11AM Hour: Zillow CEO, Oracle CFO & the Road to Anthropic's IPO 11/10/26

0:00I'm Mike McNerney, Equity Investment Strategist. Markets move fast. My mission is to provide market insights to our clients that help turn uncertainty into opportunity. Janice Henderson, investing in a brighter future together.

0:15Who's ready for a bike ride? Peppa Pig is learning to ride her bike. First, pop on her helmet. Safety first. Then attach the push stick and give her bike a push. And watch Peppa paddle. Her legs go round and round as the wheels turn. With more than 75 sounds and phrases, every ride is a big adventure. Peppa Pig Ready Paddle Go. Available at all major retailers now. Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanillo with Sarah Eisen, live at Post 9 of the New York Stock Exchange. Today, Oracle CFO Hillary Maxson, her first broadcast interview. Since taking the role this last spring, a company recently telling investors that its AI bet will pay off sooner than expected.

1:01Shares are still pacing for the worst year, almost since the beginning of the century. Plus, President Trump says the FBI is now investigating NVIDIA CEO Jensen Huang for his affair with an alleged Chinese spy. We are joined by an AI and national security expert, why he says neither Jensen Huang nor NVIDIA deserve the benefit of the doubt on any topics related to China right now. And he recently called it one of the toughest housing markets in a generation. We're joined by the CEO of Zillow exclusively to explain why. Had kind of a budding attempt at a rally about an hour ago, but between Waller's comments this morning and now Lori Logan, the 10-year is almost back to five.

1:38The two-year yield is ripping. This is the biggest advance for the short end really since spring of 25. We'll keep an eye on that as we're down about two-thirds of a percent on it. It's that combo of the hawkish Fed commentary and a little bit firmer CPI report. We're going to start out on breaking news here from the New York Fed. Steve Leisman has it for us. Hey, Sarah, the New York Fed reporting that consumer debt in the third quarter topping$19 trillion for the first time. But don't get too freaked out by big, scary numbers because the growth was relatively modest. Third quarter delinquencies, they remain elevated, as you might expect with higher interest rates, but they did ease from the second quarter.

2:17So not a one-way street on that. Credit card delinquencies at 12.9%. That is an elevated number. student loan delinquencies at 10.9 percent. But the increase in delinquencies, what they call the flow into the delinquencies, that's the one that the New York Fed follows most carefully. That leveled off, including for both credit cards and for student loans, while they remain high. HELOCs is the new flavor of the lending month here. Been a lot of that going on. It's a 10-year high now of$481 billion, but delinquencies remain modest. Carl? Steve, thanks very much. A lot of information out of Steve in just the last few minutes.

2:51We turn to Anthropic ahead of the highly anticipated IPO. The company sets the price range between$70 and$78 a share. Our Leslie Picker brought us that this morning and has the latest. Hey, Leslie. Hey, good morning, CQ. Anthropic, as you mentioned, launching what could be a record-breaking IPO based on the terms this company set today. Anthropic is marketing its stock between$70 and$78 per share for a potential$100 billion total IPO. Today's terms imply a fully diluted valuation of$1.4 trillion at the high end of that range. In kicking off its roadshow, Anthropic executives will travel the country to meet with investors.

3:32We just got some exclusive footage of Morgan Stanley headquarters in New York, where they are reportedly hosting Anthropic CFO Krishna Rao today. You can see here that they've got tons of signage across their office, all decked out, welcoming Anthropic there. Morgan Stanley is managing this offering alongside Goldman Sachs. The Roadshow will comprise several days in New York, as well as stops in Boston and San Francisco. Anthropic also published a 42-minute video this morning with executive and customer interviews. As I am told, it's aiming for about 20 % of the market offering to go to retail investors.

4:10In chatting with a few sources as well this morning, It sounds like they've already covered the book from institutional investors at that$70 to$78 range. So they're already technically oversubscribed before even marketing this offering. I'm told that the demand is actually stronger than SpaceX at this point in the process. Both conducted many of these so-called testing the waters meetings in the months leading up to their respective roadshows. So that's kind of how they had a sense of where to start the range. Additionally, I'd flag that this morning's filing updated the run rate revenue to be about$81 billion as of October 31st, up$10 billion month over month.

4:47And I'm told they plan to price next Wednesday with a debut scheduled for Thursday where the stock will be listed on the NASDAQ under the symbol A-N-T. Guys. Also, there's a lot of chatter about the private placements and the companies, the strategics that are lining up for that. I mean, it's a who's who of the big tech companies. I do wonder how much that does to instill confidence and get people more excited, buyers of the IPO. Yeah,$26 billion there. You're right, Sarah. It's definitely a who's who of kind of the AI ecosystem there. You've got Micron, NVIDIA, Google, AMD, just to name a few that are serving as these cornerstone investors.

