9AM HOUR: AI Trade Pain, Meta and Tesla Slide, Jensen Huang Interview 10/22/26

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1:09Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber and Mike Santoli at Post 9 of the New York Stock Exchange. Kramer has the morning off. Stocks down, yields down as both Meta and Tesla are lower in reaction to earnings. Got some tough guidance out of Lamb Research, the airlines. Ten-year 503 is almost a one-month low, but Brent hits 112, highest since May, on reports of plans to renew U.S. and Israeli strikes on Iran. Our roadmap begins with a trio of tech earnings to watch. We will break down Meta, Tesla and IBM all under pressure in the pre-market.

1:42Plus, NVIDIA's Jensen Wong sitting down with CNBC from the company's GTC conference in Berlin saying the demand for the neoclouds off the charts. And Barclays, the latest company to announce job cuts, slashing 5 ,000 jobs as it steps up its AI push. Let's begin with Meta shares under pressure in the pre-market despite a Q3 beat and some stronger than expected current quarter guidance. Company does raise the low end of its CapEx target. This is Zuckerberg making the case for his AI spending strategy on the call last night. I feel like this is what we're here to do is make long-term technology bets and design the best experiences end-to-end that we can for billions of people around the world.

2:22And I think as long as we continue to do that, then over time, the business takes care of itself as long as we continue executing well, which I'm really proud of the team for how we're doing on that. So they do tweak up the 2026 CapEx Guide 135 to 145 billion. They've only done about 86 so far this year, so they've got more to do before the year end. More to do. I don't think that there's sticker shock on the CapEx number explicitly. It's more the general impression that we don't we're on this treadmill and we're going to keep going with it. Muse, great uptake. They were able to cite a lot of ways that was happening.

2:56But in the near term, that represents cost, cost to deliver it. And then later on down the road, you're going to make something out of it. There's always this counterfactual with that. I mean, you know, 20 percent top line growth. That's what they do this year. It's supposed to add 50 billion in revenue. Next year,$50 or$60 billion in revenue. The counterfactual is what would they have been doing without all the spend? And so I think that's always the tension in this equation. And then the idea that they're making it easier to potentially raise more equity capital down the road, even though it's not big numbers relative to the market cap, it's in people's heads.

3:29And in the context, too, of we're just questioning now the whole AI kind of investment thesis and how fast the paybacks. We'll get into the split and the C shares, but the stock got to almost a 750 last night. And then it's turned around. So the question is, I mean, overall, listen, we're looking at a market in a Nasdaq that's going to be down substantially, potentially when we open 27 minutes from now. But it wouldn't appear to be, just to take it to the broader market for a minute, guys, it wouldn't appear to be based on the earnings themselves. No. I will turn to our, what's your title? Senior markets commentator.

4:01Our senior markets commentator. That's the one. Is it more oil than anything else? And rates? I think with tech, it's not necessarily more oil. I mean, the cost rate was down 3.5%. Why is it? All right. We might break the July lows in those stocks in memory. And yesterday, I just do want to dial back to yesterday, because yesterday cosmetically was a relief rally day. But, you know, semis lost altitude all afternoon. SpaceX peaked at 1130 a.m. Corweave did not get even a slight bump higher. So there was still this part of the market that remained suspect. And I think that we've just kind of re-upped for that today.

4:37We're going to just test those recent lows on a lot of those metrics. And then I think the reason the overall market is also not able to absorb it is you do have oil up, geopolitical tensions ratcheting higher, and then the safety bid in Treasury. So I think all that feeding into, OK, we're not just going to have this gentle rotation away. But also, you know, Meta was down. Meta peaked just under$800 on the excitement on the Mews uptake initially. So it has run into this level that it wasn't able to get over. And I don't think this is much of a move, right? We're down a couple percent in a weak market, as you say.

5:12But it does reinforce the idea. You could make the argument, this is a cheap stock, okay? Well, you always can, almost it does feel like with Meta, because typically it often is. It's 20-ish, 21 times. Yes, multiple trades below its revenue growth rate, oftentimes. But also, that's where Alphabet's now trading. You know, NVIDIA's at like 15, right? So in other words, we're not paying up for the spenders at this point. Well, speaking of the spenders, guys, you did obviously mention CapEx,$135 to$145 billion this year. But they didn't give guidance, coming back to Meta now, for anything beyond that.

