort of visceral cost for millions of voters. And especially, you know, in some of these swingy states, you know, where we're watching the Senate race, like Maine.

4:48I was looking at Maine. Half of Maine households use heating oil as their primary heating fuel. That's the highest share of any state. And we know what has happened with the price of heating oil. So that's something that people are feeling right now. Yeah. If you could get some pipelines up to the northeast natural gas, it might change things a bit. It's unfortunate. Yeah. No, I know. And this is an immediate problem. Yeah. You know, on the flip side, I do think we should check the stock market because that, I think, is a good reflection for the president and for Republicans of confidence in the economy.

5:20Look, it's partly the AI boom as well. But this was a similar dynamic in 2018 when Trump faced the last elections, midterm elections, where the stock market was doing really well, but interest rates and gas prices were higher. And this is the stock market since President Trump has been in office. And I know what you say, you know, what people will say. It only helps the top, you know, the top earners, which it's true that the more you make, the more you're exposed to asset prices like stocks. But about 156 million Americans or 58 percent of adults do own stocks either directly or mutual funds or 401ks or IRAs.

5:56That's according to Gallup's 2026 survey. So question is, are people going to judge, you know, the incumbents on the on the performance of stocks, which has been very good. It's been good. Yeah. Although coming off a rough October. Yeah, the tech trade fell apart. So if there is near-term memory here only, then it might change. I mean, not that it's going to have an impact one way or the other, but yeah. Yes, true. It's been a bumpy last few weeks. I'll also do, how about the 10-year yield? That's a good snapshot of basically loans, you know, credit cards, auto loans, mortgage rates, which we know have gone up a lot.

6:28And what we've seen there is higher yields. Now, part of this is a reflection of a better economy, you can say. So that is a good thing, but it also manifests as a pain point for households, especially when you're talking about mortgage rates. With the 30-year mortgage having climbed almost 3 % since January, we're at 7.27, which makes it less affordable to buy a home. So there's that. Then on the plus side, I'll just give you one more, which is the unemployment rate. I mean, unemployment rate has stayed remarkably low. We're at 4.2 % right now. We've had a low-firing, low-hiring kind of environment for jobs.

7:07And what I would say is that most people do have jobs. And it's one reason why you hear from CEOs, especially in financial services lately, that spending has held up and household finances have held up. And we haven't seen a ton of delinquencies or missed payments or anything. And that's because a lot of people do have jobs. Yes, their purchasing power is getting eroded by inflation, but they have jobs. and we have seen decent wage growth. So there's, you know, mixed signals. I just wanted to present the... As you've been saying, as we head into... Yes, I mean, obviously, a lot of people have already voted.

7:44Yes. In fact, the early voting totals were enormous in some states. Forty-five million, something like that? Yeah. Which tells you what? People are galvanized, I guess. I'm not sure what it tells you. Yeah, don't know which way it goes. No. But they weren't able to hear that. Yeah. before they decided, before they walked in to the booth. I think the most interesting thing. It's not even a booth. I voted yesterday, actually. I voted yesterday. Yeah, in the little thing. Probably in the same place as you did. Oh, my gosh, that's right. Yeah, I brought my kids. We all got stickers. But what I'll say is that, you know, there has been this interesting dynamic with the economic data where the consumer confidence numbers have been a lot more sour than the consumer spending numbers.

8:25And I do wonder if there's an impact of that with the polls as well. You know, the watch what they do, not what they say, because this is not. Yes, you hear a lot about affordability and higher gas prices, and I don't want to diminish that. But but it's also been overall like a decently strong economy. And we hear that from companies and we see that in the data. All right. Moving on to a company that's been very strong and is certainly one that we're watching very closely as it gets ready for its public debut. Anthropoc release an updated or what we call amended S1, this ahead of an expected initial public offering a few weeks from now.

9:00Kate Rooney's here to sort of break things down for us. Kate, we did not get that blank on October revenues filled in. I think there'd been hope for that perhaps given the month has ended. And there's still hope that we're going to get it prior to the IPO. But we did get a number of other things. Give me some of the highlights. Yeah, David, no, you're right to point out the disappointment. We didn't get that October number, but that latest filing you mentioned did show revenue for Anthropic is exploding ahead of this IPO that we're expecting in a couple of weeks here. The new paperwork also shows the rising cost of just keeping up with all of the AI demand they're seeing.