5:25What this also does is it creates a smaller market offering by which to market the deal. So a little bit more scarcity there, especially if you account for 20 percent of that going to retail. That allows you to kind of have those testing the waters meetings, set a price range and then go into a day like today where they are just now technically beginning to market the official roadshow. But the book is already covered because they kind of had those conversations ahead of time. They've got the 26 billion already covered. They don't have to worry about that. Then they just basically have to focus on the other 64 billion of which 20 percent will go to retail as well.

6:01Yeah, I mean, it's definitely, I think it's a vote of confidence, but it's also just an illustration of how interconnected and circular this all is, because many of them are also major recipients of Anthropics, you know, hundreds of billions of dollars being spent on compute. Yeah, it's interesting, Sarah, because obviously we had the SpaceX IPO about five months ago, and I was sort of surprised they didn't go the cornerstone investor route, because that is kind of typical, at least in the last few years, for some of the bigger, more buzzy IPOs to have these investors that do a private placement.

6:33They buy in at the IPO price. I think they also get some sort of fee discount if they opt to do that as well. And then it shores up kind of that signal idea of, look, you've got all these big strategics investing in here. They're throwing their weight behind this company, and you should too. SpaceX opted for the fixed price. They didn't have Cornerstone. And the IPO debut was pretty smooth. So, you know, it's just kind of interesting to compare the two strategically. And we'll see kind of how this one plays out over the next eight days. OK, thank you, Leslie. Keep us posted on what you're hearing.

7:07For more on the markets, we are joined here at Post 9 by Neuberger Senior Wealth Advisor Holly Newman-Croft. Welcome back. Thank you. It's good to have you. It's been a bumpy few days. I mean, last week was brutal for long-only investors. What are you telling your clients to do right now? I'm telling them what we've been telling them all year. I mean, I think it's been a bumpy year since 2026 started. We've had a lot of volatility in the market, and last week was certainly no exception. It was interesting. Volatility up right after the election, a lot of euphoria around a divided government, so not a lot that can pass through it.

7:40And then the next day, last Thursday, fears that the data center buildout was essentially dead. The Nasdaq down over 5 percent. its worst drop since 2025, and concerns around the fact that this very small group of companies that has been responsible, really, for all of the market's growth this year was going to evaporate. So we've seen it come back Friday and again Monday, although still down about 2 percent, just under 2 percent, I guess, from midterms. Should people cut their exposure to the market? No. No, we are not advising cutting your exposure to the market. We think this is a recalibration, maybe a rationalization of the data center spend.

8:22Remember, nothing has changed yet, except people have been elected on campaign promises, a slowdown of the CapEx spend, a slowdown of the build-out, more concern for the demands on power, the environment in the local communities where these data centers are being built. And I also think there's going to be a focus now from the rising tide lifts all boats to seeing which companies actually can digest AI and make it profitable and enhance their bottom line. I think we'll start to see some differentiation between winners and losers, whereas earlier in the year, as long as you could keep pace with the spend, not knowing really where you were going with it, but as long as you committed the capital to spend, your stock went up accordingly.

9:10It doesn't sound like you think the risk is to the upside on an index level. I we're still optimistic on the economy and on the market. We've seen a broadening out, which, you know, I like right. The S &P is up just under 12 percent. The equal weight is up over 14 percent. If you think about the month of October, the S &P was modestly down about point nine three percent. Every single sector in the S &P was up with the exception of tech and communication. So it's just so concentrated in one sector. So to see some broadening out and to see some other industries have some impact, I think, is a safer environment for the consumer.

9:55Would you be on the lookout for EPS cuts in Q1 if back half CapEx gets trimmed 20 %? Yeah, if it gets trimmed. I think Q1 is even a little bit soon, you know. So we are just 90 percent of our way through Q3 earnings, third quarter in a row of higher than 25 percent growth. The economy is strong. The consumer is strong. We're seeing spending now at all income levels, so starting to go down to mid and lower income levels. We had a really strong jobs number, third consecutive month. In fact, the prior two months were revised upward. So is there risk in the economy and in the market and in the world?