5:45We did not get any significant framework for CapEx guidance or anything else. They promised what? Strong revenue growth. That was about kind of all you got in terms of sort of any forward-looking significant guidance. On Muse, 25 % of users engage daily. They say that's more than twice what Thread saw at a comparable stage of at least its introduction. And obviously, as Mike said, a lot of excitement around the introduction of that agent, Muse. not Muse Wonder, their latest model, which they say is right at the frontier, along with the likes of what you've got from Anthropik and OpenAI. But we did watch Metastock drive forward when they initially released Muse, and it hit the top of the charts in Apple.

6:32And then there is, Carl, the stock split, so to speak, the C-share that is being created. And it's interesting. Again, it is not capital raising now. You're simply going to get a C share for your A's and B's. But at some point, this is what they can issue because it will not dilute Zuckerberg's voting stake. And it's also important because if Zuckerberg is forced to part with some percentage of his wealth and chooses to do so by selling stock, he can now sell the C shares and also not lessen his overall voting stake, which is at some, what, 60, 62 percent, I believe, of the voting shares of the company.

7:11I would note, Mike, you know, when you look at some of these non-votes-to-votes classes in the past, they do trade at discounts because oftentimes it's the non-voters that are used for acquisitions, for all sorts of things. I would come back to News A, for example, a company I used to follow closely back in the while back with Rupert. It always traded at a discount to the voters, which Rupert never issued. He always used the News A. And so we'll see what happens here with this. How much of the voting, the super voting shares, well, it's voting versus non-voting, not super voting. So none of that stuff's floating around in terms of Zuckerberg's bullshit.

7:48No, it's not. And so it does, again, line up for what would seemingly be a significant equity issuance. But most likely they want to issue these. And I think the CFO even said this could be used at some point, of course, to raise capital. Right. So it has to become effective. And then you would think about doing some kind of an equity raise. And even though it's, you know, as I said, if they were talking about 30 billion, whether it's 60 billion, whatever it is, two to three percent of market cap, it wouldn't immediately compromise, you know, the voting control, but it would eat away at it. And this idea is he says, this is what we do.

8:24We raise money. We spend money on big technological bets. You don't know where it ends. So that's why they're doing it. I mean, the Times does this pretty deep take on the filings that show how the company is trying to keep Zuck in California if California passes the wealth tax. Because he threatened to leave and everything. Right, because he would have potentially had a part with 5%, which would take, by the way, his voting stake down if that, in fact, was the case. But they've obviously worked on that. Now he's what? He's committed to eight years, I believe, as part of his deal. I think that's right, yes.

8:53Meantime, losses out of Reality Labs,$19 billion,$15 billion next year. Headcount down$15 year on year. I thought that was interesting, too. They coined the phrase year of efficiency back in the day. They did. I believe it's the first time we've seen them negative free cash flow. Yeah. Actual negative,$2.1 billion. We've talked about this moment for quite some time and how what were once the most profitable companies the world's ever seen, given the spending they're doing, are moving themselves towards negative free cash flow, whether it be an Amazon or an Alphabet or a Meta. Yeah, those three have basically done that.

9:26I mean, Microsoft hasn't quite. Right. But, yeah, they're all essentially sacrificing. And, you know, one of the reasons they feel confident doing that is, as I said, they are going to, you know, if the forecasts are right, Meta's going to have$50 billion in more revenue next year than this year to play with. So there is this kind of offset, at least in terms of the core growth. Yeah, that's sort of the creeping narrative at the moment is that with credit constraint and financing constraint, the big guys are starting to work on squeezing out the small guys. Right. And you can look throughout the market and see signs of, OK, I guess we're slowing down either by choice or by necessity or because the market says no more on certain borrowers.

10:04There is a sense of slowing versus what we thought we were going to be. Not slowing as in like jobs are going quiet and dark. It's more just kind of, you know, we're maybe ratcheting back our expectations for how long this this proceeds. I've seen some of these anti-AI stock baskets, you know, the companies that would benefit if we weren't necessarily just, you know, dislocating them with AI. They've kind of bowed them and come off the lows a little bit. It does take us to Tesla, also down pre-market despite a quarterly beat. The company posted a decline in auto revenue and did reduce its CapEx forecast.