9:38We got that amended S1 this morning. AI company says it brought in about$33 billion in terms of revenue for the nine months ending September 30th. That's up about 1 ,200 % from a year ago. And then revenue for the third quarter alone was just under$16 billion, up from about$11.5 billion a year ago. We did also see an operating loss for the quarter,$567 million. Compare that to an operating profit of almost$1 billion in that June quarter. They do say here in the paperwork it was primarily driven by$5 billion of compute under short-term commitments, which they say currently cost significantly more than those multi-year commitments, which I'll talk about in a second.

10:18Infrastructure and compute expenses, though, grew to almost$10 billion at amended filing. Also puts the total compute number and those commitments at nearly$900 billion. It stretches, guys, all the way through 2045. It appears to have also squeezed operating margins a bit compared to what we saw last week with the initial S1, you had adjusted operating margins falling from about 19 % to 15 % in the third quarter. Company also swung to an operating profit. So there's some adjustments here, but still no price range or offering size. And as you pointed out, David, we do not have the October numbers.

10:53So a blank space there, but it gives us a little bit more to work with higher revenue, but those compute costs sort of eating into what have been double digit operating margins, but taking a little bit of a bite out of that, guys. We see there, I know not clear to me that we got anything, Kate, that the broader market is going to key off of. Again, as I've said, if we got that October number, I think that would have been sort of market moving potentially. The expectation being that there would be a reacceleration of growth, perhaps from that third quarter, which came in, I think, just as had been reported at$16.8 billion or so.

11:27It is interesting how much they're paying for short term compute, though. And I remember from the S1. I mean, they said they're going to go to$3.1 billion a month just to SpaceX alone starting in December. But this makes it clear just how much that short-term compute is costing them. No, I think it's a great point, David. They really try to differentiate between those longer-term commitments and what they've had to pay up front, the fact that that's a lot more expensive. And I think you're right to point out that some of these numbers have come out. And it's similar to the S1. I mean, the S1 was leaked to the Wall Street Journal.

11:58So it feels like the market reaction has been a lot less abrupt. We knew the Q3 numbers from that investor day, which we also reported that it was about 16.8 billion. So I think the market has been ready to absorb a lot of the anthropic numbers ahead of time. We're not getting these huge surprises out of out of the S1s. One thing that wasn't in here either that we talked about around that investor day and when we got the third quarter numbers was the impact of distillation. So we've talked a bit about this before. But if you haven't been following as closely, this is essentially other companies using Anthropic to copy it.

12:31And so it really does beef up revenue. There's a question about the quality of that revenue, and they have been cutting back on that and trying to tamp down on it. I was expecting to get a little more color on that because they've made that change, and that's one thing to look out for, just the impact on revenue going forward. It's something investors are focused on, sort of niche, but something to control F for if we get an update for October. Yeah, Kate, come back. We've got to talk about some of their cash levels as well. We'll give us some more information on that. in the filing, Kate Rooney on Anthropic.

13:02In the meantime, though, we do want to talk more about the AI trade. Rockefeller International Chair and Breakout Capital founder, Rooshir Sharma, joins us to talk about, I guess, Rooshir, your piece, which talks about the AI boom relative to the price of money these days. But do you have any thoughts on the nuggets we're getting out of Anthropic? Not really, but I think that the key thing here, Carl, is this, which is that a recognition is taking place in the marketplace. and I think that it's true even of Anthropico anyone, which is the fact that you're competing now to raise money with the government.

13:35And that is the big difference in this boom compared to other booms in the past, which is that in the past, the governments were not as indebted. They were not running such large deficits. This time, the financing needs are going head on with governments around the world. And that's what is a problem for this AI buildup, which is it's still dependent a lot on debt and that debt financing is going to come directly competing with governments. And that's what I think a main reason that's pushing interest rates higher for the last few months. Does this recent relief in Treasury yields change your view at all?

14:12Well, a bit, yeah, because I think in the past when you've spoken, I've always said that around 5 % or 5.25, that's the sort of pain threshold. So, yes, the fact that we get some relief in Treasury yields is undoubtedly a positive. and if the price of oil can keep going down, then we extend that. But I just don't see the trajectory for interest rates changing that much because I think the fundamental problem here is that neither is anyone in Washington nor is Wall Street going to back down from their financing needs if interest rates come down a bit. So I think it's almost limiting as to how much rates can come down because the moment they do, the financing needs go up.