10:38Absolutely, right? We also don't know what the midterm elections are going to mean for the geopolitical situation. There are a lot of questions that remain to be seen. What about fixed income as a recommendation? As we've, you know, bonds, they're selling off hard today. And we're talking about higher interest rates. You know me, I love my taxable equivalent yields for my high net worth investors. But we continue to favor short to medium term duration, you know, five to seven years. But that's an excellent point. No, I'm just thinking, you brought it up. If you have a 7 % bond equivalent, why would you want to defend NVIDIA here or any of these other winners of yesterday?

11:18Well, that's exactly right. If you look at the long-term returns of the S &P, it's like 8%. If you can get that essentially risk-free in bonds, sit on the sidelines, let some of this volatility shake out, get some clarity, why wouldn't you do that? Right? Why wouldn't you do that? But people are drawn in by IPO news. I mean, all we've been talking about on the show today is this IPO, right? What do you tell your clients who say, Holly, do I need to buy Anthropik when it goes public? You have to remember that you're going to have exposure as an investor to all of these companies through the index.

11:55And buying a single stock concentrated name is risky. It's hard to size right. If you're taxable, there are tax consequences to flipping. So people, it's the Me Too game. And we saw it with SpaceX. You know, it ran way up and then came back down. So I think you focus on a diversified portfolio, risk mitigation, broad exposure to asset classes that are going to perform well in long-term growth as opposed to one hot IPO. That is not going to make or break your portfolio. OK. Holly, thank you very much. Good to have you. As always, Holly Neumancroft from Newburger Berman. Thank you. When we come back, CEO of Zillow is with us.

12:36He'll say why this is one of the toughest housing markets in a generation. We'll talk about that. And the fallout growing for NVIDIA as the stock takes another big leg lower following Jensen Wang's affair with an alleged Chinese spy. We'll talk with one expert who says Wang should be, quote, ashamed and that the Commerce Department is partly to blame. Don't go anywhere.

12:56Who's ready for a bike ride? Peppa Pig is learning to ride her bike. First, pop on her helmet. Safety first. Then attach the push stick and give her bike a push. And watch Peppa paddle. Her legs go round and round as the wheels turn. With more than 75 sounds and phrases, every ride is a big adventure. Peppa Pig Ready Paddle Go. Available at all major retailers now. AI is here, transforming how we work, live, and lead. And the women I talk to aren't waiting for the future. They're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world.

13:45Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

13:55Welcome back. This morning's hotter than expected CPI numbers, sending yields much higher as the path forward for rate hikes gets a little more complicated. Shares of Zillow feeling the impact as investors assess the ripple effect for prospective homebuyers and sellers. It is a housing market that our next guest calls one of the toughest that we've seen in a generation, and he's warning it might not get better anytime soon. Joining us in a CNBC exclusive today is Zillow's chief, Jeremy Waxman. Jeremy, welcome. We had Buffet on a few minutes ago. It's good to see you. Good to see you. Thanks for having me.

14:26So shelter in this particular print was a little bit troublesome. And we've been wondering whether or not rents would respond to limited housing inventory. Where do you think we are in the whole picture? Yeah, the housing market is definitely getting more challenged. The rate shock in mortgage rates, which moved from the mid sixes of the beginning of Q3 to the mid sevens by the end. That shock, that rise of 100 basis points is one of the fastest three month increases we've seen in decades. And so that's why you saw the housing market really slow down. By the end of Q3, we're seeing the mortgage market, purchase mortgage market down 4 % year over year.

15:05And we're expecting that to be down 10 % to 15 % in Q4. And so the counter to that, as you point out, is rent. Observed rental demand in Q3 was up nearly 20 % year over year. And that is buyers just not being able to afford the homes they were looking at. They were thinking about a mortgage and then they couldn't pull the trigger. And so now they're renting longer. And so those effects you're seeing between for sale and rentals come from these elevated rates and these rising rates. What's in your control? What levers can you pull given the backdrop? Yeah, well, Zillow can't control the housing market.

15:39We can control how we grow. And we grew revenue 7 percent in Q3. And that's because our business is pretty diversified and we're able to grow and gain share even as the market grows down. You know, our rentals business is now 30 percent of our company. That's up 25 % year over year in Q3. And so we are able to tap into that strong rentals demand and grow our marketplace. And even in for sale, as that market is going down, we expect purchase mortgage originations down 10 to 15 % in Q4. We expect to outgrow that. We outgrew that market 1 ,100 basis points in Q3. We've been outgrowing it for three years now.