10:39This is what Musk had to say about EV demand on the call. Demand is growing rapidly for our vehicles. It's exceeding our production by a significant margin, and obviously we're going to be ramping, and we are ramping production meaningfully. We've also been laying the groundwork for a lot more manufacturing capacity.

11:03We're, I think, aiming for 5 million vehicles a year by approximately 2030. And I think we've got a good shot of achieving that goal. So this is another really interesting CapEx story. They trim this year to$20 billion. And just about six months ago, they had raised it to$25. So they're undoing what they raised a few months ago. Yeah. I mean, and obviously, the car business and the energy storage business, they don't really account for the market cap of Tesla. So the idea is, what are you doing to build next? Obviously, full self-driving, they had pretty good penetration growth in terms of subscribers there.

11:49But again, it's much more about, you know, the whole future piece of this company. Are we just sort of outsourcing it to SpaceX, assuming that's going to be combined and it's going to just be kind of drafting off of SpaceX CapEx? And$20 billion sounds like nothing in this environment, which is kind of fascinating. I mean, you know, there was a time in the iPhone era when Apple was spending$5, And it was like, you know, it was enough. And as I pointed out yesterday, AT &T and Verizon were the biggest cap expanders. $20 billion or something along those lines. Now it's nothing. It's like, oh, yeah, we'll spend that in a month.

12:23Right. SpaceX, the potential for SpaceX to buy Tesla overshadows much of this. And I will be curious to see how they trade. We pointed this out yesterday, obviously, in a lot of our reporting on the possibility of this, given what Musk said on the SpaceX call about special committees and the like, but how closely the two will trade in unison, whether the market is going to try and assume some sort of a ratio, even though there is no ratio, because there is no deal as of yet. And you see that headline from Reuters. I don't know if that's true. In some ways, talking on an earnings call may have been his only opportunity to do so in terms of not influencing, because he could at least share that.

13:03Litigation is sure to follow, but one would expect that they will try and do things to mitigate at least the effects if they can. And again, you do wonder, Mike, a few things here in SpaceX buying Tesla. First of all, if you are Tesla, SpaceX hasn't been around that long as an equity. There's still lockups, as you pointed out, yet to come. They have not created the volatility, perhaps, that we would have thought they might have, or at least the selling pressure. But that doesn't mean that they won't. You might want just a little more seasoning for the stock before you assume some sort of a ratio based on that stock.

13:40Right. But time is kind of the essence in the sense of you want to get this done while the Trump administration is in power. You still got some time there. But, you know, I think that that assumes a certain level of rigorous independence by the Tesla board. Well, you know, relative to what Musk wants. Yes. Let's be honest. I mean, and and so that's one piece of it. And the other is, and this is why, you know, Musk was able to kind of hold the board over a barrel on his comp, which is without him out there blowing the trumpet and waving the flag with its investors. Like, where does that stock go if it's just the business ex-Musk?

14:17I mean, it's just that you know, I know. And we've been talking all morning about Starlink and Ukraine and his posts on X about Democratic lawmakers who, if they do take the House, are likely to start giving him some scrutiny. Pretty hostile, yeah. And so the political risk doesn't appear in 28. It could appear in two weeks. It could appear sooner. It could appear sooner. But in terms of approval of the deal from the regulators under the Trump administration, that will extend for at least the next 26, 27 months, which does give him some time to get that done. By the way, his comp plan as well.

14:52Remember, at Tesla, there is a change in control, but it has to exceed two trillion dollars in overall value for him to get the first of, I think, 12 tranches under that comp plan. But more importantly, if you put them together, he has voting control over the entire entity. Right. At some, I think, maybe depending on what you see the splits as. And Tesla right now is like a trillion and a half. It's going to be over 50%. Yeah. When we come back, we'll talk about what Jensen Wong told us about AI at GTC in Berlin. Take a look at the pre-market. We'll get to whether or not the Sox can hold some of these July levels with LAM Research.

15:28Down 10 pre-market. That's going to take you back to April. Don't go anywhere. Don't go anywhere. With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details.

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17:01jewelers. AI always in focus. NVIDIA wrapping up its GTC conference today in Berlin. CNBC's Arjun Kirpal spoke with CEO Jensen Wang at the event. And Arjun joins us live.