14:50And no one's going to be cutting back on the U.S. budget deficit or the U.S. debt at any point in time. Well, that's now you're veering into midterm talk because there is a sense that if there is any semblance of a Dem sweep, fiscal discipline will be even less of an issue in Washington. Yeah, I think there's no incentive because so far they've been spending and they've been warned for so many years, if not decades, that this is going to lead to trouble. There has been no apparent trouble. So they go on spending and there's no limit to that. So I think that that's the problem, which is that I think regardless of the political outcome, I think the trajectory for deficits and spending concerns remains northward.

15:31And unless you get a crisis, that's not going to stop. And we are very far away from a point where anybody in Washington thinks we are in a crisis and the funding gap needs to be addressed. Is there any real evidence, though, Rashir, that the debt, AI debt, is actually crowding out demand for treasuries, whether it's in the auctions or, I mean, there still seems to be plenty of demand for bonds when there's a risk off trade? Yes, absolutely. So there's no evidence. The day that evidence comes that some auction fails or something, that will be D-Day. So I think that we are far from that. My point is the fact that there is clearly stress building up in the credit markets around the world, not just the US, but even in Europe and stuff, as a reaction to the big surge we've had in interest rates.

16:17That we've had a big surge in interest rates and we've had this sort of conceit, even among the AI companies, that it doesn't matter. Our demand is so strong that we can keep borrowing at whatever we want and it doesn't matter. But my point has always been that the price of money is the single most important variable and the increase in the price of money is first leading to the weakest borrowers getting hit. Now, the government's balance sheet tends to be the strongest balance sheet out there in the world. So when the governments really begin to get in trouble and they're not able to finance the deficit, that is the end game.

16:52I think we're still far away from that. But there's clearly stress building up around the world, including in the U.S. credit markets, as a reaction to the increase in interest rates. It always starts that way, some obscure corner, you know, and that's what I wrote in my FT piece as well. If you look back, what happened in 2000, in 2005, 2006, some obscure corner of the market is where some trouble begins. And then it begins and then it takes a while for it to make its way into the mainstream markets. Yeah, we're definitely watching triple C spreads and a spate of bankruptcies among small trucking companies.

17:28Definitely on people's radar. Rooshir, thank you. Always good to see you. Rooshir Sharma. Thanks, Paul. Here's our roadmap for you for the rest of the hour. After the break, will Apple calm some of the tech jitters? We'll talk with an analyst about the key things to watch in the report that could set the tone for the whole week. Plus, the CEO of Data Center, company Applied Digital will be with us. The stock has been caught up in, of course, those overall fears around AI. It's down around 60 percent from its highs on the year. And Palantir, of course, after the bill tonight. Options market pricing in some pretty big moves.

17:59We'll talk about the implied volatility in a bit with Session Highs here, 7640. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments. VantageScore safely broadens access to the credit economy and brings 5 million mortgage-ready borrowers into the market. That's why top lenders like Rocket Mortgage, as well as nine of the top 10 banks, rely on VantageScore 4.0.

18:43With higher predictability and greater access to credit, everybody wins. Get started at VantageScore.com. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

19:24Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts. Welcome back. Apple is set to report earnings after the bell. For the first time under new CEO John Ternus, despite October's broad tech sell-off, the stock has actually held up well and is even higher, around 7.5 % since Ternus took over in September.

20:03Let's bring in Laura Martin, senior analyst at Needham & Co. She has a hold rating on the stock. Do you think it reflects the high expectations for the quarter, Laura? Is it just sort of traded more as a safe haven when we get a big tech sell-off. Yeah, that's exactly right. It's basically not spending money on CapEx. It's returning capital to shareholders, and it has enormous free cash flow. So it's a safe haven, big liquid name from sort of everybody else that's acting the same, which is spending a lot of money on AI. But Apple is not. Right. So it's kind of like the alternative AI CapEx trade.

20:38What about the numbers tonight? Where are your expectations relative to the street on the iPhone numbers? Right. So iPhone, we're at 56 billion, which is right on top of the street. The big number to watch is services. We're at about 31 billion, and that has a 75 % margin. And overall, we're expecting 300 basis points of margin compression at the empire level, at the overall Apple level, because memory costs are up 4x, memory prices through the roof. So one of the things we want to hear from John Ternus is, is he raising prices on iPhones or is it going to keep taking margin pressure, which means his earnings per share growth will decelerate over time because of these huge increases in cost inputs that he's actually competing with the big AI labs for these components?