16:12So even as the market is contracting at this point, the ability to gain share, because we can help more buyers and more renters and more sellers with the technology and the tools they need, you know, the number of people buying houses is down, right? We're down to a three-handle on existing home sales, 3.8 million existing home sales in October. We're expecting that to be 3.5 in November. But that's still 7 million people actually trying to buy and sell, and we're helping more of them. What about, I know you've been talking a lot about the AI story and you're bullish on how that can help. Can that help get you back to double digits?

16:48Yeah, I mean, AI is definitely transforming real estate and it's transforming how we build technology for our consumers and for our professionals. And you see that in how people are using it on Zillow today. So Zillow AI mode, something a buyer, a seller, a renter can use, it's now live for 100 % of our signed in users. And we see a lot deeper engagement. People are asking dozens of questions. They're spending twice the amount of time with us. They're engaging at double the rates. And the interesting thing is they're doing it, more than half of their activity, their conversations, are outside of traditional business hours.

17:22And so they're asking things that a search interface couldn't answer, but now they can get a question answered and they spend more time with us. And so that means when they're ready, they're going to hire an agent. They're going to hire a mortgage loan officer. They're higher intent. They're more ready to go. So even in this affordability challenge environment, they're looking for an edge on how can they get it done. But they still need the agent. That's what we see. The percentage of buyers and sellers that want help is actually higher now than it was even when the Internet came online. And that's across generations.

17:54The younger buyers, everyone who's tech savvy, when you get more information at your control, you want to do more yourself. But that means you need help to make sense of that. Now, what changes is what kind of help do they need, right? In the old days, an agent might have been an information arbiter. They might have had access to stuff you and I didn't have access to. Well, that's gone. We all have access to the same information. They're now looking for a local market expert, a therapist, a negotiator, someone to help them with the hard part of the transaction they don't want to do so that they can do more of the part that they want to do.

18:26There's a piece on the tape this morning about Democrats on the Hill getting pitched some solutions for housing. In one case, Lael Brainard pushing for the creation of a new FHA program, which would facilitate purchases with down payments as little as$1 ,000 if you met some pretty strict criteria. Don't you think the message of the midterms is that we're going to get some policy response? Well, housing has been a bipartisan issue really for the better part of this year, and we've been very pleased to see that. The Road to Housing Act that passed, that was very focused on supply, what we think is the most fundamental problem in the housing market.

19:02We signed on for the Latin America Build Coalition to really help take that to the state and local levels to help figure out how do you streamline permitting, zoning reform, fast track, pre-approved designs, things to get supply online. So continuing to make housing and housing affordability a focus, that's a great sign in Washington. And that's also a great sign at the state and local levels because the real structural challenge in the housing market is still supply. We talk a lot about rates, the rate shock, the near-term challenges in Q3 and Q4. But the reason prices have held in and the reason transaction volumes have been down for three, four years running is we're nearly 5 million homes underbuilt.

19:41We have just systemically underbuilt new inventory to match household formation for more than a decade. And getting that inventory online, getting it easier and faster to build and bring inventory, ultimately is how you bring supply and demand back in balance. Yeah, yeah, we've got some MSAs that are good examples of what happens when you can build. Austin's one good example of what that's done to prices overall. Jeremy, it's really interesting. Please come back soon. Great to have you. Awesome. Thanks for having me. Jeremy Waxman of Zillow. Much more on the real estate sector for you coming up, where private equity managers are finding investment opportunities right now.

20:15And later, why one AI expert says NVIDIA and Jensen Wang should no longer deserve the benefit of the doubt on anything related to China. In just a minute. Who's ready for a bike ride? Peppa Pig is learning to ride her bike. First, pop on her helmet. Safety first. Then, attach the push stick and give her bike a push. And watch Peppa paddle. Her legs go round and round as the wheels turn. With more than 75 sounds and phrases, every ride is a big adventure. Peppa Pig Ready Paddle Go! available at all major retailers now. Which NHL teams are scoring big off the ice? CNBC Sports' Michael Ozanian has the numbers.

21:01If a dot margin in the NHL is right there with the NBA. Official NHL team valuations revealed Friday in Squawk Box on CNBC. Welcome back. As the real estate sector feels the pressure from these rising rates, where are private equity managers finding some opportunity? Robert Frank joins us here at Post 9 with the latest. Hey, Robert. Carl, good to see you. Well, real estate funds from Blackstone, KKR, Carlyle and others struggling with lower returns and these higher interest rates. But Bridgepoint Group sees opportunity in this beaten down sector. The company just acquired Kane Anderson Real Estate, bringing its total assets under management to over$125 billion and increasing its footprint in the U.S.

