11AM Hour: EQT Chairman, TD Bank Vice Chair & Anthropic Gets Philanthropic 10/19/26

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0:44Good Monday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with David Faber, who stayed with me. Lucky me from the New York Stock Exchange. Carl has the morning off. Today on the show, TD Banks' Jeff Solomon is with us as Wall Street looks to bounce back from last week's tech and AI jitters. Why he says focus should now be on the economic return from the AI CapEx boom. Plus, Gartner predicting that 80 % of neocloud companies will cease operations by 2030. The forecast behind that report will join us and explain this hour. And could Anthropics shake up the global philanthropic landscape, their new move?

1:17The AI giant launching a massive benefit fund with 5 % of its shares. We've got all the details for you. First up, though, in the markets, a little bit of a rebound here in the S &P 500 and the Nasdaq. S &P up 7 tenths of a percent. The Nasdaq up 1.5%. It's being driven by Amazon and Micron, AMD, NVIDIA. A lot of the stocks that got hit hard last week amid the AI sell-off. Though Meta, Netflix, both are down ahead of results. It's really information technology, consumer discretionary and communication services. All the other sectors are down. But that shows you just how heavy of a lift those groups do right now, how big those market caps are in this market.

1:53Yeah, including the likes of an NVIDIA and AMD, which are up. Let's let's focus on that rebound in tech today. CNBC senior markets commentator Mike Santoli joins us here at Post 9. You know, we start off every morning on Squawk on the Street. Right now, me, Jim and Carl typically talking about core weave. The stocks are about 3 percent. Not sure it's leading here, but at least giving some some comfort. It's not leading. It's but it's not worsening. And I think it's essentially a pretty good time. I think core weave and Oracle to a maybe even more important degree are the sort of linchpin between are we going to continue to finance things the way we have before?

2:32and is financial condition tightening going to have a broader restraint on what markets can do? I do think Thursday and Friday, the intensity and the messiness of some of that intraday selling, the sort of real rapid reduction in risk that we saw, grab for put options to hedge, and all the rest of it did create a tense tone going into the weekend. And we're exhaling a little bit here because if you don't see a lot of forced selling at the open and it feels like maybe credit spreads can stabilize a bit, which they have this morning, then OK, let's figure out if we can position for earnings. I do think you've repositioned in terms of the big money in a much more defensive fashion.

3:08And so you have the S &P right here. It has not broken this trend. It's been very, very tough to get out of this range for months. But we're just kind of playing with the 50-day moving average. It's really all the action is happening below the surface. NASDAQ 100 bouncing today. And it has to kind of bounce here to preserve this trend. See, it's kind of sitting on that shelf that goes back to May. So we haven't really made much headway. And I think it's the answer to everyone who says, hey, earnings are going to bail us out. And they might because expectations and valuations are down. But earnings were amazing in the second quarter.

3:39And we're kind of trading where we were before those numbers came out. So I think that the fact that the biggest contributors of rapid earnings growth are exactly the areas in the AI food chain that we're reluctant to put a heavy valuation on and extrapolate earnings in years to come creates this interesting fix for the market. Final thing I wanted to point out, MAG7 and S &P Energy, same chart for two years. So it sort of shows you there's been kind of a flip in terms of where people have managed to find the absolute upside this year. But isn't it just that bond yields had this big backup and that, you know, no matter how good earnings are, that's going to stand in the way of, first of all, the outlook on the economy, on corporate America, on borrowing.

4:22Totally. There was always this mantra that it didn't matter for rates for the AI trade. But last week, it showed it mattered. It definitely did. And look, I think there was a story for a while which said, you know, Treasury markets repricing growth. That's mostly good news. And credit spreads remain tight on top of that. That's fine. But then credit spreads started to act up. And so it showed you it's getting into the cost of capital. I think it's prudent to figure, and I said this like a month ago, just assume that the high in valuations is in for this cycle. And so earnings kind of have to do most of the work, given where rates are and all the rest of it.

4:52And, you know, there's the fact that we are so reliant on this one theme for most of that earnings acceleration. All right, Mike, thank you for the setup. As always, Mike Santoli for more on the market. Joining us at PostNine, U.S. Vice Chair of TD Bank, Jeffrey Solomon. Welcome back. It's good to be here, Jeff. So how are you feeling about everything after the kind of digestion that we had last week? Well, so, look, I actually feel pretty good about things. Like, I think Mike is right. You know, the market is going to wait to see what happens with earnings. And I'm actually more bullish on long-term earnings than I've been in a while, in part because I think we're finally going to start to see the productivity gains from AI that we've been hearing about for a long time.