21:25I know you mentioned the fact that they aren't big spenders on AI CapEx as a good thing, as a port in the storm. But for a lot of the period of the last year or so, it wasn't a good thing. It was where is Apple on AI? So basically, can they capture value even without the massive spending numbers of some of these other big tech firms? Right. So that's the best question. They're using their 2.5 billion installed devices as a moat. And meanwhile, you know, both Google and Meta would love to move the form factor in the AI era to glasses where you talk to them. And they would like to leave. They would like you to leave the iPhone completely.

22:06So Apple has really bet the farm that the smartphone will be relevant 10 years from now. And almost every other AI company is going to try to change that form factor and capture that platform 30 percent fee that Apple now takes from the smartphone and take that platform value and device value away from Apple. Laura, are Macs immune from this sort of Intel based notion of PC weakness right now? I think maybe. You know, I think the important point, though, is I think the anchor tenant for Apple is the iPhone. And then people buy these adjacent products. So all eyes on the iPhone, because if iPhone penetration starts, you know, falling, I think it affects Mac.

22:50Because I think the ecosystem watches and these other products that Apple sells are tied to that iPhone as the anchor tenant product. Half of their total revenue comes from the iPhone. So Macs are more subject to, you know, consumers continue to adopt the ecosystem than I think they are to, like you say, like what chips they're using. Right. And have you seen anything to suggest that there's reason to worry about about iPhone? And I'm not talking about sort of creases in the duo or anything like that. Yeah, that's not good for their brand. Cracking iPhones is not good for their brand. So China, we need to watch China, because, as you know, Chinese policy comes from the top.

23:27And they, you know, as you know, China outlawed iPhones in government buildings, you know, two years ago for a while. So we need to watch what's happening in China. It's about 20 percent of their total iPhone sales. So it's a big part of their revenue. What about John Ternus himself? Because this is the first earnings call, right, that he'll be on as CEO speaking. Is there anything different under his leadership in terms of strategy or communication or anything different that you'd like? So we really that that's the best we are listening for that tonight because he was at a product and he's already announced these new home products.

24:00I got to tell you, I think that's the first new products that are sort of outside an incremental watch or incremental earplugs since in 10 years. You know, so I'm really excited to hear him talk about product and product roadmap and what he's doing next and what the next big revenue driver is that, you know, he needs to make this ecosystem stickier. so more products is better. And if they're not linked to the iPhone, that diversifies their risk. So we are listening for that tonight. If he's going to have more products faster, which almost every company is accelerating their new product innovation because they're using AI.

24:36So we want to see that out of Apple too. Yeah, shorter cycle rate. It's definitely on deck. Finally, Laura, you're always good about sort of floating ideas, out of consensus ideas about portfolio management or something else. Do you have any on Apple? on Apple, not so much, but really liking this Amazon here, how it rebounded from down 10 % the morning after earnings to down only one. And now it's up 4 % today. We added it to the conviction list. Really like what, you know, when you have Amazon talking to you, they tell you, we are not spending a dollar without a committed revenue number with that dollar at Patbax.

25:15And they're going to do robotics. They now have a million robots in their warehouses. they can basically use a lot of AI, almost every form of AI innovation they can use in their empire to lower costs. Their safety record is hitting all-time highs because when a robot has a truck fall on it, nobody sues them. So I really like the AI trade for Amazon specifically because of its capital intensity. All right. Nice little rebound today for the stock, as you mentioned, a 5%. Laura, thank you for joining us to help pregame Apple. Still ahead this hour, Marvell buying Lumentum in Wall Street's latest mega AI deal.

25:51We'll tell you what the CEO has told us about that move as both stocks are lower today. Get a fresh read on the health of the AI economy with the head of data center firm Applied Digital. Shares have been cut in half over the last year. First, though, the headlines that are pushing oil back below 100, in fact, back below 98 after a short break. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools, no extra logins.

26:27Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. Building a portfolio with Fidelity Basket portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics, and managing it as one big juicy investment. Mmm, now that's pretty good. Learn more at Fidelity.com slash baskets. Investing involves risk, including risk of loss. Fidelity Brokers Services, LLC. Member NYSC SIPC. This holiday, all plans, even unlimited, are just$15 a month.