21:42People say, oh, interest rates up, real estate bad. Well, it's actually not quite that simple. Yes, real estate's up, cap rates up, asset valuations down. This is a longer duration investment business. So this isn't day to day or quarter to quarter. This is have you made good underlying investments and do they make sense? When you get in an environment like the one that we're in, it actually produces a very outsized investment opportunity. So the three sectors that Kane Anderson likes right now, medical office space. That's due to the aging of the population, the need for all those doctors. Small industrial, that's for all the e-commerce companies and small businesses.

22:23And multifamily, as investors that bought at the peak and now have to refinance, look to restructure. Now, BritPoint CEO Raul Hughes telling me that higher interest rates will have a limited impact on its own private equity and private credit portfolios since they own high-growth, high-margin companies. Now, for more on the opportunities in real estate and the impact of higher rates on the entire alt sector, you can sign up for the Inside Alts newsletter at cpc.com slash inside alts. Anything surprising to you in this interview? It was interesting to me that just like any other macro sector that looks terrible from the outside, if you have expertise in some niche like medical office, where especially oncology, neurology, these high margin areas, highly special, there's just not enough space for the demand.

23:10So you can look at any sector of the market and say, why would I go there? But if you find a specific niche, there are opportunities. So that's what I liked about this, not to mention the e-commerce and then some of these multifamily that are going to have to restructure. All right. We'll check out the newsletter for more. Thank you, Robert. Thank you, guys. Robert Frank. Time now for a news update. Contessa Brewer has it for us. Contessa. Sarah, threats from Iran have now prompted the U.S. to move military aircraft from another U.K. airbase. A U.S. official confirms that move to NBC News, saying the military is operating under enhanced force protection measures.

23:42More than a month ago, the U.S. withdrew bombers from another British base after police say they busted an Iranian-backed terror plot. The FDA has ordered a new warning to accompany popular GLP-1 weight loss and diabetes drugs over the potential for sudden blindness. A rare side effect is decreased blood flow to the optic nerve, resulting in vision problems. Eli Lilly, which makes ZEP bound in Manjaro, says it's carefully evaluating the update. Novo Nordisk, which makes Wegovy and Ozempic, says it believes that data does not establish a cause and effect relationship. IBM says it will no longer sponsor visas or green cards for most jobs in IBM Consulting, its largest division.

24:28The change follows a Trump administration crackdown on high-skilled worker visa programs, including H-1B visas that have long served as a pipeline for talent in the tech industry. That's the news now, Carl. Let me send it back to you. All right, Contessa, thanks. When we come back, a lot more on NVIDIA's probe of Jensen Huang. Why one AI expert says the biggest scandal is NVIDIA's interference in government investigations of Chinese AI chip smuggling. Plus, CFO of Oracle will join our David Faber first on CNBC. They'll discuss everything from the AI build out to the company's growth outlook. We'll be right back.

25:02Come back to Spock on the Street. Investors still trying to make sense of NVIDIA CEO Jensen Huang's affair with an alleged Chinese spy and the ensuing investigations. Our next guest says that chips are the new oil, and NVIDIA's governance is completely unprepared for their role in national security. He's also raising the question, if Jensen Huang lied about this affair, what else is he lying about? Joining us now is Gregory Allen, Decision Tree Research founder and CEO. Previously served as a senior AI advisor at the Center for Strategic and International Studies, as well as the Defense Department's Joint AI Center.

25:35You know, I thought of you yesterday, Greg, when we were talking about this story, because I remember you being here on set really challenging Jensen's advocating for for the Chinese chip for exports from America to China of American advanced semiconductors. So I can only imagine your reaction to this story. Well, here's the deal. Jensen admitted to his board, his employees, his family and the American public that he was lying to them as recently as this Sunday. That's a lie about not having an affair. But he's also been dead wrong on so many obvious matters of the factual record. Like, is chip smuggling to China happening?

26:23He's been saying for years that it's basically impossible because the server racks are too heavy. This is comically obviously wrong and contradicted not just by an ocean of high quality journalism, but the factual record stated in court cases. There are NVIDIA employees in Taiwan that were arrested for aiding and abetting chip smuggling. And so now the question becomes, how high up does this go? Right. And your thesis is basically he's been wrong on the issue the whole time? Yes. I mean, basically what we're down to is he's either comically naive about the reality of the threat that the Chinese government and Chinese Communist Party poses to the United States.