5:31You do? I do. That's a big question, right? How fast they come and are they big enough to justify all the spending? Yeah. So I actually think so. Everyone has to remember, like enterprise-wide AI is still relatively new. Most enterprises haven't figured out how to incorporate AI. It's less than 12 months. I'll just say at TD, we had so much work to do to bring AI into our environment that we're just now beginning to deploy it on use cases more broadly. And so what you're starting to see is enterprises are beginning to figure out how they can use these tools to increase their productivity. We just did this report at TD Cowan.

6:04We surveyed 689 purchasing managers. Each of them, so 92 % of them have said that they have deployed AI or used sort of like Microsoft Copilot or Gemini or ChatGPT over the last year. And what they're saying is that they expect somewhere in the general vicinity of sort of massive ROI gains. Like 75 % of them said they have massive ROI gains on whatever processes that they're already deploying. So we're having a conversation not about chatbots anymore, which has been really interesting, but actually how workflows and processes are changing inside enterprises. And we expect that that will translate into meaningful margin expansion for a lot of companies across many industries.

6:48And we're going to start seeing that now. Yeah, I mean, I think it's going to, as we head into 27, yes. I mean, I would just say 75%, 34 % said that they had deployed agentic AI already. They expect to deploy agentic AI, 75 % say they expect to deploy agentic AI by the middle of the year next year. And we're already starting to see, like, when you think about one, two, three percent margin increases for a lot of companies, you know, one of the groups is like health care and insurers, just to pick one. You know, they expect to be able to make somewhere between 80 and 160 basis points of margin improvement just from AI deployment in their sphere.

7:30Like that is these are huge numbers when you talk about the entirety of the economy. And so I'm more bulled up now on this concept. You call me like A.I. Jeff. Yeah, because I see in my own life how really diving in on and using these tools, not just to chat and query and things like that. Yeah, I've been doing that for a while, but how to actually process, reengineer things in my own life, both professionally and personally. It's going to be huge. And I'm so more bulled up on that. Bigger picture, obviously. And you've been involved with the capital markets for a long time. I mean, the numbers that we've been talking about and seeing every day, whether it's a bond offering or even an equity offering or a private raise are just astounding.

8:08Given what you've just said, you think that they're going to generate the required return to justify? Well, I think they're going to have to. And by the way, not surprising that we see higher rates. So anytime you see higher rates like this long term twos, even twos and tens, like you just look at that, you know, you the equity market is going to command higher rates of return in order to be able to justify the valuations where they are. So I actually feel that that listen, the last time we had a productivity boom like this and it even comes anywhere close to this would have been the Internet.

8:38And where were rates at that? And we had some boom and bust cycles. Let's be really clear. So it's not that you can't have a readdress. We had a bust that took a lot of companies out of business. Obviously, most of them did not have business models that made a lot of sense. Right. So the difference there is also a lot of them were over levered and were choosing to not to non-dilutive financings that ultimately came back and sort of bit them in a bad place. Laying fiber that ultimately is not going to be used for any period of years and therefore not generating return. But I feel like, you know, you just again, I'm just looking on a personal level.

9:15This is anecdotal. But like, what am I spending now personally on AI versus what I was spending last year? But the enterprise opportunity is larger than the consumer opportunity. So I am curious back to what you're seeing at the institution. So just to give an example, in 2025, there was three and a half billion dollars spent on sort of, let's say, AI enterprise wide. We expect that by 28, that'll be 54, 55 billion. That's our estimate at TD Cowan. That is huge. These are huge shifts in terms of the way that people are actually, you know, thinking about deploying AI. So I just it's. But now the question is, with all that spending, a lot of it has to be debt financed.

9:55And in a world of rising interest rates where the Fed is expected to keep raising rates and we have higher inflation, is that a sustainable model? Yeah, so I'm good with the higher rates on this one because it actually modulates the amount that people can borrow because they're going to have to service the debt. It would be in a very different place if we were borrowing at 1 % or 2 % because then they'd be overborrowing, right? In other words, what people don't seem to understand is you look at your debt service as the primary gate on how much you can borrow, right? You're saying it's keeping us from having some sort of bubble.

10:26It puts a lid on how much people can borrow. So if we were, if the Fed were behind the curve, then people would be borrowing a lot more money because they could service a lot more debt. But now with rates kind of where they are, people can't borrow as much. Even though these numbers are staggering, they're staggering because we just haven't seen them before in an absolute sense. On a relative sense, when you think about the size of the company. Yeah, no, that was my point. Yeah, no, I understand. Of course, the size of these companies is also the likes of which we've never seen. Right. We don't typically see$5 trillion companies.