27:14A holiday deal this good obviously deserves an enormously expensive holiday song, like All I Want. Right. Okay, we can afford that. You know what? Forget the music budget. We're going to stick with whatever's in the public domain. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three months,$90 for six months, or$180 for a 12-month plan required,$15 per month equivalent, taxes and fees extra. New customer offer for initial plan term only. Greater than 50 gigabytes may slow when network is busy. See terms.

27:42Welcome back. Oil prices falling hard right now, down almost 7 percent as hopes grow around some sort of diplomatic resolution with Iran. Pippa Stevens has been tracking the action. Pippa. Good morning, Sarah. Well, oil prices taking a leg lower after a report that Iran's president said the supreme leader has granted the government new powers to conduct talks. That's according to state media. And after negotiators reportedly left Doha with a draft proposal for a U.S. deal being circulated, Reuters reported citing officials. And that all follows Secretary of State Marco Rubio saying over the weekend that President Trump prefers not to use military force and would like to resolve the Iranian war diplomatically.

28:20Now, that, of course, marks a shift from last week when escalation was front and center, sending Brent above 118 amid multiple reports. The U.S. was gearing up for a short but intense attack on Iran. CIBC Private Welsh Rebecca Babin saying there was about 15 to 18 dollars of risk premium priced on Friday's close. So we're now taking out about 30 to 40 percent of that. And with traders still running near maximum long exposure, additional declines could hit selling triggers and accelerate the downside. Now, this is all within the backdrop of both sides trying to shape the narrative to their advantage, with the midterms seen as a clearing event, after which the market is looking for more clarity on whether the U.S.

28:58pursues strikes or talks. Meantime, Ukraine restarting attacks on Russian refining infrastructure after a two week pause. Diesel and gasoline futures both lower this morning, though. The national average for a gallon of gas down 23 cents in the last month. Currently, guys, at$4.17. What's interesting, Pip, is that over the weekend, Goldman, for example, raises their forecast for Brent and says if output doesn't recover meaningfully, you could be talking about 130, 140 Brent in 2027. That's right. And it shows that there is increasingly a sense of we don't actually know what's going to happen because the options on the table are in different directions.

29:37And there's a lot that could happen after the midterms, whether or not we increase our strikes. But I think what people are now focused on is that after there is some sort of resolution, if that happens, then we can take a step back and start beginning to assess the damage. And that's where some of the higher price targets are now focused on. The fact that there is damage in the Middle East to infrastructure. And then also you look at Russia. There's a lot of damage there to their refining infrastructure. And so this idea that it's not going to be that as soon as there is some sort of resolution, then all this oil is going to come back to the market is still going to take time to work through.

30:09And so Goldman now says that Brent next year, they see it at 88. And again, that's more than 20 dollars above where we were prior to the start of the war, which shows that the curve is now pricing in a longer term disruption to supplies than prior to the war breaking out back in February. Yeah. Pippa, thanks. Pippa Stevens watching in a very important story today. Let's get a CNBC News update as well with Dom Chu. Hey, Dom. Good morning, Carl. The Massachusetts mother accused of murdering her three young children will be back in court today in a bid to get her case dismissed. Lindsay Clancy's trial earlier this year ended in a deadlock jury.

30:41Her lawyers argue she was suffering from postpartum psychosis and should not be held criminally liable. Prosecutors still have not said if they plan to retry Clancy for first degree murder or whether they will pursue lesser charges or perhaps even none at all. The NAACP asked a judge to detour federal law enforcement officials from serving as monitors during the midterm elections. The group says their presence could intimidate voters. The Justice Department has insisted the monitors will not interfere with voting. And a British man completed his 28-year walk around the world, returning to his mother's home in northern England this morning.

31:19Carl Bushby took a flight to South America at just 29 years old and began his journey. He crossed the Darien Gap, traversed the Bering Strait, and swam across the English Channel and Caspian Seas before returning home as a 57-year-old. In total, he walked 31 ,000 miles. Hopefully some inspiration, David, for many of us to get motivated, for even the journey of 31 ,000 miles begins with a single step. I'll send things back over to you. Thanks for that. Yeah, maybe the English Channel, although I don't think so. I don't think that's in my future either. Tom, thank you. After the break, the CEO of data center company Applied Digital.