27:10I think the wake up call he got in terms of being targeted by Chinese intelligence services, I hope that that's a wake up call for him. But that's the he's naive scenario. There's also the unfortunate possibility that he personally is involved in criminal behavior. And the fact pattern here does not conclusively show that, but it also does not allow us to rule it out. Look at some of the journalism that came out of The New York Times earlier this week, showing that NVIDIA's general counsel improperly interfered in an active Commerce Department investigation into Megaspeed being involved in chip smuggling.

27:50So the question, of course, then becomes, is NVIDIA not merely ignorant about chip smuggling, but are they actually trying to prevent the U.S. government from successfully prosecuting chip smuggling? I hope that's not the case, but if it is, it is truly appalling. One question, Greg, is if the demand for their chips, these H200s in particular, was so strong and you had customers lining up out the door, why was it such a priority to supply this part of the world? Was it about trying to diversify your customer base or do you think it was something more conspiratorial? Well, there's two good corporate strategy reasons for NVIDIA to want to sell into China.

28:37The first is the one that you mentioned, simply diversifying the customer base. If OpenAI is the only one buying the chips, then they have a veto over every decision that NVIDIA wants to make. The second is NVIDIA is trying to defend the strength of its CUDA software moat. Effectively, the more people who use CUDA, the harder it is to come up with competing chips. Even if they're attractive on hardware, they won't be competitive on software ecosystem. them. But those are two good reasons from a corporate strategy perspective. But they are overwhelmed by the reality of the geopolitical concerns.

29:13China is willing to spend whatever it takes. They're willing to ban whatever they have to ban. They're willing to steal whatever they have to steal to get off of NVIDIA technology. And all NVIDIA is doing is strengthening a bunch of cloud giants in China who are absolutely committed to getting off of NVIDIA technology once it's ready. So by selling into China, NVIDIA is helping its bottom line today, but not by much because OpenAI, Anthropic, Google would be happy to buy all those chips. But they're also destroying their future addressable market share because all of those Chinese cloud companies will go over to Huawei in five years, in 10 years, in 15 years when they're ready.

29:57Well, I think that was part of actually Jensen's national security push, which is we don't want them. We don't want them to create another Huawei. We want to keep China dependent on American technology and American advanced manufacturing chips. Doesn't that still hold? So that's not a completely unreasonable position, but we do have enough facts to prove that it doesn't apply in this case. The Chinese government already had a policy, the 352 plan, to mandate the transition away from NVIDIA AI chips. That was in 2019, years before the AI chip export controls that NVIDIA hates so much. And Huawei first had a 7 nanometer AI accelerator chip being manufactured at TSMC in 2020.

30:47And the reason why they had to stop was export controls. So NVIDIA is constantly talking about a fantasy where China is going to be willing to buy their technology forever. The reality is the only reason they're still willing to buy it now is because of export controls applied to chip manufacturing equipment and chip manufacturing facilities in Taiwan. on. Greg Allen, thank you for joining us. I knew you'd have some thoughts on this one. Appreciate it. Still to come this morning, the CFO of Oracle is going to be with us in her first broadcast interview since taking that role. Watch the 10-year today, just now crossing back above five for the first time since mid-October.

31:29We're back in a minute. Oracle getting caught up in the recent tech sell-off, now trading close to 52-week lows. Our David Faber joins us with the company a CFO, her first broadcast interview since taking the job. David? Thank you, Carl. That's right. We are joined by Hilary Matcha. Nice to have you here. Yeah, thanks for having me. Up on our nice little post here. We can look at your Oracle signs. You guys have been busy in particular. You had Investor Day a couple of weeks ago at which you basically said, we're doing$20 billion and then we're done. And then you did the$20 billion really fast.

32:03And I'm curious, Hilary, I guess let's just start there. Why so quickly after Investor Day did you hit the market for the$10 billion in equity and $10 billion in debt? Yeah. So for us, we laid out the building blocks for how we're getting to free cash flow positive in the second half of 2028. That's our fiscal 28 for us. So sometime even almost as early as 27 calendar for the rest of us. And then we said, and we did a lot of work over the past months on exactly how much funding we need over this investing cycle. Because it was quite a bit less than what might have been anticipated,$20 billion in entirety, we thought there was real merit in getting out there and being the first of the fully funded hyperscalers.

32:50So that's what drove us to that excitement. The market was good enough, I think, in order to allow us to do that. So we thought there'd be real value in getting that done. And getting it done quickly. And to the point that it is the last, I mean, it was in February, you were not the CFO then, that Oracle said no more bonds in 2026. In June, the company said no more debt in 2026. I guess, why should the market believe you? Yeah, indeed. So I myself made that statement in June. I think it was well worth it. And I think that we were able to explain to the market here that because of the lower amount than anticipated, that it was well worth it just to get done with this endless narrative about funding of Oracle and to really get both the debt and the equity holders to focus on what we should be focusing on, which is just execution, watching us execute quarter over quarter.