10:53Right, but also when you look at the growth of these companies, when you look at the staggering growth and revenue of these companies and their ability and their software companies. So it's not like they're going to be having to build massive infrastructure. They've all done these really incredible things to finance their big CapEx, the big capital expenditures. Those are being done off balance sheet. So the data centers, the hyperscalers, like the Mag7 is not owning a lot of those. That sits with the real estate developers. That sits with banks. It's a very different model. It's in the form of lease payments instead of CapEx itself.

11:28But that means that most of the borrowing is going to go to develop frontier models. But none of this takes away from the idea that maybe this is a bubble. I mean, again, we had a bubble with the period you were just discussing. It didn't mean that all that fiber didn't ultimately go to great use and that there weren't significant advances made from all the capital that was spent then. But it did mean that a lot of the companies that spent it went out of business. It did. And it doesn't mean right now that the capital is not being put to use that is going to necessarily justify the return anytime soon.

11:57Yeah. Although, again, I think that we're looking at speed here. The rate of increase of the deployment of this technology is way faster than the growth of the Internet. Like, we had so much infrastructure to build to actually get to 2008 with the launch of the iPhone. We started building that in 1998. It took a decade. It is not taking a decade to build the infrastructure on this. Do you see the results in TD, though? I mean, we just had a round of bank earnings results. Did we see margin improvement because of productivity? It's a little early. It's a little early to see it, especially in financial services.

12:33Financial services are laggards in terms of the deployment of AI, in part because we have so much to be concerned about with making sure the data sits within our four walls. But I do think you will see improvements. Like, obviously, I know what's happening and I understand what the use cases are likely to be. But just look at customer service, for example. Customer service calls are the most expensive things to do. Our biggest gating item is training clients and customers to use AI-enabled tools to feel comfortable with them. We would prefer if they did because the cost associated with servicing those is far less.

13:07I'll give you one case in point. I decided to download Muse, which I don't know why, but I did it. I'm so into it. It's so cool, right? Oh, wow. This is beautiful. I told you to do it. Now you did it. And I did it. Okay. And now my whole life is a bad idea. You've got to be a little careful. All right. So what did you see? So what I did, I just, I'm sitting at dinner with a friend, with some friends, and I said, I'm downloading Muse. He said, ask Muse to reconfigure or re-optimize your cell phone bill. Now, I have like 20 devices. There's six people on our plan. It's a lot of stuff. Stuff I would never do.

13:43I will never take the time to do that. in seven minutes, it saved me$120 a month. Really? Yeah. By the way, it didn't change, and literally didn't change one level of service, confirmed with the AT &T chatbot everything that was his, and it basically said, are you good with this? Click, yes, I went back to my dinner. That is an insane. What if every AT &T customer did that? Well, that would be bad for AT &T. Yes, except guess what? But the service model that AT &T, I would have had to be on the phone with an agent. I would have had to talk it through. They would have had to do all this querying.

14:21None of that happened. The Muse bot talked to the AT &T chat bot and figured out how to optimize my cell phone bill while I was at dinner. You can do that with any service. You can do it. You can see everywhere that you have subscriptions, places you didn't even realize, cut that. By the way, I also set up an agent to look for specials. So if anybody is adding a special, like if they're going to do something special, if I do this, I get this. Now it sends me notices. Hey, if you do this, you get that. All right. This is where we are. And I know I sound like AI, Jeff. It's real, Jeff. I'm still here.

14:54I do think it's still important to do things in person. It's not taking that away. But like the stuff, the administrative tasks and things are just going to go by the wayside. And that's why I think the productivity boom, I think we're right at the front of it. And you look out in the next five years, it's going to be incredible. It is. Another good one is you can have it check airline tickets for every day before your flight to see if they drop the price. I like that. And then alert you. I like that. So you went with views, not instant. I went with views. I know we are out of time, but I'm going to the Steeler game in Paris this week.

15:22I have a bot just looking. I know. I have a bot just looking. For the cheapest flight? No. I hope you have your flight. I'm good on the flights. Tell me the security issues and what do I need to know. So right up until game time, can you give me security alerts and warnings and a bunch of things like that? Like just running into the background. Jeff, thank you. All right. It's good to have you. Bold up Jeff on AI. Jeff Solomon. AI, Jeff Solomon. Still ahead. Anthropic is committing a 5 % stay in the company to a public benefit fund. We're going to break down the implications of that. Plus, we'll speak to Gartner's chief forecaster, why he says 80 % of neoclouds will cease operations by 2030.

16:01Squawk on the street. We'll be right back. 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. Vantage Score 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 Vantage Score 4.0.

16:41With 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. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much.

17:24Don'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. Welcome back. Anthropic committing a 5 % stake in the company to a public benefit fund. Kate Rooney joins us with the details. Kate, so where does it go? Hey, Sarah. So as part of this mega IPO, as you mentioned, Anthropic is setting aside a portion of its equity for a new charitable fund.