17:17And David, it's been Jensen mania over here in Berlin and a great time, of course, to catch up with the NVIDIA CEO, given some of the concerns around this AI trade and pockets of this market. One of those, of course, being the NeoClouds, led by concerns of CoreWeave, some of the debt financing we've seen there, and a number of quite bearish stories around some of these NeoClouds. Now, of course, NVIDIA is an investor in many of these NeoClouds, from Nebius all the way through to NScale and CoreWeave as well. And they are buying up billions of dollars worth of these NVIDIA GPUs. So I asked Jensen Huang, is there actually a fundamental problem with the business models of these NeoClouds?

17:51Let's listen in to what he had to say. The demand for the neoclouds is off the charts. Their capabilities are extraordinary. And so what is missing in the middle is the working capital to fuel that growth, to fund that growth. And because there's just so much demand across so many sectors of AI, there's a scarcity of capital. The demand of the capital is much greater than the availability of the capital. That's going to get solved. And that's going to get solved because fundamentally the most important things are the values that these guys are providing, these companies are providing. The demand for it is so strong.

18:34Jensen's view there really is not an issue about demand or the business model itself, but access to working capital as well. And of course, as I mentioned, NVIDIA, backer of many of these neoclouts. Another big concern in the market, of course, is over some of the memory stocks, the likes of Micron and Samsung and SK Hynix. and whether there is actually potentially an oversupply. This was a conversation that was sparked a few days ago by a prominent South Korean business paper who suggested that there could be oversupply of memory in 2029. It was a question, of course, given that NVIDIA is a big buyer of memory and of high bandwidth memory in particular as well.

19:07I asked Jensen Huang whether a 2029 oversupply scenario is likely. Let's listen to what he had to say. I don't think so. You know, one of the things that's really great about memory is that you could always use more of it. And, of course, through architecture ideas, and NVIDIA owns the architecture of our systems, through architecture ideas, we could shift around the resources as necessary. But HBM memory will be used for years to come, and LPDDR.

19:43So no signs of memory oversupply there, according to Jensen Huang. He goes, there's lots of memory that is going to be needed in the future. We spoke through so many topics, all the way from his views on safety through to the China market and whether that is still open to the company as well. All of that on CNBC.com. But for now, guys, it's back to you over there in New York. Arjun, appreciate that very much. Going to help move markets over here, that's for sure. A great interview, Arjun, over watching with Jensen Wang. Take a look at the pre-market here. We'll get to a ton of movers on earnings, including Spotify, Lockheed, Valero, Comcast, Procter, the Rails, the airlines in just a minute.

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21:50Unless we are stopped by governments, which is certainly a possibility, like if they're trying to protect the domestic industry, I think Tesla will end up doing a majority of all passenger miles on Earth in any country where it is allowed to operate freely. and you can come back and look at this prediction, but I feel confident about this prediction. That's Tesla's Elon Musk on the call last night, predicting the company will eventually account for the majority of all passenger miles on Earth. For now, auto revenue was negative year on year. Yeah. And, you know, volumes have basically been flattish for two or three years now.

22:31So, So, you know, he didn't put a time on it when that might happen. And what he's obviously talking about, too, is self-driving and robo-taxi and all this idea of, like, you know, having fleets and personally owned cars, you know, rove around and be on demand for everybody. But it's a long way. It's a long way there. But stretch goals. That's what he always puts out. I think he's talking unsupervised FSD by Q2 now for those who bought the software years ago. And then CyberCab sales by year end, even though NHTSA continues to look at whether or not that is going to be legal on American roads. It's actually going to be cleared, yeah.

23:11So, unclear. I mean, I do think it's worth reinforcing the notion that Tesla now doesn't really trade on the car business. It's now trading as what's next plus SpaceX potential down the road. And, you know, and it's been wallowing here, I think, for a long time. We also have to remind people we're coming up next month is the is the fifth anniversary of kind of that ultimate peak post pandemic. And it was like almost six years since it went into the S &P 500 and has barely been a net upside contributor over that time. Yeah. One of the worst MAG 7 names for sure so far this year. Yeah. Let's get ready for the opening bell here as we're going to keep an eye, I guess, Mike, on volume and fix action above 18.

23:55Yesterday was a bit of a light volume, you know, levitation. We kind of stayed above last week's lows, which I think are relevant here. It's like maybe a 2 percent drop from from yesterday's close in the S &P 500. And that would break a little bit of a pattern where we're trying to turn higher here. So I do think a lot of things are on that frontier of don't worry to start worrying. Well, we'll get to what some of the airlines are saying about next year. That'll lead to some more. Let's get the opening bell at the big board on Wall Street. It's S &C Outfunds doing the honors. Here to spotlight their latest ETFs at the NASDAQ and Times Square.