31:56It's stock, obviously, along with so many others in a similar area down sharply. We'll get his read on the state of funding for this AI buildout next. Plus, don't miss the CEO of Mondelez. Big strength for that company in emerging markets and a new acquisition here at home will be part of the subjects discussed. Don't go anywhere. Welcome back. Take a look at shares of Oracle. They are down, although not quite as much as they had been a little bit ago. The company just last week told us it was going to raise another$20 billion in new capital,$10 billion in debt,$10 billion in equity. Now, some investors might have thought they would wait a little bit before doing that, but no, they actually are doing it right away.

32:36$10 billion equity offering,$10 billion in debt as well. So you can see it is having some impact overall on the stock. Speaking of the AI build-out, by the way, Applied Digital is a company that has leases for about 1.4 gigawatts of data center capacity. That represents about$36 billion worth of contracted revenue. Now it has to finance and build those campuses. Last quarter, it spent more than$2 billion on construction against about$64 million in operating cash flow. That comes as investors question heavily indebted neoclouds, companies such as its largest tenant, Corweave. Applied digital stock, by the way, also down around 50 percent over the last six months.

33:17Joining us now, CNBC exclusive Applied Digital chairman and CEO, Wes Cummins. In good weather and bad, you come. We always appreciate that. Thanks for having me. You know, we talked about access to capital being a key differentiator. differentiator. And Elon Musk, of course, sort of sent many of the neoclouds into a bit more of a spin last week, Wes. And I'd love you to respond because, you know, when he said access to capital is everything at this point and said that 200 plus neoclouds are going to see guppy level death, still trying to figure out what exactly that means, and consolidation, some will make it through, but not many.

33:54Can you respond to that from your perspective at Applied Digital? Sure. So for applied digital first and foremost, I wouldn't put us in the NeoCloud class. So we're building data centers. We're effectively a highly technical real estate business, long-term leases, high-quality tenants. We do have CoreWeave. We have that facility fully financed already with CoreWeave. CoreWeave at that facility has an offtake with Meta that increases, I would say, the investment grade of that facility specifically. But we have focused, so after we signed CoreWeave, we've focused specifically on investment-grade hyperscalers.

34:28I've talked about this on here a few times. It's really kind of four or five companies that we focus on. And so when we go out to finance, which is what's left for us to finance, the tenant backing that is AA credit or better. We have a 15-year-plus lease agreement that's take or pay. We build the building. We lease it to them. And then you'll see, you know, generally, as we've talked about, spending precedes the revenue. So you've got to build the entire building and it turns on. But you see in our financials with revenue up, you know, 300, 400 percent year over year, we're starting to see that ramp.

34:58And we're just going to continue to see. So we turned 250 megawatts on over the past 12 months. I said earlier on our earnings call that we'll turn on at least another 600 megawatts over the next 12 months. So we just keep delivering. And so for a company like ours, the key is we've delivered on time, on budget for our customers. That's the big risk is delivering on time. And so it makes it easier for us to go finance. Our tenant investment grade quality has gone only up. And what we have left to finance is really high investment grade tenants. So I think we're in a good place from that perspective.

35:29Well, I want to follow up on that and then get to a couple of the other concerns out there. Obviously, your filings, as you'd expect them to list, access to capital is a top risk. We've been talking about it a lot of late. I think Polaris Forge 3 and Delta Forge 1 and 2, you got about$20 billion of contracted revenue. Yes, that's correct. But you still need to finance, correct? So we still need, so out of the 1.4 gigawatts, we've financed about 600 megawatts of that. So we have about 800 megawatts to still go and finance. You know, that'll come over the next 12 months. There's a lot of funding mechanisms out there.

36:00So what people really focus on, like bond market, data centers historically were traditionally financed with what we call project finance. There's bank debt, construction debt or construction loan. We're down the path on that for several of our campuses. That market is still available. The bond market at a certain price for us, given, again, our track record, I think is still available for us. At a higher price, though, perhaps than the 7 % or so, I think you paid back in June with different financing? So we did, if you look at the history of what we've done, we did a 9.25 bond around this time last year.

36:31And then we did a 6.75 on our facility. And then we did our last quarter. We were financing at 7 a few months ago. I think we'll have a higher credit quality tenant, but interest rates have also went up, right? Treasurer's have went up. Everything's went up. Spreads have went up some. But it's still available to us. And when you look at our our economics, you know, we're kind of in the low double digits from an unlevered yield perspective. So we have a fair amount of room to deal with that on construction debt from from a rates perspective. After tomorrow and once some of these races get decided, mostly at the state level, would you expect permitting and like community outreach to get a lot more onerous?