18:03So it's going to be starting with a 5 % stake, which could be worth at least$50 billion, could be closer to$100 billion if the company debuts at a$2 trillion price tag, which is at the higher end of what we've been hearing. It is on track for a November listing, according to multiple sources. Anthropic did hold its Investor Day out here in San Francisco last week. Anthropic also says it plans to contribute more equity as its valuation grows. So they note a 2 % increase for that public fund on every 50 % jump in valuation. This is also a wholly owned LLC. So it's not really a traditional charity.

18:38Anthropic did say it won't be used for lobbying or political donations. On one hand, guys, it does appear to be a move to win some public trust around AI. The IPO does come amid public backlash. We have seen it with data centers and some of the negative polling around this technology. The IPO is also about to create a record windfall for these founders and early employees, which some say could also add to that negative sentiment. Anthropic did say some of the funds will go directly towards addressing the technology's economic consequences. So the fund, they say, could support workers displaced by AI.

19:11But the announcement is already facing backlash. Some are questioning why Anthropic would retain control of the money versus just giving it away directly. who had Elon Musk and former White House AI czar David Sachs, among those pushing back on that structure, saying that the shares should go directly to the public via Trump accounts. Musk is doing just that, pledging to give one SpaceX share, I should say, to every child in America. Next year does follow a separate pledge, guys, from the company president, Gwen Shotwell, to donate about two million shares through the Trump accounts program. Back to you.

19:47Kate, you know, just to remind people, Anthropic is a public benefit corporation, as is OpenAI. And they also have very different governance structures. I know that also has been a bit of a focus, but we don't know a lot. I guess we'll learn more if we ever see an S1 from Anthropic. But what do we know about this trust that includes, I think, these trustees like Ben Bernanke and the like and the power they have to replace directors? It's such a unique governance structure. I mean, it's a great point, David, and it's important, I think, as people look at potentially underwriting this IPO when we do get an S-1, that it is a public benefit corporation, meaning they have this dual mandate.

20:26It's not just a fiduciary duty. They have this duty to AI, basically, to say that they want to make AI for the good of humanity, which is sort of roughly what the other mandate is. They have this long-term benefit. I think it's called the benefit trust. So basically, they have the board, which makes day-to-day decisions, and then they have the board that basically oversees AI safety. They decide who is going to be on the board. So it's sort of this side board, which does include Ben Bernanke, and they are able to make these decisions and sort of be the referees on the side there. So extremely unique structure.

21:03And also, as we talk about the fund, it says, you know, whether it's where they donate, how much they donate, it is up to the board's discretion. So you really are putting these decisions in the hands of Dario Amadei on the board. You have his sister, Daniela Amadei, one of the early founders. And so that's part of the big question. We know basically everything I just ran through is all that we know about this fund. I mean, they didn't put out a lot of details. And I think those are the questions. Where are these donations going? What does this exactly look like? And probably too soon to say, given the company hasn't gone public yet.

21:35The other thing I would just mention is the question over dilution. So they don't say if this is existing equity or they're issuing new shares, but again, back to the board discretion, that is up to them largely. Interesting. Yeah, so much we're going to learn if and when we get that last one. Kate, thank you. Thanks, David. Kate Rooney. All right, meantime, Gartner recently releasing an AI spending forecast, which says the shortfall between revenue generated from AI and spending on its build-out could prompt 80 % of independent neocloud companies to cease operations by 2030. Joining us now to discuss is Gartner's chief forecaster, co-author of the report, John Lovelock.

22:11John, nice to have you. Got a lot of attention last week. Explain the math behind at least one of these headlines that I just shared. I know you obviously shared a lot of other forecasts as well, but why do you see potentially as many as 80 % of the neoclouds not being able to make it as ongoing concerns? Well, the asset base that is being built up through these massive spending on AI servers requires a certain amount of cash flow in order to meet a reasonable return on invested capital. We pegged it at 18%. And the revenue that we see being attracted to companies with a simple business model are insufficient until 2032.

22:53So in the near term, these companies are going to be under an asset crunch. Companies that are not going after the AI market with a simple revenue model are much more resistant. And again, we're not saying that these companies are going out of business. We are saying that they may seize independent operations. They may become part of the mergers and acquisitions and the consolidations that we're seeing as part of the current AI cycle. So I guess, you know, one of your key forecasts is the total enterprise and consumer AI revenue that can be attributed to AI data centers during the period. And again, we're talking through 2030 will reach no more than three point six trillion.

