11AM Hour: Box CEO on AI, Meta Muse Gains Popularity & Oil Market Outlook 9/22/26

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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. That was the president. A fairly comprehensive speech to the U.N. General Assembly covering Iran, Venezuela, Greenland, Cuba, Mexico, even a couple interesting wrinkles on AI, which he now calls SI or super intelligence, which he says that the United States is going to encourage and we're not going to stifle was the word he uses.

1:19Innovation around artificial intelligence says we're going to use the Department of Justice. We're going to watch it. but didn't sound like he wanted to sort of make any kind of agreement or international framework when it comes to slowing down AI, says, called, you know, repeated that it was like the hoax of climate change, he said, or, you know, the fear mongering of other major things that didn't come to fruition and said, we are winning against China and others and we will continue to win. I'm pretty much restating his case that we've seen him make on True Social, in interviews and others about how the U.S.

1:55is not going to slow down. We've got to win. Also amplifying his previous comments about Iran, big decision to make. Do I cut a deal with them or, in his words, annihilate them? Do I drive them into hell, saying that the midterms are not part of his calculus? Let's bring in Megan Cazell at the White House. Get your reflections, Megan. Guys, that's right. You were hitting on what I thought were some of the top points of that speech as well, really running through sort of a state of play on a number of different foreign policy issues. He was celebrating what happened in Venezuela. He talked about Cuba as well, saying Secretary of State Marco Rubio is leading there.

2:26He called them an absolutely failed state and a haven for foreign adversaries. And while that was happening, it appeared that the Cuban delegation stood up and walked out of the room. A little bit of color from reporters inside the room there on that. I thought on AI, he was mostly reiterating what we've heard from him on this being a hoax. And he said at one point, quote, the U.S. totally rejects any attempt to construct a globalist scheme to control for AI. So we've heard some of this already from him, but it is notable to see that he's saying this on this global stage from the floor of the U.N.

2:57in front of most countries of the world. The other part on Iran, also in front of everybody there from the U.N. floor, threatening to annihilate an entire nation. We've been hearing him make similar comments like that throughout the year already, throughout the past several months, as the war has been ongoing, but musing to do that, really a remarkable moment there, as so many world leaders looked on. He did say he has this big decision to make. He said that he thinks there will be a deal after the midterms, but not until then, guys. Yeah, they're waiting to see how I do in the midterm election, the president says there and said that, I mean, he threatened them for sure.

3:34Big decision to make. Thank you, Megan Casella. For more on the market setup, let's bring in Deutsche Bank chief U.S. equity and global strategist, Binky Chata. Binky, investors always have their eye on these geopolitical risks, especially right now with the price of oil. Did you take anything away from the president's speech or will you be looking for anything in the Xi-Trump meeting that you think would have a market impact? So I think right now, I mean, clearly, you know, lots of people are here in New York. And so the potential for, you know, making some diplomatic progress is there. But other than that, no, I would say, you know, the biggest issue for the market is really now Q3 earnings, I would say.

4:19So it is earnings. I mean, it feels like oil and sort of where we stand with AI have played a bigger role because earnings have been fantastic. And yet the market hadn't done much really since June. Sure. You know, what I would say is if you look at the last two quarters, we had basically a range bound market that then saw basically during earnings season, you know, a strong rally. We've done that two quarters in a row. In terms of the first condition, it is fulfilled going into Q3 earnings. We've been in a range. We've just moved from sort of the bottom of range towards closer to the top of the range.

5:02But we are still very much in the range. I would argue, you know, earnings are basically the anchor for equities. I mean, there's parallels with other periods, for example, in the early 1960s, where we had a lot of social issues, a lot of domestic political and geopolitical events and risks materialized. And yet, you know, the equity market basically continued to climb. And it did that actually exactly on par, basically, with the rise in earnings. If you fast forward to where we are today since the pandemic, it's a very, very similar dynamic. But if you look at where equity prices are, as you just said, you know, they are well short, basically, of where earnings would suggest we should be.

5:56On Q3 earnings, we are short by about 7 percent, I would estimate, and Q4 earnings by 15 percent. And of course, Q4 earnings, Q4 is just around the corner. So I would argue it's a very, very good setup for equities. Positioning is modest. And so what we're likely to see is going really from range to range as we did in the last two years. I do wonder, though, Binky, whether or not this rollover in industrials, certainly in consumer discretionary, and today in financials, are they providing any tell for you about the macro going forward? I would say no. I mean, I think positioning is very, very, you know, cautious, jittery, jumping around.