33:43So I think that we felt confident, even though that's not entirely what we said at the beginning of this year. It's so unanticipated, the low amount, that we can do that. And we're very, very serious about the commitment of the one and done that$20 billion is what we need and we'll manage to that. You were on the record many times during the investor day saying in different ways this is it. I am curious about what you paid, particularly on the debt side, obviously. I mean, we just saw the 10-year hit 5 % again. You know, in February, you paid 4.55 % on 29 notes and 6.55 % on 2046 notes. recently was now 7 % and 8.65%.

34:24Obviously, rates have moved up. But how much of that is also increasing risk for Oracle being priced by the market? Well, I think it's a bit both. But I think, look, I cannot time the market. It's very important for us, I think, to get that out of the way. The returns on investment that we get on the projects we're doing, we're bringing something like seven gigawatts of new data centers to the market in the next couple of years, the return on investment is more than strong enough to support the level of funding that we're putting into place, even those costs associated with that level of funding.

35:00Yeah, I wanted to get to that because there were a number of slides and, you know, there's so much perhaps coming at investors, some things that I wanted to come back to. A year ago, the company talked about a gigawatt of data center compute would provide Oracle with lease payments that equaled$10 billion a year. Two weeks ago, then, you just said one gigawatt now is$16 billion a year. What has changed? Is it simply cost inflation? I think it's primarily cost inflation. So we do have inflation, particularly in the cost of memory. So that's either coming through the chipset itself or we're out buying memory and we've secured that memory supply for ourselves.

35:45So it's primarily going to be around cost inflation. We have cost plus pricing in our big AI contracts. And then I also think that the market is strengthened in terms of overall pricing for AI computers. So you have cost plus. I mean, do you have a fixed gross margin then? Yes, we have a fixed gross margin percentage. So the gross margin dollars can go up and down or more recently up. But that would imply that in some ways your business has become 60 % more profitable. In some ways, we will have the opportunity to earn even a bit more margin dollars. We also introduced a few flexible funding models, though, including the bring your own hardware that some customers may follow.

36:27That makes for very high gross margins and very high return on investment. The mix of all of that, But somehow we may have more opportunities in the future, I agree. Do you think the market has understood that then? Your stock performed extremely well very briefly there after the investor day, but since then has not. I think that the market is probably watching, I hope now, for exactly what we want to show, which is real execution over the next couple of quarters. And then clearly, if we're a company that's moving to$225 billion plus in sales,$21 plus in EPS, I would say that the valuation will start to follow our execution.

37:05Now, the bulls might ask the question, and I will ask it for them as well. You had a 60 % potential increase in revenue per megawatt that we just discussed. But the only thing that changed in your fiscal year 30 forecast was you added a plus. I did. How's that possible? Your RPO grew from$209 billion to$664 billion. And we're talking about a huge increase potentially in the profitability of that. You only added a plus? Well, for me, look, we're adding$158 billion plus in the next four years. I think there's going to be stepping stones for us to get there. The plus is very real, but we don't think the market was necessarily even reflecting the$225.

37:47So we really want people to focus on the totality of the journey. We're fully funded, cash flow positive in the second half of our$28,$30 billion plus free cash flow in$29. and then 2030 will be a very, very different looking company than what we are today. Conceivably a very profitable company. But I do wonder, obviously, we've been talking a lot since the election about the possibility of data center delays. How important is that to your ability to continue to grow and or meet the specific metrics you just lined up? So we have, and they get a lot of headlines. We have five large data centers under construction already in the U.S.

38:30One of those is nearing completion. So there's four primarily that are under construction today. Those span, they started a lot of them in our calendar year 26 all the way through 29. So it's part of the seven gigawatts we're bringing online, but not all. That said, it's an important part. And we think that we have all of the scenario planning in place in order to bring those data centers online in a timing that allows us to achieve the commitments that we gave in our investor day. Regardless of the political environment or the various referendums that said, hey, no more data centers in our backyard?

39:08So these are projects that are already under construction, which generally are quite different than new data centers. So I think we feel pretty confident. It's not like anti-data center sentiment just arose last Tuesday. Actually, this is an environment that we've been dealing with for at least the past eight to 10 months. So I don't think anything really changed for us on Tuesday, aside from maybe those data centers, as we get them to completion, will actually be even more valuable in future. Right. And that has been something the market has been grappling with as well in terms of the potential compute.