23:35Can you give me a bit behind that forecast? Why you see that number? What could change, by the way, in terms of that forecast, given we obviously have a few more years to go before we get to 2030? Oh, we do have several more years to 2030, and there's lots that can change. The numbers are basically talking to the idea that AI is not a market. It's a technology. And as a general purpose technology, it sprinkles on everything. It adds to every piece of technology that we're currently buying. It's salt. It's going to sprinkle on things that make everything better. So it becomes part of your software spend.

24:10It becomes part of your spending on PCs and tablets and laptops, Even your TV and your car will have AI included. The services that are being delivered by traditional consulting firms and managed services will have AI built in. So it is part of every piece of IT spending that's going on. And in fact, by the time we get past 2030, there really won't be any spending on IT that doesn't have AI at the heart or supporting AI. But, John, why do you say that your research indicates that AI revenue, enterprise and consumer, will be insufficient to basically fund it, to support profitable returns on the AI capex?

24:50We just had a conversation with Jeff Solomon at TD. Couldn't it be more bullish about productivity gains that are going to come across the enterprise and consumer from AI? We are bullish about some of those productivity gains, too, although a little bit more muted. but not all of that revenue floats down to the data centers, the people that are running the servers. We still have to pay the people that are making the PCs and the tablets and the laptops. We have to pay the people that are making the software. We have to pay the services firms. A portion of all of that money will flow down to the model providers and those model providers will be running on cloud-provided infrastructure.

25:26So it's a portion of all of that money that they get. that there's many people to feed as the money trickles down to the data center. Yeah, but I guess I'm just trying to think about this. All right. You know, you've got an open AI that has a lease agreement with an Oracle, for example, that might pay them as much as a billion dollars a month for access to the data center, for which Oracle has spent tens of billions to outfit with servers. What part of that chain are you saying is not going to work? We're not saying it's not going to work. We're saying at the moment it's insufficient. At the moment, we have more compute capacity than we have demand.

26:02And we have a lot of the tokens and processing power being given away in freemium solutions or as part of the ability to attract new end users adoption and to get sticky. So at the moment, not everything that is being used is being charged for. Once we get to the inversion, which is closer to 2030, where we actually have more demand than we will have supply, that's when things pick up and more money will flow into the data centers themselves. Until then, everyone in the AI race is running for a last man standing position. Pretty much every market the Gartner is tracking in our AI race is likely to collapse down to a duopoly.

26:42to providers getting most of the revenue from that particular market and the regular and everyone else in the market fighting for a niche position and living with a lower market share. So who's being the most overzealous here? Do you think it's the hyperscalers that are spending the money, the investors that are financing? Who do you think is making the biggest mistake? I don't believe anybody is making a mistake in the investment line. You have to be in a larger position in order to be that last man standing. We saw the same type scenario play out during cloud adoption in 2008, 2009. By the time we crowned Microsoft and Amazon, the winners of the infrastructure as a service race, they had massive investments and they were able to get 100 percent growth rates for a few years afterwards.

27:29The same scenario is being set up now. We have to have the investment now to be large enough to be one of the duopoly winners going forward. OK, John, to be continued, I have a feeling. obviously as the years go by here, but appreciate your time. Thank you. You're very welcome, Dan. And yeah, these are the big questions that we're trying to answer this week at Gartner Symposium in Orlando. All right. Thank you. Still ahead, we're going to speak to the chairman of EQT, one of the largest private market firms globally, where he's seeing opportunity right now. Plus, Russian President Putin is reportedly suggesting a summit that would involve a meeting with President Trump and Chinese President Xi We're going to discuss what that could mean for the war in Ukraine.

28:12We're back in a moment.

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29:20Don'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. Time for a news update. Dom Chu has that for us. Dom. Good morning, David. President Trump is expected to sign an executive order alongside First Lady Melania Trump today to create a new National Institutes of Health division focused on women's health.

29:58It will also include a task force run by White House Chief of Staff Susie Wiles. According to Reuters, the first lady will highlight the need to use AI to speed up health discoveries. The move comes amid a concerted effort by the administration to make health care spending cuts and downsize the federal health care workforce. The Ebola outbreak in Congo has spread to Kenya. According to the country's health ministry, the eighth case was confirmed there over the weekend after another person in quarantine tested positive. The outbreak in Congo is responsible for at least 4 ,000 deaths going back to May.

30:31And Philadelphia Eagles quarterback Jalen Hurts will be out for the rest of the season after doctors found multiple blood clots in his lungs. According to a statement by the team and Hurts' agent, his prognosis is very good, and doctors expect a full recovery. The Eagles currently have a 2-4 record but remain in second place in the NFC East division. Sarah, I'll send things back over to you. My son's going to be very disappointed. Hope he makes full recovery, of course. Thank you, Dom. You got it. Dom Chu, when we come back, we'll speak to the chairman of EQT, one of the largest private market firms globally, about how he's investing in the AI build out.