6:41So I would not make too much of the moves. I think it's really, you know, getting set really for earnings season. And, you know, we're looking for something around 30 percent growth. So all the calls really for acceleration, I'm sorry, for deceleration are not necessarily really happening. And if you look at the consensus estimates, I mean, they were flat last week, but they continue to climb. Company guidance says they should continue to climb. And of course, the bars for the last two earnings seasons were very, very high. And yet we got, you know, 68 percent beats on the aggregate. it. What is underpinning that?

7:24I mean, is it productivity from AI? The earnings? No, I would say. Yeah, the 30 % growth you're talking about. The 30 % growth. So if I take Q2 to start with, we had what we measure as basically 34 % growth. We take out a lot of the one-off positives. Many people keep that in the numbers, So they have higher numbers. But if you break up that 34 percent, half is coming from AI and its beneficiaries. The other half is coming from the rest of the S &P 500. So it is very, very broad based.

8:06And in terms of, you know, the rest, I would say what I would highlight is really the, you know, long awaited basically bounce in manufacturing, which, you know, the ISM is a good measure. Below 50 for three years, you know, went vertical in February and has basically continued to go up. The ISAM manufacturing is the best cyclical indicator for U.S. earnings historically. And it's kind of reasserted itself. And that's why we are getting it. So we have an AI acceleration, but we also have the rest of the S &P by running earnings growth picking up. Thank you for coming on, Binky. Appreciate it. It was good to talk to you.

8:51Reiterating the bull case, Binky Chata, Chief U.S. Equity and Global Strategist for Deutsche Bank. Let's get to energy as well. The president spoke about oil at the U.N. General Assembly a few moments ago. Take a listen. I call on all nations to join us in enforcing the complete economic isolation of Iran until they stop their attacks on commercial shipping, relinquish their nuclear ambitions, and cease their support of terror. If we stand united, we will soon see a world free of the last 51-year menace of Iranian terror, and oil prices will come plummeting down even lower than they were. at the start of the conflict.

9:32Joining us to discuss this morning, B of A, head of commodities and derivatives research, Francisco Balsh is with us here at Post 9. Great to have you back, Francisco. Thanks for coming in. Is it too much to hope for a bilateral this week? I kind of think so. I think there's been a lot of tensions building up in the past few weeks. We've seen the east-west pipeline, saw the attack. We've seen the Houthis making progress in Yemen. And of course, the last couple of days, yesterday, today, we've seen Ukraine, on top of the weekend attacks, accelerating their targeting of Russian energy assets. So it might seem a little early for diplomacy at this stage, but who knows?

10:14That said, we've had a nice few days of relief on Brent, although I think you did increase your forecast for what, the final quarter of the year? Yeah, we're just lifting our final quarter of the year staying around$100 a barrel, we think the damage to infrastructure is very extensive. Plus, frankly, it doesn't look like things are about to settle down. Plus, I think there's also a question about how sustainable the situation is with the U.S. spending all this money to try to keep vessels flowing through Hormuz, but at the same time, there may be attacks on vessels on the other side of the area, in principle, I'm going to be involved in that.

10:52Plus, of course, refineries are still a major bottleneck. So we really don't see a sign of relief. And to the earlier point that you were having with former guests is that the economy is doing well. So demand is picking up. You have industrial activity picking up. You have the harvesting season taking off. And you have the winter. And inventories are very low. So as inventory is going to draw, which has been the real buffer between early in the year and where we are today, and the economy hasn't suffered so much because of that, when that runs out, then we're going to see who's swimming naked here.

11:28So what is your number of how much Middle East oil exports are actually going through? Because I cited a number from Goldman Sachs this morning that said 80 percent of pre-war exports are actually still happening in the Middle East. Do you think it's that high? Probably not. I mean, there's been times we've seen that. The numbers range from 7 to around 12 million barrels a day. Pre-war, we're seeing around 20. And then, of course, we have the east-west pipeline, which has another four on top of that. So you don't need to be at 100 % to be kind of back to 100 % because of the rerouting through the east-west.

12:05But the east-west is now idle for a few days or maybe a few weeks. So I do think maybe you're getting 60 % to 80%, maybe somewhere in our range. But that still means inventory is going down. And at some point, we'll clean them up. And what's China doing with its imports at this time? Because that matters too, right? It matters hugely because China has been the one country that built inventories for years, preparing for a potential eventuality like the one we've just gone through. And the Chinese have tapped their inventories. We've seen them probably bringing down their inventories about 10 % in the past six months.