24:35Ocean Light Acquisition Fort. It's fast. It's incorporated into Cayman Islands, headquartered in New York City. And at SIBO in Chicago, it's pure epilepsy. And the Cameron Boyce Foundation honoring those who lost their lives due to sudden, unexpected death in epilepsy. As we do lose that range, Mike, of 7 ,700, sort of back to the lows of the last few days. Yeah, the number I was talking about is like 7630. That's last week's lows. You break that again. Everything is sort of on this shelf that we've more or less been in place really going back to May, June. So you could look at the S &P. You could look at the Sox is very much in that in that zone, as is really the bank index to the BKX, the KBW Bank Index.

25:23It's sort of fighting to stay above those trough levels from the spring. I think that's where a lot of things are sitting right now. So it's you can still say we're holding trend. And I can absolutely say that sentiment and positioning have moderated to a point where there is some upside risk if you get some kind of clearing news or anything like that. But right now, the market isn't really proving it. Semi should really be bouncing this week. They are oversold enough. They have not really taken that opportunity to do it in a comprehensive way. And as I mentioned, Cosby down 3.5 % overnight. The memory stocks are still back toward that fold.

26:01DRAM ETF is another one that's only been around for a few months, but it's been an exciting few months. Guys, I wanted to hit news from Barclays and then use it as a way to also get to IBM earnings, which we will get to. IBM shares are down. But we did get this news from Barclays that it will eliminate roughly 5 % of its global workforce. 1 ,000 positions at Barclays apparently have already been eliminated during the first half of the year, but another 4 ,000 are expected to go away between now and the end of the year. And of those, about 60 % are said to involve support roles, including things like software developers.

26:43Now, we always look for the linkage to AI. Here they do talk about investments in technology, including AI, allowing employees to perform work more efficiently, if you want to look for that. You know, they're not struggling at Barclays. You can see the stock obviously has performed to a certain extent like many of the banks have as well of late. But it is about AI deployment, no doubt about that. And that gets us to IBM because during the call, its CEO, Krishna, discussed deployment, of course, and how they are a beneficiary of customer spending priorities and trying to leverage AI. Take a listen.

27:33Customer spending priorities and trying to leverage AI remains strong. But as you begin to leverage it, how does the average customer get value? They have to rewrite an application. They have to modernize an existing application. And you then ask the question, where do those run? That tends to be a tailwind for Red Hat OpenShift. And I think we are at the very beginning of the cycle. So I expect that to carry on for a long time. Of course, that is one of the key questions we have. How quickly can you diffuse AI within the enterprise? What friction is there? How many things do you need to rewrite?

28:12How many jobs need to be reworked to a certain extent to allow for this technology to actually bring the efficiencies that have been promised. Krishna, talking about that, obviously, on the earnings call itself. This is a stock that you recall, of course, Mike, this summer when they took the rare step of pre-announcing a bad quarter, got absolutely crushed, and it hasn't really come back. It hasn't come back all the way. They did say in reporting the results yesterday that those software deals that had gone uncompleted, and that was the cause of that pre-announcement, About two-thirds of them have been knitted up.

28:48The stock still hasn't retraced all the low. Even coming into today, it's up 8 % this week. So it is trying to recover a little bit of that. And the issue, I think, in terms of big picture when it comes to IBM and talking about how they're enabling their customers to implement AI and all the rest of it is, their core legacy business is in other areas where they already were providing a lot of services. And it's sort of you wonder how much on a net basis there is vulnerable, right, IBM's, especially financial services, big, big franchise for them. And so I think that's the puzzle as they try to make the case that, you know, they are going to be more beneficiary than victim.

29:29Yeah, you can see what the stock is doing right now. By the way, third quarter revenue on constant currency was up 5.6 percent. The operating margin did expand by, I think, 70 basis points as well. and fully diluted operating EPS,$2.95. That was up 11.3 % just to sort of put that in perspective. Other movers, guys, that we got this morning, Comcast, our old parent company, no longer, of course, we are now Versant. VSNT, if you have any interest out there, stock is up a little bit this morning, VSNT. It's also up at Comcast. Don't see that that often. We always look for some of the key metrics there being how many people are disconnecting broadband, how many people are disconnecting video.