31:06Plus, the Elizabeth Holmes-focused documentary, you can see everything, makes a very strong debut in theaters over the weekend. We're going to break down how the film came together. We're back in a moment. Welcome back to Squawk on the Street. EQT Group is the third largest private market manager globally by capital raised. And it's the only firm in the top 20 without any exposure to private credit. The firm saying that AI is expected to drive more than$4 trillion in data center and energy investment over the next five years. Joining us here at Post 9 in a CNBC exclusive is EQT Group's chair, Jean-Erik Salada.

31:38Welcome. It's good to have you. Great to be here. So you have, what, more than$400 billion in assets under management. How focused are you overall on the AI build out right now? It's an important investment team for us, but we have four different business lines. We We have private equity. We have infrastructure. We have a real estate business, and we've just acquired Caller Capital, so we now have a secondaries business. But all of our businesses are thematically equity-oriented businesses. We don't have a private credit business. We think that what we're good at is looking for alpha in the markets, trying to generate returns through value creation.

32:11Private equity, mainly. Mainly private equity, but also infrastructure, including AI infrastructure. Yeah. What's exciting right now? Well, in the AI world, there's a lot going on. It's probably the most consequential technology that we've seen in our lifetime, and there's going to be a multi-trillion dollar buildup. The question is, where are the pools of capital going to create returns for investors? We like the infrastructure layer, but when I talk about infrastructure, it's not just data centers. I mean, we are also very heavily invested in the power generation sector. So we have power assets, we have digital connectivity assets, and we have data center assets.

32:44A company called ZEA, which we own, is the largest data center connectivity company of fiber connectivity for data centers in the United States, for example. We also own the largest solar and battery installation facility in the United States called Steel River. We have over$100 billion invested essentially in power energy assets combined with Edge Connects, which is actually our large data center business. It's 106 data centers globally. So we're trying to offer a kind of an end-to-end solution that's fully connected to the grid and also connected to digital fiber. What are your investors expecting here?

33:19I mean, at some point you've got to sell these, right? You want to generate a return for the fund holders. But these seem to be long-duration assets you're talking about. They're long-duration assets, but they also have long-term leases that we've signed. So we are 96 % of the EdgeConnects leases are signed with hyperscalers. We're not really working with the NeoCloud providers. And so we have very strong counterparties that we're working with. These are generally 15-year leases. So they're generating cash flow. And there is a very good cash yield on these assets. Okay, but when it comes to actually realizing, I guess my question is, you don't have permanent capital, right?

33:56I mean, you do in the funds, but there's an expectation you're going to return it over time, right? I don't know what your average life expectancy of a fund is. Yeah, the bulk of our capital is invested through closed-end funds, which have a 10-year life. But we also have some open-ended structures. So we have open-ended strategies that are specifically focused on AI. We have an AI infrastructure strategy that's an open-ended structure. And there you can continue to own assets indefinitely. Right. So you're just generating a return that's going to be a fairly significant one, I guess. We hope so.

34:23Yeah, we believe so. What about the old buyout business? I mean, you know, what we see here in the States, at least, is a lot of the deals that were done in 21-22 may not be being marked particularly well. Obviously, technology-related. Exits are very hard to come by right now. And so even though if you raise a fund, it's not clear what you can deploy as a result of you haven't gotten the exits yet previously. Are you seeing the same thing around the rest of the world? Well, I would say that on exits, we've been able to generate significant liquidity for our clients. So we're pretty diversified across asset classes and geographies.

34:55So in the last 12 months, we distributed$33 billion back to our clients. In the last 24 months, we distributed$65 billion back to our clients. That's enabled us to continue to raise new capital. and to generate new fund products as part of the distribution profile that we've been able to create for our clients. When I look at the landscape today, yes, it's a difficult environment. I'd say our industry is consolidating. If you look at the top 10 firms in our industry, for example, there are 15 ,000 private equity firms, something like that. The top 10 firms have raised something like 50 % of all the capital in the last 12 months.

35:31So with that consolidation, I think you're creating a market where there are fewer firms that have capital to deploy, but a lot of assets available. Well, you mentioned you have a secondaries business. I would assume that's one reason why that's an important area. The secondaries market is really booming right now because of the sheer number of assets that are unsold. But it also creates opportunities for buyout funds that have capital to deploy to buy some of these older assets. I think the era of cheap money and multiple expansion is over. and the way to make money in private equity is the old-fashioned way, which is by buying businesses at reasonable prices and then generating your return through earnings growth and the value creation through the active ownership that you have in the business.