12:43And now they're starting to come back into the market, which is another reason why we've seen the prices of crude oil for delivery into Asia catching quite a bit in recent weeks. Another reason to be a little cautious about the next few months. Now, remember, if everything clears out and we end up having a more peaceful outcome, diplomatic outcome, diplomacy wins, we are going to have a market surplus in 2027. But again, we need things to fall into place. We need the U.S. and Iran to find some common ground. And again, I don't think that that's very likely at this point, which is why we raise our numbers.

13:20Right. Even if we get some short-term relief on diesel, what's refinery, what's the environment like right now? And can these kinds of prices last to year end? They can, and they can actually be higher, too. We think refining, we think diesel prices can be in the$1 ,600 to$1 ,800 range per ton in ice. Also, I mean, if you look at the U.S. price, it could be potentially$200-plus a barrel for a bit of time. And remember, again, we're going to winter with no stocks, and we got these things that we talked about. So at some point, if you run our inventories, you need to raise demand. You need to bring demand down, and price is the mechanism to do that.

14:01Until now, we just keep drawing, drawing, drawing in the hope that things get fixed. Now, U.S. refineries are making a ton of money. The reason why the U.S. economy is pretty insulated is because the U.S. is now the largest petrostate in the world. It's like a third of the world's gas, 20 % of the world's oil, massive exporter across the board, including petroleum products. So, of course, this whole thing is going on around the world. But for America, in terms of market share, the U.S. has never had it better in a way. So the U.S. now has the largest market share gain ever seen. So all of that's really helping beef earnings, helping beef the U.S.

14:35economy. Now, it's not helping the average American that needs to drive, but we are seeing also wages rising. And if you think about oil as a share of income or the price of gasoline in terms of wages, because there's been so much inflation, it's actually not that high. And that is also a reason why the momentum may just keep going and makes it a little difficult for the Fed also to rein inflation in. The nominal economy is just expanding very fast in this country. We're seeing the fastest rate of nominal growth in this country in 25 years if you look at a 10-year rate, which is why the Fed is actually high.

15:11Of course. One last thing. Diesel export ban, 90 days, or anything ahead of the midterms? I think it's too close, number one, to get that done. But also I think it can bring a lot of negative side effects. It can push up the price of gasoline. Switch to jet fuel or something. switch to Jeff, you can create an imbalance. It will be likely litigated, if that's right. So, I mean, we live in the era of litigation. So, I don't think it's going to do much at this point. It can just create imbalances. And by the way, the U.S. has remained the one place where you can actually buy your energy. Everyone else shut down.

15:51The Russians have shut down. The Chinese have shut down. You know, Mili shut down. I mean. And we know what happens when you get branded unreliable in the energy market. That's right. That's for sure. That's right. Francisco, thanks for the help today. Always good to have you. Francisco Blanche. When we come back, Box CEO Aaron Levy will join us. His first comments on the growing concerns around AI. Plus, we'll break down what to expect from MetaConnect tomorrow after shares rallied more than 10 % yesterday on that Muse news and adding a little bit more today. We'll be right back.

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18:19Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts. Welcome back. Meta stock rallying yesterday as the company's new AI assistant Muse gains popularity. That's ahead of Meta Connect tomorrow. And there's follow through today with the stock up again. Julia Borsten joins us with more on this story. It's been a good week for Meta, Julia. Yeah, that's right, Sarah. Meta's share is about a 1 % higher today after surging 11 % yesterday. That was one of its best non-earnings moves ever on bullishness over its Muse AI agent, which had faster downloads than ChatGPT in its first 12 days.

19:01Now, this comes ahead of Meta connect where tomorrow at 7 p.m. Eastern Mark Zuckerberg will discuss his AI roadmap addressing the key investor question of whether Meta can create the definitive consumer AI software and hardware. Plus, we're looking for more in its plans to monetize those AI investments. Now, Meta is expected to announce a camera free lower cost version of its Meta Ray band glasses, addressing privacy concerns while a lower price tag could drive adoption of this AI enabled hardware. Other key news to watch for at Connect, a roadmap for Meta's sophisticated augmented reality glasses, its next virtual reality headset model, updates on its next frontier level watermelon launch, and other potential corporate partnerships for Muse AI, building on its Shopify deal to enable checking out within the app.