30:10What's the wireless ads? And so let's give them to you. Domestic residential broadband was down 144 ,000. That was actually year over year worse. Domestic wireless ads were 368 ,000. There were over 10 million wireless customers now at Comcast with the asset light approach. Of course, the MVNO they have with Verizon. There it is. Thank you. And the video losses continue as well. 274 ,000. Peacock was perhaps one of the real positives for the company. Kind of a bright spot, yeah. They, I'm just trying to find all my different numbers here. Second profitable quarter for Peacock. Revenue up 33 was still a bit light, but paid subs up 17, flat quarter on quarter.

30:58They did have FIFA World Cup to benefit from, as well as the Odyssey. Right. Yeah, so, I mean, obviously a bright spot. It's flagged by a lot of the sell side as very popular short. It's in the kind of deep value disrupted basket that will rally on weekdays. And so that is part of what's going on as well. I mean, when you look at the free cash flow generation of the company and you annualize it, yeah, it's trading it to some ridiculously low multiple to everything. Debit data, free cash flow because of the overall concerns, frankly, about their competitive position in the key business, that being broadband.

31:33Remember, they are also separating this company into NBC, which will include Peacock and the studio and the network and the Bravo cable channel that didn't come with us and then the broadband business. But it's that broadband business in particular that is seen as very vulnerable, potentially right or wrong to the star links of the world as it continues to spread around the world and into communities around the U.S. and fixed wireless which we've been talking about for a very long period of time. One area that has been a continued bright spot, of course, had been theme parks. But Mike Cavanaugh, who will be running NBC, was on the call talking about theme parks and the trends they're seeing.

32:15Take a listen. While we continue to see near-term demand pressure across portions of the parks business, including in Orlando and certain international markets, we view these trends as temporary rather than structural. First, we believe competitors were quicker to anticipate and recognize softness in demand and adapt their marketing strategies. And second, we continue to work through capacity challenges and ride throughput at Epic, given the complexities of opening the most technologically advanced theme park ever built. So interesting there that he did actually admit competitors were quicker to anticipate and recognize softness in demand and adapt their marketing strategies perhaps more quickly than they did at Universal.

33:00Well, it certainly echoes with what American said in their quarter this morning. Load factor misses. 2027 growth is going to decelerate considerably in American's view. And then, of course, Love also cuts the guide, sees Q4 55 to 80 cents, streets at 84. Yeah, it's real separation. I mean, these airlines normally go into the fourth quarter fairly hot. Yeah, it's real separation, too, in terms of, you know, don't the UAL get the benefit of the doubt and the rest don't. By the way, just to put a number on Comcast, 17 % free cash flow yield on projected free cash flow. Six times free cash flow. Six times.

33:38Yeah, because it's running at over$4 billion. And by the way, Bloomberg's got a piece on Comcast that job cuts are being considered. And you mentioned Barclays. Yes. eBay's confirming the Reuters report of 9 % yesterday. Okay. Netflix, Kroger, Workday, Quark. I mean, we're getting into the pile-up mode on layoff announcements going into year-end. We are, and of course, we're always going to be looking through to try to understand the absolute linkage to AI and what they're seeing. There's clearly a linkage there, but it always becomes a bit less transparent, I feel, as though companies don't necessarily want to see it.

34:15EA, we didn't mention EA. And official jobless claims were under 200 ,000 again this week. One of the lowest readings ever. It's just not happening in terms of the flow of absolute layoffs, feeding into unemployment claims and all the rest. There's a lot of, you know, mitigating factors, including a couple hundred thousand retirements every month economy wide. But it is really interesting how the macro data don't really rhyme with a lot of the corporate streamlining news that you're starting to hear here. I would point out just in terms of macro, we do have another bid in Treasury yields. And so last week's pattern of stock market gets a little volatile, people get worried about credit.

34:53You actually are buying treasuries. It's not about higher yields. So 504 or so on tens. And that is happening when overseas you're seeing French yields blow out. They now exceed the U.S. 10-year. So that dynamic where there's a safety bid fits in with this notion that with this surge in yields, there's value in bonds as a cushion again. and that they are operating as a bit of a hedge and an offset to equity risk. Yeah. French yields actually today, the 10-year, got above our own 10-year. Yeah, there it is. For the first time since 2013. And, of course, Macron has been on the tape blasting our president for what he called stupid comments about the riots.