36:10I was going to ask about the rising rates and whether that impacts deal-making and what you're able to do. I think the rising rates are creating an environment where multiples have come off, both in the public markets and the private markets. But it also implies a higher cost of capital, a higher return on capital for equity investors. So generally, I would say if you have capital to deploy, this is an interesting market to be investing in. Slightly more dislocated, a lot more challenging for people with unsold assets that need to find liquidity. When I think of private equity, I think a lot about the software exposure problem, which we saw really creep into the market earlier this year.

36:48How do you look at your portfolio? you. How much is software and do you worry about the disruption risk around AI? Well, software is affected by AI, but it can be positively affected or negatively affected. And it really depends on what kind of management team you have in place and the nature of the business that you own. If you have a business that's deeply embedded in the workflows and that has a deep data layer underpinning it, then if you're quick to adapt to AI and bring AI functionality into the business, then you should be able to benefit from it. But there is going to be disruption in software from AI.

37:23And I think what we're doing right now is making sure that our companies and our portfolio companies in the software sector have the right leadership teams. Do you have significant exposure to software in your portfolio? We do have exposure to software in the portfolio overall. I actually don't know what the number is off the top of my head, but technology is one of the sectors that we invest in. You raised, I think, a$15-plus billion fund, APAC fund. What are you seeing in that sort of part of the world? Japan, for example, and why do you think there's opportunities there? Just on the software portfolio, we're actually seeing in the portfolio that the earnings and revenues are still growing in the software portfolio.

37:56The question is really what's happening to the multiples in that industry. Multiples have collapsed. We know it's happening. So I think, but yeah, and they're starting to revert maybe to a mean. We've seen some of the public equity comps obviously claw their way back during the course of the year as well. I mean, over extended period of time, we would expect returns to revert to the growth and earnings per share of a company. And the multiples kind of go up and down. But over time, if you're driving earnings growth in a business, you should be able to generate returns that are attractive. Coming back to your question on Japan, Japan is a market, or Asia rather, Japan is probably the single most interesting market that we see in the region.

38:33We have been in business there for nearly 30 years. And what's happening in Japan is there's a huge surge of activism, shareholder activism, and in the public markets that's creating a lot of deal flow for private equity firms like us. And so what we're finding is when we buy a business, a lot of these businesses have been undermanaged for decades, and there's an opportunity to quickly drive efficiency in those businesses and generate returns. Very excited about the opportunity in Japan. We think that is somewhat similar to what happened in the USA in the 80s and 90s when you had a lot of conglomerates that were being sold off and where there was a real opportunity.

39:04There was a real cultural impediment to activism for quite some time, but I guess that sort of gets over. That has changed. There's been a real mindset change in that. 45 % of the exposure is in Europe, which is your biggest, heaviest exposure. Is Europe a good place to invest right now? Well, I think what investors are looking for is global diversification. And I wouldn't say whether, you know, we're not trying to time the market, whether it's today or tomorrow. But in Europe, you have a couple of interesting things happening. One is there's a lot of technology companies in Europe that are underfunded.

39:33So we've just raised something called the Scale Up Europe Fund, which is going to be a 5 billion plus euro fund. It's actually endorsed by the EU to back European technology winners. And Europe doesn't lack really technology innovation. What Europe lacks is the deep capital markets the U.S. has to support the growing technology funding rounds that we're seeing. And so we're trying to do the same thing in Europe. There's also a lot of inefficiencies in the biomarket in Europe and a lot of room for sort of fragmented companies operating across multiple geographies where there's room to consolidate those industries.

40:05John, well, thank you for taking us on a little trip around the world in the private market. We appreciate it. John Eric Salata, the group chair of EQT. Good to see you. Thanks very much. Thank you. Coming up, we're going to break down what a summit between President Trump, Russia's Putin and China's Xi could mean for the war in Ukraine. Squawk on the street. We'll be right back. Let's get to the latest headlines on the geopolitical front. Damon Javers, he's got them for us. Damon. Yeah, David, that's right. Ukrainian President Vladimir Zelensky lamented the U.S. government's pivot towards supporting Russia over the weekend in an appearance on U.S.

40:37television. In the wake of President Trump's decision to send money to Russia to buy oil and to suspend a new sanctions bill on the country late Friday night, Zelensky appeared on Meet the Press and called the U.S. government's reversal in the middle of the war unbelievable. It's not about prevail or not prevail. It's all about it's about our people. If it's without United States support, it's very difficult. But if United States will support Putin, I mean, it's unbelievable. It's tragedy. It's historic mistake and big tragedy. Meanwhile, the Ukrainian government said that it hasn't been able to get a response from the Pentagon or from SpaceX about its questions about the throttling of the company's Starlink and Star Shield services, which are crucial to Ukraine's defense against drone attacks.