19:52JPMorgan writing, quote, while it is still early, we believe that Muse has the potential to become the most widely used consumer AI application since ChatGPT, going on to say, we expect Muse transactions to be handled through agent-to-agent interactions. Then we believe Meta will be able to monetize on a take rate or commission model. But Bank of America with a buy rating warning the monetization path for Muse, including ads, subscriptions, and commissions, seems unlikely to be material before 2028. In the meantime, Zuckerberg is going to be trying to draw developers to build tools and features for that Muse ecosystem to make it as valuable as possible for consumers and then ultimately for investors.

20:36Sarah Carl. So is the thinking here, Julia, that this is the killer consumer AI app? That's certainly Mark Zuckerberg's hope here. There's been a lot of speculation about how much of a player meta really can be in this AI ecosystem. But once they launch Muse and you can see the fact that they already had this mass adoption of all of their other apps and could use that to drive adoption of Muse. There was this perception in the past couple of days that, hey, looking at these download numbers we're seeing for the Muse app, the fact that people can interact with it through WhatsApp, their prompts to download it through Instagram.

21:14they might just have the reach and scale to get people to really get comfortable with using AI in a way that maybe they wouldn't before. The question really, I think, Sarah, that's going to be key to watch here is about trust. Do you trust Meta not just to get you answers, but actually to act as an agent and have its muse agent do things for you or make purchases for you? And that's where things like the Shopify partnership come in to enable that kind of trust when it comes to things like transactions and credit cards. I'll tell you what's really I mean, among the biggest losers today, Julia, are brokers, Schwab, Ameriprise, Expedia, Intuit.

21:54I mean, those are businesses that ostensibly could be disrupted if people start adopting news or something like it en masse. Yeah, there's this question about who will agents hurt, right? If you can use an agent to go through your credit card bills and figure out what subscriptions maybe you're paying for, what monthly things you're paying for that maybe you don't need, maybe you could get Muse to unsubscribe for you. I think there's a lot of question asking here about which companies are going to suffer from this. Expedia, you mentioned, could you ask Muse to plan a trip for you or find the best deal on a hotel?

22:30that through this agentic piece of this comes in and could have much broader impact than just disrupting search. Yeah, fascinating. Really affecting, actually affecting financials broadly today. We'll see what happens tomorrow. Later this week, Julia Boorstin on Meta. Let's get to Oliver Rennick in the meantime at SIBO in Chicago. Look at some options activity. Hey, Oliver. Hey, Carl. Not unrelated. S &P futures hit highs yesterday, but some are saying it's alarmingly low. the number of individual companies making highs. The options market says just wait. Yesterday's explosive rally in the NASDAQ and S &P had market makers scrambling to buy upside calls, and the key leaders like Meta and Intel are not backing off today.

23:13Meta options volume is 90 % above the 30-day average. Intel is 40%, and traders bought twice as many calls as puts in both stocks this morning. Meta, in particular, very strong, traded more than half a billion dollars in options in the first hour of trading alone. $400 million of it was tied to calls out of the gate with the most popular contract to buy the 770 strike expiring tomorrow. That contract is not cheap because volatility is high right now because Meta is moving fast. Right now, market makers are giving Meta a 50 % chance it will touch a new all-time high by October 16th. They think Intel will make a record by October 30th.

23:54But the big development this morning as well is that bulls are making a breakout move in the summer. Semiconductor favorites now, too. Memory stocks like Sandisk up 6 % today, Micron up 3%, and DRAM up 2. Options say Micron will be the first to hit a record by November 20th, guys. Thanks, Oliver. Oliver Renick, watching some options activity. When we come back, SB Energy, the latest data center company, or at least energy company, to delay its IPO. We'll take a closer look at what that means for the broader market and the AI build out. And then later, Box CEO Aaron Levy joins us. We'll discuss the growing concerns around AI as tech leaders call for a slowdown.

24:32We're back in a moment. Call Her Daddy is brought to you by SoFi, the everything app for smarter money. If your money is scattered across five different apps you never open, you're not in control. Your money should move you forward. with SoFi. You get award winning banking, investing, borrowing and more all in one app. So you finally know where your money is. Make your first move with SoFi checking and savings, competitive APY, no account fees, a bonus when you join with eligible direct deposit. Terms apply. SoFi Bank and a member FDIC. When you're ready to invest or pay off that debt, everything you need is right there.