35:34The situation in France is tense. It is. And the question for investors there is, of course, continues to be the 5 % of GDP that their deficit represents. Of course, in this country, we exceed that. No, that's the whole irony. I know. It is an irony that they don't have a reserve currency and we do. Exactly. That's the whole story. Too bad. And, you know, then, but also Japanese investors are significant investors there, but Japanese yields are up, so maybe you want to just stay home. Right. Guys, I did want to hit Blackstone this morning as well. It does bring us back also to sort of the overall conversation around data centers and AI that we continue to have here.

36:10As for the company, total assets under management hit$1.368 trillion. That was up 10 % year over year. Fee earning almost at a trillion. That was up 9 % of assets I'm talking about. Perpetual capital, by the way,$562 billion. That was up 12%. They did have quarterly inflows of over$63 billion, deployed$30 billion, and on from there. But there is sort of this question around their financings for the likes of data centers. Remember, they also own many as well. John Gray, on an interview earlier on Squawk Box, sort of addressed kind of what they're seeing in terms of both spending internally at their portfolio companies on AI and then went on to expand that to talk about some of the challenges for certain data center developers.

36:59Take a listen. at our companies as an example we've seen a 20-fold increase in spend on model uh on models over the last 12 months it's pretty extraordinary we have a joint venture with anthropic to deploy these models the company's called ode and it can't keep up with the business that's coming in the door so we're seeing demand really growing for compute and at the same time the constraint, of course, is delivering that supply. And that's hard because of amassing capital, data centers, power, chips, all of that. And so for the neoclouds, if they can get to the other side, the pricing of compute's up 50 percent.

37:46Their legacy chips are worth much more than people thought. Their data centers are least below market. Their challenge is, do they have the capital, the debt and equity in the quantum that's needed to deliver. I think some of these companies have very talented CEOs. CoreWeave's a good example of this. They'll find a way through it. But that's the challenge they face. The underlying business is actually quite strong. Gray, of course, talking about data centers that are already under lease and with chips in them, actually, you know, if you could re-up, you would do so at a far higher level, as we see with SpaceX, which is able to get as much as$50 billion per gigawatt of compute, essentially, they're offering far above what are the rates that have been signed previously in deals that are already in existence.

38:33Yeah. Bernstein today takes a victory lap. They went underweight CoreWeave seven months ago with a target of 56. Today, they cut it to 51. They say, we estimate CoreWeave needs to raise$85 billion to fund the existing committed backlog. They do suggest that NVIDIA would step in if things got super tight. I think that is kind of the answer. I mean, SpaceX saying they have like a six month payback period after they deploy. You would think that credit investors, if they believed it, would say, fine, here you go. If those are the real economics. But I don't think there's a lot of confidence that that's necessarily the case across the industry, that it's going to happen in time.

39:17So that$85 billion that CoreWeave has to raise, however they manage to try and do it, whatever mix of debt and equity and what they're going to have to pay for it. I mean, that's the reason that the stuff trades this way. You know, I just, again, it's just really a stretch to think that this layer of the industry was going to reap tremendous reward on a sustainable one. The landlords, like, you know what I mean? And so I think that that's happening now in terms of the skepticism around that whole think? Well, yeah, it's not just the landlords. It's also the people who put the stuff in the building, right?

39:55In the case of many of these, the landlord, like a related digital, they're doing fine. They were like, well, sign a 17-year deal with Oracle. It's Oracle that's got to spend all the money to put the servers in there that in five years' time, I don't know, maybe they're worth more. Maybe they're not worth anywhere near what they spent. That's the problem, right. And by the way, interesting listening to Gray talk about Anthropic and their joint venture, because so much of what's going on in the market now, I would argue, at least the people I speak to, is about, well, what are we going to see when we get that S1 from Anthropic?

40:24And because there was a deceleration in growth in that third quarter, at least there seemed to be. And maybe it was because they cracked down on distillation from the Chinese models. Maybe it was because Meta pulled back as a key customer. Who knows? But it's funny having so many discussions with people about a private company, but that's what it's about. Yeah, I know. Look at GE Venova today. I mean, nine more bucks, that's going to take you back to March on GEV. And we've talked about how important it is to stocks like Cat and Goldman. I do want to get to Lockheed, S &P leader today. This is, what, 9 % gain as sales were ahead.