41:31President Trump has said that he did not order the slowdown, but Elon Musk has suggested that the U.S. government ultimately controls Ukrainian access to his government service. Also on Meet the Press yesterday, though, Treasury Secretary Scott Besant pushed back. President Trump and Secretary Rubio have categorically said that no one on the Trump administration did that. And I think it is very reckless for President Zelensky to make such a charge. President Zelensky should be very careful about making statements like this that aren't true. So you heard the Treasury Secretary there warning President Zelensky to be very careful.

42:10And the question is, how can this relationship develop from here, guys? We've got a seemingly irreparable division in the U.S.-Ukrainian relationship, and we'll see what happens this week. OK, thank you, Eamon, for all the updates. And just breaking this hour, by the way, Saudi Arabia did officially postpone its future investment initiative conference, the big FII conference slated to kick off next week following a number of strikes in Riyadh at the Riyadh airport. They said it will now take place sometime in 2027. It's a big deal, David, because everyone in our world, the big bank CEOs and the big finance companies, and increasingly other companies as well, all attend this because it is Saudi's big initiative aimed at getting capital in and opening up and saying, come invest with us because we have big plans and a big project.

42:58So they had to postpone it because of all this security. Yeah, we discussed it. There didn't seem to be much doubt that they potentially have to. Hard to imagine so many of these CEOs, not to mention our most coveted and important anchors, would be allowed to go to this part of the world right now, given the security concerns. But their security teams would not let them go. Coming up, you can see everything making a stellar debut over the weekend. We're going to discuss how it compares to other opening weekends for documentaries. That's when we come back. Welcome back. The Elizabeth Holmes-focused documentary.

43:30You can see everything making a very strong debut in the theaters over the weekend. Julia Boorstin joins us with more. Morning, Julia. Good morning, Sarah. Well, A24's documentary about Elizabeth Holmes. You can see everything open to$15 million in only 855 theaters, according to Rentrack. That makes it one of the largest openings this century for a movie debuting on fewer than 1 ,000 screens. This is the biggest opening for a documentary in 22 years, since Fahrenheit 9-11 opened in 2004 to$24 million. And the film expands to a wide release next weekend. The roughly three-hour-long movie has a 99 % critics rating and a 98 % audience rating on Rotten Tomatoes.

44:10It's already getting talk of a Best Picture nomination, which would be a first for a documentary. Indie Studio 824 produced the movie in secret over the course of three years. It all started when Elizabeth Holmes reached out to the studio to tell her story. Nathan Fielder, known for his docu-reality comedy series, and Lance Oppenheim, who directed another movie, which is out right now called Primetime, reached out to 824 after hearing that Holmes was interested in doing something. They then co-directed the film. This builds on 824's success with low-budget hit Backrooms this summer and Oscar-nominated Marty Supreme.

44:48824 has been praised for its marketing and its ability to draw a younger audience. For this movie, 70 % of the audience was under age 35. Guys? Well, I wonder why. How they did that. I think there was a lot of leaning into the memes. If you remember, the trailer captured this really intense interaction between Nathan Fielder and Elizabeth Holmes. And then it sort of went viral. And there were a lot of memes about that. I also think the element of surprise and for everyone who watched the documentary and the scripted series about Elizabeth Holmes, they had a sort of built in audience of people who were interested in the topic.

45:27All right, Julia. Thank you. When I have a free three hours, I would love to see it. You got to go, though. I know. Have you seen it? I haven't seen it, but I know I have to. I mean, you know, I interviewed Holmes a couple of times. I got to see it. You have to see it. Yeah. But for us, it's just like business journalists. We have to see it. That's probably not why most of the kids want to see it. I haven't seen the Odyssey yet, so it shows you what I've been up to. I know. Same. Yeah. Meantime, David, stock market is actually holding in. We've been strengthening throughout the session, especially the NASDAQ, especially the S &P, which got hit pretty hard last week.

45:57So it's a comeback of sorts. I know you've been watching CourtWeave. We'll keep an eye on that. Of course, you know, as we've said throughout the last three hours, it is it's more that it is a reflection, of course, of this concern around cost of capital and access to capital, even though, as many have made the point, of course, they have much of what they build is sort of based on what they're going to be receiving from those tenants. And they're able to to raise that debt easily. They do have unsecured debt. That was the subject of some focus last week, given they traded as much as a 15 percent yield.

46:27We'll be watching the CDS spreads of Corweave, the bonds, the equity. Also, the French bond yields very much in focus today. They're rising on the back of these protests over the weekend. We get Netflix earnings tomorrow night, SpaceX earnings tomorrow night, and a lot more coming this week. That's it for us, though, now. 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.

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