25:11As a SoFi member, you get access to SoFi Wealth's world class financial planners to help you know what to do next. Get started today at SoFi.com slash callherdaddy. SoFi, get your money right. This is a paid advertisement by SoFi Technologies and is not intended to be financial advice. 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? You will find them where you left them. Investing involves risk, including risk of loss.

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26:35Our Leslie Picker has some details. After whole tech, Leslie, raising some eyebrows once again. Yeah, you're right, Carl. Look, noise around the data center market is one thing, but perhaps the true test is when that noise starts to affect the capital market. So far, we've gotten some mixed signals. As you mentioned, The New York Times is reporting, citing four sources familiar with the matter, that SoftBank-backed SB Energy is delaying its IPO. This is a company that develops, constructs, owns, and operates data centers, and it's reportedly seeking upwards of a$50 billion valuation in that IPO.

27:13Now, this is not exactly a pre-revenue company. SB Energy generated about$139 million during the first six months of the year, largely from legacy energy businesses, not data centers. But it had net losses of more than$3 billion over that same time period. SB Energy sums up its risks in saying, quote, we have limited operating history in data centers with none currently operational or substantially dependent on open AI and face challenges in personnel, labor and business management. So taken together, it's not too surprising that investors would take a pause here. However, the delay of SB comes on the heels, as you mentioned, Carl, of Holtec Nuclear, also seen as an AI infrastructure play, which blamed data center backlash on its postponement.

28:03But on the flip side is its peer, Westinghouse, which is on file confidentially. And we were able to confirm last week that it will be seeking around a$50 billion valuation in an IPO. And I separately asked Bruce Flatt about this last week because his firm, Brookfield, owns a majority stake in Westinghouse. And he said the biggest impediment to data centers is power. And that nuclear is a broader solve for not just fueling AI but upgrading grids nationwide. And the last thing I'd mention is that data center company, Nscale, disclosed its S1 on Friday. So it seems undeterred by some of the slowdowns elsewhere, guys.

28:43Yeah, I mean, my question is, is it actually a slowdown? It feels like demand hasn't slowed down and CapEx hasn't slowed down and everybody still wants tons of compute. It's, I guess, the political backlash, but whether that's having a real impact. Yeah, a slowdown in the IPO process, I should specify, Sarah. That's the key question here. I mean, in terms of Anthropics IPO, I'm told that the timeline on that has and continues to be somewhat fluid. You've got OpenAI pushing its IPO to next year, according to those comments, those recent comments from Sam Altman. So the slowdown is more in terms of the capital markets.

29:21The bigger question is whether the noise surrounding data center build out and development, whether some of the political backlash, does that change after the elections, I think, is the key question at least capital markets watchers are looking at. Does it kind of quiet down a little bit? And do you start to see more of a ramp up or a continued ramp up in some of these data center development projects undeterred by the political noise that's out there? Yeah. Finally, Leslie, I know you got Moynihan tomorrow, I think, right? Stocks down about 3 percent, JPM down four. And then some of the brokers today, Schwab down six.

29:58These are all multi-month lows. It's going to be interesting to get Brian's sense as to whether or not something's inflecting. Yeah, you're right. And it is a kind of broad-based sell-off today in terms of the banks. They've run up quite a bit, so it could be partially related to that. And then I do think some of these capital markets concerns filter through into bank stocks. You do see there was so much excitement kind of going into this part of the year surrounding the big pent-up pipeline for IPOs and what that means in terms of earnings for the big banks. because after the IPOs, you get follow-on activity, you get debt for a lot of these companies as well, and that's a big boon for the banks.

30:40So if you do start to see some of this anxiety trickle through into the capital markets, you see more and more deals get put on pause, then that affects the expectations for Q3 for the banks as well. Yeah, that was quite a warning that had the ripple effect last week from Moynihan about the trading volumes. Thank you, Leslie. Leslie Picker. Still ahead. Amid growing AI anxiety and calls to slow down frontier models, we're joined by Box co-founder and CEO Aaron Levy. While he thinks open-weight AI models will drive more innovation and lower costs, he'll make his case when Squawk on the Street comes right back.