41:01There's a backlog,$291 billion, well above. Yes. And, you know, the big defense contractors have been way out of favor. So this is a pretty nice setup, you know, given exactly where those had gone. There was just basically this overlay of skepticism that they work in the penalty box on some level. And so, you know, pretty good beat. They're going to make up a lot of their recent, like, one-year loss. By the way, Spotify, I know you were looking at that. That's up nicely. How about Procter, too? It seems like premium growth. Procter, perfect defensive play. They have a little bit of good news incrementally, and it's fine.

41:35Yeah, this is the best day for Procter here since 2020. Wow. Almost 6%. Really? Yeah. And look at that. Yeah. But see where it was? The panic of the Gulf War, of the Iran War, right around here. What's the multiple on that thing now? It's probably low 20s. It's above NVIDIA's. For sure. Meta's. Yeah. Yeah. You know, the universe is back in line. You know, that's always the way it was. Procter was too expensive. As we go to break, watch bonds. Mike mentions some of the bid in treasuries as we got the 10-year. this morning back to 5.03ish. That would take you to the last week of September and claims, of course, at 194K, one of the lowest readings ever.

42:19Stay with us. One of those mornings where breath is actually a little bit better than it is worse, even with the S &P down about a full percent, although hanging on to gains for the week, haven't quite taken out the lows of Tuesday morning, which would be around 76.68. Later on this morning, 11 a.m. Eastern, don't miss an exclusive with Pershing Square's Bill Ackman joining us live from the Tel Aviv Stock Exchange. Squawk on the streets back in just a minute. Apple's foldable iPhone duo starts at a price of about two grand, but aggressive carrier promotions are dramatically changing the math ahead of tomorrow's in-store launch.

42:54Let's get some more this morning right here at Post Tonight with Mackenzie Sigalos, who's been tracking this. And some of these reviews are getting kind of spicy too. Very spicy. Joanna Stern's video watched that yesterday. Come back to that. But right now, Apple's$2 ,000 iPhone duo is already being sold for dramatically less than that once you factor in carrier subsidies. AT &T can effectively bring it down to about$800 over 36 months with an eligible trade-in and plan, while T-Mobile and Verizon are both around the $1 ,000 mark with their best offers. And we've been talking a lot about Apple Upgrade, its new leasing program.

43:27And even with Apple directly in eligible trade-in can bring that initial$2 ,000 sticker shock down to around$1 ,100. And the lease gives customers another way to spread the cost rather than buying it outright. And the carriers may actually be the better place to find one right now. Apple's site has new Duo orders pushed into late January, while current carrier estimates are mostly in November and December. So some customers can potentially pay substantially less and get the phone weeks earlier by going through AT &T, T-Mobile, or Verizon. Though, of course, he will be locked into service plans as part of these deals.

44:00Now, as for what all of this means for Apple's bottom line, it could be an especially lucrative new tier of iPhone. CounterPoint telling me this morning that it's just done a preliminary bill of materials estimate on the 512 gig Duo, and it puts gross margins at more than 55 percent, actually higher than the comparable iPhone 18 Pro Max. And that's despite memory now being the single biggest component cost in the iPhone, edging out even the folding display. Tech Insights also seeing memory costs spike sharply across the generation. So Apple appears to be preserving exceptionally strong economics, even as some of its biggest input costs rise.

44:36Is there a sense, Mac, that Apple is content with this sense of scarcity? In other words, did they have lower hopes for demand or are they OK with this idea that they're going to have to, essentially ramp up production beyond what they might have thought? I think for the moment, scarcity is a fantastic thing as a selling point for the duo. They waited until yesterday to say, yes, indeed, there will be stock in stores on Friday if you didn't successfully place a presale order for this device. So that drums up a lot of interest. We're going to be at that store tomorrow on Fifth Avenue, and so we'll get a sense of what the lines are like.

45:08In past years, we certainly saw tents camped outside of the flagship location. I look forward to that. Get some rest in advance by Kenzie Sagalos. Interesting market setup here. Meta down six. Tesla almost back to flat. And the 10-year within two bips of a four-handle. Stay with us. You've been listening to the opening bell on CNBC's Squawk on the Street. 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.

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