37:10So we have made a choice to be in places that want us to be there. And then we've done a really good job in those places. And if you look at a lot of the kind of the news items that come about our data center campuses, we've lowered electricity bills in North Dakota by about$50 million over the past five years. We do things, what I always say, the right way. And you see a lot of positive things. We've had great community engagement in our state, primarily North Dakota, where we are. we don't see, you'll see a little bit of this, but you just don't see the same amount you see in the rest of the country.

37:41And it's really welcoming and it's really localized. So we spend a lot of time community by community because real estate's a very localized business. So I know you see a lot of this blowback nationally, but we've really focused in areas that want us to be there. They want this economic benefit and we've built a really great reputation for ourselves. Does it make expanding to other states more difficult? I think it makes us want to expand more in the states that we're in. And that's really the path that we've been on is we've started building power generation for the states that we're in. We're in North Dakota.

38:11It's got the second largest oil field in the country after Texas. So it makes us want to expand more in the states that want us there. Right. We want to expand more where they want us. But your 2030 target is three and a half to four gigawatts. All right. We're talking about credit. You're saying it's not that much of a concern for you. We're talking about moratoriums. I don't know. It just seems to me that there are a number of gating issues that might not have existed 18 months ago. You still are confident, though, in that target, which is only a little less, a little more than three years away.

38:40So as long as we have the demand, David, I'm comfortable in that target. Again, we've done all of the steps to set ourselves up to be able to execute specifically that state. Right. Again, it's a huge amount of net gas. They have a gating factor of generating, producing oil because of the gas. There needs to be more gas. There's a new pipeline coming out of the state that we're working on. So we have all of the factors for us specifically that I think is a big advantage for our company versus and we're really the only company building in the state. We're not one of three or 400 developers in the state of Texas or in other states.

39:10So we have a really unique set of circumstances for applied digital that will allow us to do that again, assuming demand. Do you have pricing power still on future leases? Yeah, the pricing power has been robust. The demand picture is extremely robust. You know, I've been in this really since the beginning, and we've seen waves, and I know everyone's really hyper-focused on the waves now, but this feels like the third one to me, and I don't think a lot of people would say that because no one was as focused on it as they are now. But it feels like kind of the third time we've gone through this, but demand from all of our potential customers and current customers remains extremely robust.

39:46Yeah. Finally, though, we're looking at a stock that's down 30 % in a month. You made the point right at the outset. You're differentiated. You're not a neocloud, more of a real estate developer. That said, you seem to be getting lumped in with the entire group. I think everything trades with the group right now. I'm not a stock person, but, you know, all of them seem to trade almost like one stock. And so I think over time, as we continue to execute and we put these facilities online and you're already starting to see it in our results, you'll continue to see it in our results, there will be differentiation.

40:15Is there going to be consolidation? You know, there's definitely opportunity for consolidation. it's been hard for me to look aggressively at consolidation because the organic growth is just so high. And typically when you see consolidation in any industry, and we've seen it over cycles, usually happens when that growth slows down and then people are looking for those synergies when you bring companies together and cut costs. So it's something we're seeing a lot of projects come our way that are having a problem. There's a lot of things that are getting stalled out that I think we're going to have an opportunity when it comes our way.

40:47But we're not really aggressively looking for those consolidation opportunities now. All right. Wes, always appreciate your willingness to stop by. Thank you. Thanks for having me. Wes Cummins from Applied Digital. Still to come this morning, some details behind Wall Street's latest AI tie-up. That's Marvell and Lumentum, one of the biggest tech deals ever. We talked to the CEOs this morning. We'll get you what they said later on. What to expect from Palantir tonight, according to what options are telling us when we're back in three minutes. Well, back to the data center in many ways here, of course, because this is a deal that we'll be talking about right now that is based on what these two companies are going to be able to do together in terms of selling into the data center as a result of the rise of optical technology in terms of the way everything communicates within the data center.

41:31Marvell is buying Lumentum. It's a deal we talked about, of course, last week. There had been some initial reporting around it as well, which did have the effect of sending Lumentum shares higher, at least briefly. But once we got the ratio last week, we told you it was going to be a low premium deal. It did end up being that, 4.5 times each Marvell share. And it is not getting the greatest reception at this point, and, of course, valuing shares of Lumentum far less than what they would have called the unaffected premium and the price prior to at least the initial reporting about a potential tie-up between the two companies.