39:42OpenAI continues to be a very important customer for the company. You know, various estimates are that$664 billion I mentioned, that they're still as much as perhaps half. They only were able to raise recently$11 billion when they were looking for$30 billion. They may be able to raise more. How concerned, though, are you about OpenAI as a potential customer, given their commitments to you? So OpenAI, indeed, is a good partner with us. I think they're a customer, but also partner. We also use ChatGPT a lot. We put it into our own technologies. We're very close to the team there, as you might expect.

40:16They're an important part of our business. We're an important part of their business. And we feel comfortable with their business plan. We keep in touch with their financials on a quarterly basis more than the general market would know. And we feel comfortable with what they're doing enough to support the contracts that they have with us. Does the Anthropic IPO actually help instill confidence overall in the market, do you think? Well, I guess one could hope so. I think that the financials that they showed, you know, they start to show that there's good free cash flows, good gross margins associated with their business.

40:54Finally, there were these reports about a force majeure coming back to sort of the build out of data centers. I think it was Roars and Bloomberg. It was in September that you delivered a force majeure notice on the New Mexico site because of getting various applications, I think, for power. You've said it remains on schedule. Is that still the case? Yeah, I think so. Force majeure is a word used in a lot of context from a legal standpoint. Very, very scary when you talk about projects already in operation. Like I declare force majeure because I don't know there's a war or something like that. In construction, particularly of large infrastructure, in my mind, it's much more commonplace.

41:30So something that hit the media, but probably just ordinary course in a project that does have some challenges. There's no doubt. So those types of force majeures are to to just preserve rights between the various parties. Is that part of the 7 gigawatts? That is indeed part of the 7 gigawatts. I'd mention that those commitments that we have, plus or minus a few quarters on each of those data centers, we can withstand. New Mexico, we remain committed to as a project. We think it's going to be great for the community there. And we feel confident that we'll be getting that online over time. Well, Hillary, much to discuss in the future as well.

42:07Certainly appreciate your taking part in the conversation today. Thank you. Thanks very much. Maureen Maxson is the CEO of Oracle. Sarah, over to you. OK, a lot of good information there. Thank you, David. And after the break, we'll continue the conversation about the AI build out. Tell you what to expect when CoreWeave reports earnings later today. Welcome back. Next test for the AI trade. CoreWeave set to report earnings after the bell today as new questions are raised around its shareholder, NVIDIA, not to mention the high borrowing costs, Seema. Yeah, that's exactly right, Sarah. CoreWeave's ability to raise more capital and NVIDIA's role in any future raises will be top of mind when it reports earnings today.

42:43NVIDIA CEO Jensen Wong has publicly defended CoreWeave in the midst of CoreWeave's stock sell-off in October when we saw a bond yield surge above 15%. Wong came out and said CoreWeave does not need a backstop or a bailout and that its, quote, cost of capital is actually decreasing. NVIDIA has been an investor in CoreWeave since 2023 when it participated in its Series B fundraising round at its IPO in 2025. held about a six percent stake and in its latest investment of two billion dollars in January that put Nvidia's stake in the NeoCloud at around nine percent. The market has sort of operated on this assumption that if CoreWeave remains boxed out of the credit market and pressure continues to mount on its business that Nvidia could potentially step in.

43:24That's sort of been Nvidia's playbook, right? So far this year following Hugging Faces hack, Nvidia acquired the software company for 12 billion. It has over 40 billion dollars, guys, committed in 2026 in these AI investments. And I'm told by existing investors that CEO Jensen Wong played an active role in all of these names, sort of a seat at the table. The question now is how Wong's many pending investigations will influence future dealmaking. The expectation is that he will need to devote some time to his answering questions internally and externally. And regardless of how the investigations go, So there is, again, this conversation happening on whether he will be able to maintain the same level of authority and power he has as CEO in executing some of these big investment decisions, guys.

44:08Seema, thanks. Two really interesting data points just now. Microsoft, microcap overtakes Nvidia's market cap for the first time since 2025. And then I think Nvidia's multiple is now lower than Procter & Gamble's. I mean, the stock is taking it on the chin again. And I'm sure, you know, shareholders aren't pleased that they're losing money because of his bad judgment. I think the bigger question that the board has to answer is that, you know, if there's any evidence of wrongdoing or that they give away secrets, it's just it's a mess. And we haven't heard from him yet beyond that statement where he admitted to the affair.

44:47Yeah, this is why we need more women leading companies. They are less likely to cheat on their spouses. 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. Such 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.

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