31:18Time now for a news update. Contessa Brewer has it for us. Morning, Contessa. Hi there, Sarah. No charges in the death of a Mississippi teenager that sparked widespread speculation on social media. A Mississippi grand jury has decided that 18-year-old Nolan Wells, who died, will not face, there will be no charges in his death. He was found dead off the Gulf Coast on the 4th of July, two days after a boating trip with friends. Forty-three witnesses had actually testified before a grand jury, which determined there was no evidence of criminal conduct. Still, Wells' family is demanding answers because two examinations could not determine how Wells died.

31:55DoorDash has agreed to pay$131.5 million to settle allegations it underpaid New York City delivery workers, or paid them late. The company acknowledged mistakes in its payment system. The agreement ends a dispute with the city's Consumer Protection Agency. We don't yet know how the workers will be compensated. And the FAA launched an$875 million AI-assisted system aimed at reducing flight delays. It's called the SMART Initiative and combines weather, flight schedules and airport capacity data to identify congestion before it develops. The first rollout covers Washington, D.C.'s three major airports.

32:33Officials say the software will advise planners while human air traffic controllers remain in charge. Big update there, Carl. Yeah, after a tough day for airlines, airports in the Northeast yesterday, Contessa, thanks. Contessa Brewer. Still ahead, the CEO of Box will join us. will get his take on these growing concerns around AI, or should I call it SI safety, when we're back in a minute. Take a look at shares of Box, up more than 8 % year to date against the IGB software ETF. The outperformance coinciding with a slew of AI-related hacks and cyber attacks, perhaps prompting investors to rethink software's role in preventing security breaches.

33:10Joining us now is Box CEO Aaron Levy. Aaron, welcome back to the show. It's good to have you. Yeah, thanks for having me. We'll talk about Vox in just a moment. I just wanted to see where you come down right now in the debate about how you balance the need for AI safety and oversight with also winning the race against China and proceeding with innovation that we need. Yeah, I actually I think the good news is that there doesn't have to be a significant tradeoff between those. You won't win the race against China if you don't have structurally very robust AI systems. Enterprises won't be able to deploy AI if they don't believe that those systems are safe, aligned to both the values and the goals of what workflows they're trying to execute, and then ultimately not, obviously, hacking systems and kind of any risk of going rogue, etc.

34:05So I think that, you know, Dario's post about a week and a half ago that really kind of kicked off the maybe modern version of this conversation, I think, was quite sound. This idea that we need to invest in, you know, much better security, much better testing of these platforms, much better robustness of these models. And while that might lead to, you know, in theory, a slower progress, ultimately, it's the only way to deliver really strong and safe AI. And I think the ultimate goal is how do we make sure that AI can diffuse across the economy, but is built in a way that is, again, very robust and very safe for all customers to use.

34:43And when you say we, do you mean like the U.S. government or the companies themselves should do this? Well, I think ideally as much progress can happen within the industry itself. I think that there's a lot of best practice sharing that occurs between these companies. I think we need to continue to push those best practices forward. There's a lot of conversation around how do each of the labs test each other's models? How do we have better practices in the safety community around how we evaluate these models as well as drive to greater alignment on how do you make sure that they're safe and kind of working within the goals that we set out?

35:21On the government front, I think it's still a very kind of delicate balance right now. We want to make sure that we're having strong progress in AI development and we don't want to sort of accidentally veer off course and slow things down right before we are really able to see the real breakthroughs with AI. That would actually definitely impair our competitiveness versus China or just lead to not actually getting the level of breakthroughs that we need, where AI will then be extremely useful across the economy and society. But I do think the government will inevitably get more involved simply because of the gravity of the situation and how powerful this technology is.

36:00It does sound, though, Aaron, like it's allowed Vox to blow past its growth targets. Yeah. Yeah. So for us, and I think this is true of a number of software companies you've seen, Salesforce as an example, Atlassian, Snowflake, many others, where AI agents coupled with our platform actually end up making our platform much more powerful. than it was before. In the case of Box, for instance, we enable enterprises to manage their unstructured data, so contracts and financial documents and research materials. And all that data contains information that has traditionally been locked up in that data where you haven't really been able to kind of parse what's inside of it unless you look at each file one by one.

36:40AI agents actually let you now work with that data at a scale that just wasn't possible before. So we're unlocking all new use cases as a result of AI. Now, obviously, keeping that data secure is incredibly important. So that's another vector of opportunity that we've seen, which is how do enterprises ensure that they can protect their data in a world where agents are sort of running around accessing and working with their systems and tools. But we are seeing increased growth as a result of AI. And so we're incredibly ecstatic about the market potential. And I think that's going to be true of other systems of record and core platforms as well.

37:13What are you hearing from the enterprises right now? I mean, are they asking for more powerful agents? Are they asking for help understanding the highest return on investment? Are they concerned about security and stealing of data, as Alex Karp noted last week? Yeah, how about all of the above? This is, I mean, and I can list about 10 more topics. So, you know, I regularly get to have the opportunity to, you know, host dinners with CIOs and CEOs kind of across a range of industries and every topic you just mentioned, in addition to, you weights versus closed weights, post-training your own models, how do we sort of re-engineer our business processes and workflows to be able to use AI agents.

37:54These are all the topics, I think, on the minds of every, again, CIO or technology leader or even CEO across the economy. I think you're going to see we're entering the period which is really the AI diffusion era. So AI model progress is going to continue unabated. I think even this week will be a great example of all new breakthroughs on the model front. and you're going to see just incredible sort of escape velocity on AI progress on what these models are capable of, but we still need a layer that can bring the power of those models into the real workflows in the enterprise. And this is the opportunity for the applied AI layer that could be a product like Box, but it could be, again, Salesforce or Atlassian or new startups like Harvey or Cognition or Factory or Decagon, Sierra.

38:36So all of these companies that are taking AI and allowing that AI to diffuse into the real world, I think you're going to see years and years of the evolution and adoption of those kinds of platforms that allow you to, again, bridge these breakthroughs from Silicon Valley and beyond into the real world. But these are the kinds of topics that I think every IT and technology leader is paying attention to. And then on the consumer side, I'd love to get your take on Muse because we're already beginning to see some disparate reactions from Amazon, from PayPal, from Shopify. What do you make of it in this early inning?

39:14Yeah, I think this is Muse and this new form factor, and consumers are going to go through this journey, which is, wow, like another completely new way to think about AI, which is it's not you're just chatting back and forth with an AI system giving you answers. You can actually sort of send out a task to an AI agent that goes and does real work for you. So it'll complete your shopping cart. It'll get the food delivered to you that you're looking for. It might go out and sign you up for tickets for something that you needed to go do. I did this a couple weeks ago with our kids. And so all of a sudden, you now have personal agents that can go out and execute work for you.

39:55This is going to change how we interact with most forms of commerce in the future. If you obviously believe in this general trend where you'll just say, hey, I'd like you to go and get my next week's groceries. and all of a sudden, a couple hours later, those get delivered to you because of all the work that the agent did in the background. So this has the opportunity to both expand, I think, a lot of the commerce activity on mobile and through these agentic systems. It is going to mean that different companies will respond in different ways. I think this is going to be a very dynamic space. But we're basically two weeks into this entire topic, so we're still very early in watching how the industry is going to play out.

40:35But, you know, Muse and Meta are certainly in fantastic position right now to capture this opportunity. Yeah. These guys think I need it very badly. Aaron, it's always good to have you and have you weigh in on all the hot topics in tech. Thank you. Good to see you. You too. Aaron Levy, the CEO of Vox. Kind of tied to this AI trend is McDonald's. We're going to talk to Chris Kempchinski tomorrow, 10 a.m. Eastern Time on their Investor Day and how some of these innovations are affecting throughput and ordering and all of that. We're back in a minute. Welcome back. Look at the home construction ETF, ITB.

41:12It's jumping today. It's on pace for its best day in a month. DreamFinders Homes, Lenar Builders, First Source, KB Home leading the ETF higher. KB Home also set to report earnings today. And, of course, the news that Berkshire Hathaway purchased more than$200 million of Lenar stock over three trading days. It's just over 10 % of the home builder, certainly helping that stock jump 4%. And then you've also got rates coming down a little bit. This has been a trade that's really been tied to the high rates with 30-year mortgage rates back to 7%. Yeah, we mentioned it with Santoli earlier this morning.

41:45I mean, Berkshire buying a home builder, Taylor Morrison, and now a piece of another. They usually don't. They make long bets. And maybe this is one of them. And a lot of people do think that these stocks have been depressed in the face of rising rates. Meantime, overall market, when Dow's down 300, we've given up most of the gains on the S &P 500. I'm still watching for any developments that will help push oil prices lower. And then, of course, MAG7 back in charge. Yeah, we did have a nice drop in West Texas, but that's now gone green. We'll watch it as we work our way through the week. All opinions expressed by Squawk on the Street participants are solely their opinions and do

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