42:04One key question continues to be, is Marvell buying something that is really a commodity in what Lumentum provides to the market but in short supply, or something that really has technological differentiation. Take a listen to Matt Murphy, the CEO of Marvell. While there's a discussion of a supply shortage today, there's a supply shortage across the entire global semiconductor and optical industry. Lasers is one of those. The reality is these light sources and lasers coupled directly with our proprietary semiconductor technology. So you're taking Michael and the Lamentum team, proprietary technology.

42:44We're actually going to create solutions around those that are highly sticky. And the reason that they're sold out is because the demand is exploding. And we don't see that changing anytime soon. But through cycle, the differentiated and proprietary nature of these products is going to be lasting, whether we're in a supply shortage or not. When it comes to sort of the arbitrage side of this, Murphy also went on to say he's confident they will get the regulatory yeses that they need. It's really not so much about the U.S. guys as it is about China, where this will also require regulatory review, which tends to be more difficult to ascertain.

43:22And it was notable they said second half, I'm sorry, first half of 2028 for a close. Right. Although he then responded by saying we've done a few big deals that has given us some aptitude for getting deals done. Yes. And I'm trying to remember what the environment was on that first big one. Was it just post-COVID? Yeah, I think it was or it was around the trade restrictions, the initial perhaps trade restrictions from the first Trump administration in terms of China. So they have had success there. We'll keep an eye on what is still one of the larger tech deals worth about 80 billion in equity right now based on where the prices are, maybe a bit less than that when you do the math.

43:57What's the main pushback? Is it the strategic rationale, the price? Yeah, it's more. I think it's antitrust and timing. How long it's going to take to close. That's certainly one. And then the other is simply, is this a commodity in some way that they're buying, giving up so many of those shares from Marvell, which truly is viewed by its shareholder base, a couple of whom I spoke to this morning, as having differentiated technology in a number of areas. So more about what they're paying for Lumentum and whether it is sustaining in terms of its sell-through. Yeah, also the timing as far as the deal at a time where there's more scrutiny and questions around the AI trade and all this expected future revenue growth due to all the investment.

44:38We'll continue to watch that one. After the break, what options traders are expecting from Palantir ahead of tonight's results? Plus, much more ahead on Apple earnings. We're going to head live to Cupertino next hour with a look at what's at stake. Don't go anywhere. Palantir hanging on to its 2026 gains even after the tech volatility in October. The company reports tonight. Let's get to Oliver Rennick at CBO in Chicago. Look at some volatility signals. Hey, Oliver. Hey, Carl. Palantir has had a wild year after a 40 percent drawdown in the first half and then a 70 percent rally since. The stocks moved an average 10 percent after earnings the past two years.

45:15And options today are currently pricing in an even bigger move this time around, looking for an 11 % swing. The last report was the turning point for the stock with a 30 % rally after, but the positioning going into this one does not scream confidence. The put-to-call ratio hit the highest in a year towards puts after Palantir made new records in early October. And volume this morning is leaning towards puts again with over 50 % of volume tied to puts. About 20 ,000 were likely bought this morning compared to 12 ,000 calls that look bought. And including the biggest trade of the session, it's looking somewhat bearish.

45:55That was an opening position of 750 in-the-money, 250-strike puts expiring mid-February for a total$5.1 million. And at the same time, the most popular contract by volume was the 125-strike put expiring Friday. That traded 7 ,000 times. It goes for 33 cents a pop and needs Palantir to crash. 33 % this week. So for a stock that's often a retail favorite, just made highs last month, it's kind of oddly bearish positioning here, guys. It's going to be important. We'll have all eyes on it along with Apple tonight. Oliver, thanks. We'll talk soon. Oliver Rennick. Next hour, the CEO of a snack food giant, Mondelez.

46:35We'll get his read on consumer spending following some positive results. Shares up a percent and a pretty good tape. Dow's up 560. We'll be right back. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

47:04Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on the Street disclaimer. Hey Fidelity, how can I remember to invest every month? With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs. Oh, that sounds easier than I thought. You got this. Yeah, I do. Now, where did I put my keys?

47:39You will find them where you left them. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC.