9AM HOUR: Stocks' Post-Midterms Rally, AMD CEO "First on CNBC", CVS CEO Exclusive on Breakup Plan 11/4/26

0:00This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules.

0:35Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street. Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange.

1:13Got some wild swings overnight in the wake of the midterms as Democrats take both the House and the Senate for the first time since 2006. Big implications for defense stocks, data centers, crypto, clean energy and more. Bond yields a bit lower. ADP was a beat. Eurozone inflation hits four for the first time in three years. Our roadmap begins with Democrats dominating the midterm cycle, taking control of both the House and the Senate. We'll break down the market fallout. Plus a first on CMC interview with AMDC, Oly Sisu. That'll be on the company's third quarter earnings, which were ahead of expectations.

1:46And what a democratically controlled Congress may mean for the data center buildout. And CBS Health announces it's going to split into two public companies. It is breaking up its insurance from its retail pharmacies. CEO David Joyner is going to join us on set for another exclusive interview. Let's begin with Mark a reaction to the changing balance of power in Washington. Last night's midterms did show the Democrats flipping the House and the Senate. A number of races still yet to be called. Texas, of course, among the biggest stories of the night. James Tallarico projected to defeat Republican Ken Paxton.

2:21become the first Democrat since 98 to win a U.S. Senate seat in the Lone Star State. In the gubernatorial race, Gina Hinojosa is the projected winner over incumbent Greg Abbott, making her the first Democrat to be elected Texas governor in more than three decades. Jim, we're already getting some estimates of how many gigawatts of data center are exposed to the Hinojosa win. There have been shifting tides all evening from when we first got the 8 to 9, 10, 11, and kind of like the Hillary Clinton, where we felt first the mark goes down, that went up. I want to discount all this stuff from the point of view that the SNAP judgments have been so persistent that they could shift again.

3:00But just taking off from what you said about Texas, for instance, people immediately say that is the end of the data center. That's just such a wrong way to put it. What you have to say is it's going to make financing much harder for data centers because they're going to be more drawn out, kind of like the way that natural gas pipelines were, believe it or not, under Biden, just harder to get financing. I think if that's the case, then you're going to see the stocks that are posted right there, and let's include HUD-8. They're the ones that aren't going to get to marginal capital, particularly because their bonds are going to trade awfully.

3:28Who wants that risk? And, David, I would say that the reason why, let's use the case Amazon is up, because the market is forcing, in a backward way, forcing discipline on them. And, therefore, they're not going to use these guys, and they're just going to say, listen, we have to slow our buildup. I would argue as well that, given how much compute Amazon already has, they're in a beneficial position. So you may be right on that front, but they're also potentially benefiting from the idea that there will be less compute, or I should say fewer data centers built and therefore a reliance on obviously those that have a lot of potential capacity.

4:02That said, as you said, it's early, guys. And I think there's going to be a lot of review now, Carl, of exactly what the incoming governor in Texas has said on the campaign trail, specifically about her approach to data centers, which I don't think have necessarily been like, We're never going to have them, but it's been more about maybe no tax breaks. Maybe they have to pay sales tax on the electricity and things of that nature. It's permitting that's going to be the issue. It tracks things out. So if you have a HUD-8, which has$26 billion, what? No, no, no, go ahead. I'm just mentioning HUD-8 as being kind of an outlier.

4:34I could have mentioned Corwee, whatever. These are the guys that I think are most endangered by this just because the cost of capital has been going up for them. And this is like the coup de grace cost of capital. So if you don't have more companies building data centers, then the incumbents win. And by the way, you know, shrewdly, Louisiana, one place, it was definitely the right place to go. Well, you said Oracle got some of their stuff done in time. That was smart. There were 29 jurisdictions that did vote for data center restrictions of some kind. Juliet, Illinois, Hubbard, Ohio, Janesville, Wisconsin.

5:09And they were not close. We're talking 80, 75, 60 percent against. Well, it's funny. You can try to figure out why the people revolted. They revolted because of water pollution and electric? No, I think they revolted because they saw that jobs were taken away. I want to thank Strategari for this because Ben Thompson does a good job. They saw that jobs were taken away to China and they couldn't vote on it. Here they voted. They believed, David, just like you, that there could be a job apocalypse. And so, therefore, let's stop these guys before it happened. I think that was what was on target, not pollution, not electricity.

5:47No, it may very well be. We've said a data center being the physical manifestation of AI. And therefore, if you are anxious about what the future is going to bring in terms of that technology, none of us know, of course, whether there will be a lot of jobs lost. And there's an active debate that we have engaged in many times around that. We'll continue to. I would point out when it comes to Texas as well, just to note sort of other things you might not be thinking about. HCA health care shares are up. Why? Well, you're going to have Democrats in control there. Maybe they start to offer more health care in states like Texas, Medicaid, you know, things of that nature.

6:22Keep that in mind, of course, because I would have to speak to David Joyner about that. He's the only guy who would know that. And we will have a chance. But I mean, you can see. So there are other pockets of the markets that are reacting. And then, Jim, are you surprised to see the actually positive response overall to this election? Yes. In the market, I mean. Well, I am, because it's not like, you know, I think that there are certain parts of the Trump agenda that were inherently inflationary. I think we now realize that tariffs was a disaster. It accomplished absolutely nothing, other than people like me not be able to say that, except for I never cared.

6:57There are a lot of people who are always afraid. Hey, by the way, the tribute, paying tribute to the president? No, no, not anymore. You think that CEOs will actually no longer be doing that? I think they're busy. He still has an enormous amount of power. I think they're jammed. Well, really? Do you think he's more powerful or less powerful after last night? Thank you. He's less powerful. Thank you. But that said, it doesn't mean that he isn't still in a position to potentially impact your business for the next two years. That's sort of NATO's fear right now is that he will use executive power to lash out in different ways.

7:29I mean, I mentioned tariffs just because before the Republicans completely caved in the House and Senate, that tariffs were the province of Congress. I think they're going to take that back. I think that matters. There's a stock that's down that I think is absurd. It was up. And the stock is AMD. How this stock could be down is I'm just going to put my neck out there and say I wish my charitable trust could buy it right before I do this interview. And that's why we have AI and data center chip demand fueling Q3 crushing, crushing the estimates. And that's why it's so terrific to have now first on CNBC, AMD chair and CEO Lisa Su.

8:05Lisa, so many positives, it's very hard to figure out which ones to start. How about the fact that year over year and quarter, linked quarter, so to speak, dramatic surprises from where we thought would happen even three months ago and even one year ago? Well, first of all, Jim, David, Carl, it's great to be here this morning. It is a very, very strong time in terms of demand for compute. We had a great third quarter, you know, exceeded our expectations. You know, data center was extremely strong. We grew over 40 percent year over year. And as we look forward, we're seeing even stronger demand overall, Jim.

8:43So I think what we're seeing is, you know, again, compute is one of those things that everybody in the industry wants. And we are extremely well set up with our newest products ramping starting in the third quarter and going into Q4 and 2027. I've been watching your stock from before the election and after. It's obvious that people feel that whatever you thought would be about data center build has got to be curtailed. I'm curious about what you think, because, frankly, what you have in the pipeline, I can't see a single deal of consequence that would be canceled. and what you have not in the pipeline for health 20, 31, 32 could be also spoken for, given the demand that we see.

9:24Well, we are in a place, Jim, where I think there is a intense need for more compute. And when we look at that, we are seeing a very strong order pipeline. We are actually seeing the demand being higher than supply. But we were able to guide, for example, our data center business is going to grow 50 percent sequentially quarter on quarter into the fourth quarter. We have actually landed our first racks at our top customers, including Anthropic, OpenAI, Microsoft, Oracle, Meta. And these customers are seeing great performance out of our newest products. So, you know, what I look at is this is an opportunity to continue to expand.

10:03We see our business growing over 80 percent next year, which is a very significant number. It's over double of our long-term model. And we see lots of opportunity to continue expanding because of our very strong customer partnerships as well as very strong supply chain partnerships. I would also point out that you have chips that don't need as much DRAM, which I think would matter to a lot of people. I have the November AMD Financialist Analyst Day from 2025 in front of me, Nisa. You talked about the compound annual growth rate of 60 % for data center business. How would you revise that now looking at what you just did?

10:38Well, I think what we see is, again, you know, this year we're going to be 100 percent of our data center business in terms of growth. Next year, we're also forecasting over 100 percent growth. Our server CPU business, you might have seen, for example, the newest capabilities with MetaMuse and these personal agents. I think we're seeing, again, we're at the very beginning of the adoption cycle where people are seeing where, you know, AI and super intelligence can really take us. And for that, you need all kinds of compute. You need CPUs, you need GPUs, you need all of these accelerators to come together.

11:14And this is what we specialize in. So we're very, very excited about the long-term demand. There is a lot of conversation about how do we ensure that we supply all of the demand that is out there. Yeah, Lisa, I mean, you mentioned this. You're guiding to more than 80 % growth next year, and it is more than double the model that you laid out. I think it was only a year ago. And so I am curious, what has changed, particularly, let's say, even in the last 90 days for that target? And how much of it's already under contract versus just a forecast? Yeah, I would say, David, a couple of things have changed.

11:46First of all, the demand for AI has continued to accelerate. So you see more computing is needed out there. And frankly, we've also had our customers now also see the strength of our products. So, you know, launching Helios here in the third quarter, very, very, you know, big step up in terms of performance for us. Being deployed at, you know, major frontiers as well as major hyperscalers has been a big vote of confidence. And we're also seeing, you know, CPUs, I will say, David, the agentic workloads were, you know, really just coming to fruition over the last, you know, three or six months. And even over the last six weeks, you've seen just the tremendous momentum that Meta has had with Muse and the number of people who are adopting that.

12:31So all of that coming together gives us very high confidence into 2027. You should imagine that the majority of that is under contract with customers as well as under contract with our supply chain because both sides are extremely important. And we see an opportunity to continue to ramp that demand as we go through 2027. Yeah. Well, we've mentioned, of course, the ratio of CPUs to GPUs when it comes to inference and agentics. You've said a number of times that demand exceeds supply, Lisa. And so I'm just curious, if you got every wafer, every stack of memory you wanted, how much bigger would next year be?

13:07And where is the tightest constraint then? Well, I think, David, what we have seen is this supply chain is really about end to end. So you start from wafers to, you might have heard about substrates, advanced packaging, memory, into data centers, land, power, shell, data center infrastructure. All of that has to come together. I'm very pleased that we have tremendous partnerships across all of that ecosystem. And so we are confident in our ability to grow greater than 80 % next year. I think you will see over time that we will continue to work each one of those constraints. So there's not any one thing.

13:44I think it's just an opportunity for us to continue to align customer demand with the supply chain and the data center infrastructure environment. Lisa, obviously we led with the midterms and the election cycle, a big story of the morning. Can you talk a little bit about how you and your team are discussing strategy in the wake of a shift in the balance of power? Well, I actually think the work starts now and is one of these areas where I look at it as AMD as well as our peers are always working across both sides of the aisle. What I see is an opportunity for us as technology companies and technology CEOs to step up and be part of the conversation.

14:25And at the end of the day, what we need to do is ensure that everybody wins from AI. And, you know, there's no doubt in my mind that winning the AI race is extremely important for America. But I also believe it's extremely important, you know, for every region, every local community. And this is an opportunity for us to, you know, really open that dialogue. So I think it's a very clear recognition that their public-private partnership is super important. Now, Lisa, I think it's important just to talk about the competition. To me, it looks like that Intel loser both in PCs, not that important to you anymore, also loser within the data center and racks in general.

15:07And then NVIDIA, as much as you know I respect the company, you do obviously have some benchmarking, including some things having to do with storage or DRAMs that are just better. Can you speak to your portfolio versus the portfolio of your competitors? Well, Jim, I like our competitive position. Let me say it that way. So on the CPU side, what we've seen over, I would say, the last 12 to 18 months is our customers are coming back to us month after month and saying they need more. They need more performance. They need more performance that is very efficient. They need more performance that's very cost efficient.

15:48And we have all of those avenues. You know, we've talked a lot about our Italian cities. We just started launching Venice, started shipping Venice here in the third quarter. It is by far the best CPU in the industry. And the demand that we see, you know, shows that. And then when you look at the AI accelerator market, you know, I've always said that, you know, you need really a broad ecosystem to satisfy all the demand there. We really like our competitive position with Helios and MI455. We lead in memory bandwidth. We lead in many of the aspects that are important. And this is also a case where AI is helping people adopt new technologies.

16:26We're using AI extensively through our development and through our work with customers to accelerate their adoption of our products. Lisa, I do want to come back to the election. Carl asked the question as well. But, I mean, to the extent that at some point in the not-too-distant future, data centers is going to be more than 80 % of your total revenue, it would seem that you need a lot of data centers to continue to be built. There have been any number of times when it's been put to voters. Well, we just saw and they've said no thank you in certain states. And obviously we saw an election in Texas that may also have been influenced by potential opposition to it.

16:59How worried are you that data center growth is going to slow dramatically as a result of this election? Well, David, look, I believe that, you know, first of all, for everything that we forecasted, we have a very good visibility into which data centers that they're going into. And that's one of the things that we do in terms of diligence with our customers. But to your broader point, I do think this is an opportunity for us as a tech industry to realize that we need to make sure that the value proposition is clear to every local community that is going to host a data center. And I believe that we can do that.

17:34I believe the value proposition can be made clearer. I think there needs to be more dialogue going forward. And I welcome the opportunity to participate in that. Well, Lisa, I do want to point out that I think the election was defining the companies that actually have to borrow a lot of money to build data centers. And here I'm speaking of the HUD-8s or the CoreWeaves, the IRENs. If they are the marginal builders and they don't have the capital to build, does that change your 2027 or 2028 growth rate predictions? Because they were a sizable part of what I thought would start to be building in, say, 29, 30.

18:10and that we can't overlook that the companies that are on our screen right now, which are the neoclouds, were the big losers last night, the biggest losers last night? I will say, Jim, that it is really important, as I said, for us to plan the entire supply chain that's required, including data centers, including land, including power, including the folks that are going to build that. And we are actively doing that. But for sure, there are going to be places where companies are going to be able to leverage their large resources to be able to ensure that those data center builds happen. And we look at it as we are partnered with the most important frontier labs.

18:50I mean, you look at OpenAI, you look at Anthropic, you look at Microsoft, Meta, Oracle. These are our deep partners. We're planning three to five years in advance in terms of how we put together our roadmap as well as how do we put together the data center roadmap for that. So I am confident in the long-term foundation here, which is more data centers are necessary, more compute is necessary, and we must bring the entire ecosystem together to make that happen. So you do not change your$1 trillion data center total addressable market by 2030. No change to that in spite of what we saw last night in the election.

19:28That's right. I really do see the long term need for compute is such, whether you're talking about the United States or you're talking about across the world, there is an intense demand for more compute. And we need to work together to make that happen. Final question here, sort of a more of an investor question, Lisa. Gross margins dipped, I think, 55 percent in Q4. AI obviously growing. If it keeps outgrowing CPUs, I mean, is that the new ceiling or the floor? Where are we when you look at gross margins? Yeah, actually, David, I would say from an investor perspective, when you talk about margins, we're really happy with our margin performance.

20:08I mean, we exited Q3 at 56 percent. We guided Q4 to 55. It's right in the zip code. We're talking about growing our data center business 50 percent sequentially. And so there are some quits and takes there. But going into 2027, I look at the balance of our portfolio, and I feel really good about all the levers that we have in there. And so from an overall top-line growth, bottom-line growth, especially when you look at our operating margin expansion, the leverage we have on operating expenses, and we believe that gross margins will hold in there very well, I think we're going to have a tremendous business model that we can use to reinvest in getting all of this technology built out.

20:49Well, Lisa Su, thank you so much. CEO of AMG with just Blockbuster Numbers. Great to have you on. Just welcome. Wonderful to be here with you guys. Still to come this morning, we'll get an exclusive with CVS Health's David Joyner. He'll join us here at Post 9, talk about the company's plan to split in two. We'll get to SMCI, booking McDonald's, Uber, Circle. Check in once again with the likes of Core Weave, knocking on the door 50 yen again. Stay with us. 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.

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22:06With Fidelity, it's easy to get an outside opinion from independent experts. in a single score. And then? When you're ready, trade U.S. stocks and ETFs with no commissions. That's right. I am always right. Investing involves risk, including risk of loss. Zero dollar commission does not apply to customers designated by Fidelity as a professional equity trader. A limited number of ETFs are subject to a service fee of$100. See details at fidelity.com slash commissions. Fidelity Brokerage Services, LLC member NYSE SIPC. It's the holiday season at House of Burrell, which means that it's the perfect moment to review some key rules.

22:38Rule number five, More style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. Welcome back. About six and a half minutes before we get started with trading here at the New York Stock Exchange. time for a mad dash, Arista Networks. Yes, not the only blowout AMD. Arista Networks wants to get a terrific blowout. This is a company that leaks everything within the data center.

23:19Jayshree Ilal is just crushing it. And I would say that, remember, the data center trade for the next few years, I still think is too strong. I'm not sure exactly you came out with Lisa Su in AMD, but if you do believe that there can be more scale out, scale up, scale across, meaning linking the different nodes, linking the different GPUs, you want to buy this. By the way, this does not preclude Cisco having a bad quarter. I think they're also going to have a good quarter. But this is the kind of thing where the real aficionados are going to say, wait a second, quarterly revenue rose 58.5%. I'd rather be in this one.

23:55It's a little less high profile than AMD. AMD's a little more caught up in, wow, what happened to the data center last night. This is more of like nuts and bolts is so strong, you're not going to see any sort of decline, just advance. We have to link them because, you know what, we have to be more efficient in the data center going forward because there won't be as many. This is how you increase efficiency. Jay Shui Yulal is an amazing executive. I've got to hand it to her. She is scrappy. She's beaten almost everybody, and I really like this stuff. All right. You can see those shares will be higher, as will the broader market, perhaps a bit of a surprise to some who expected a different market move on the results from last night.

24:37We got an opening bell about five minutes from now. That's still an important takeaway to the data center. I don't want to be too miniscule here. Okay, right. But we are keeping an eye on stocks that do reflect concerns about data center construction in the future as well. We got a lot more squawk in the street for you straight ahead. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading.

25:16Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington.

25:55This holiday, all plans, even unlimited, are just$15 a month. A holiday deal this good obviously deserves an enormously expensive holiday song, like All I Want. Right. Okay, we can afford that. You know what? Forget the music budget. We're going to stick with whatever's in the public domain. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three months,$90 for six months, or$180 for a 12-month plan required,$15 per month equivalent, taxes and fees extra. New customer offer for initial plan term only. greater than 50 gigabytes may slow when network is busy. See terms. SpaceX and Tesla under pressure pre-market after last night's big Democratic victory in the midterms.

26:32Elon Musk spent nearly half a billion dollars to boost GOP campaigns, but that bet failed to pay off. Overnight on X, he posted, quote, data centers in space looking pretty appealing right now. Also, Jim wrote, guess my election interfering space lasers didn't work this time. No, I also think that these stocks are down off of what I regard as a zeitgeist issue. And zeitgeist, in the end, does not win. I think that this opportunity here, maybe you have to wait a few days because there's still a lot of stock coming for sale, David. But you don't vote on SpaceX. You buy SpaceX. And we can say, you know what, I think Musk, I no longer think he's that powerful.

27:13I'll sell the stock. And that is not what we do. And it won't be what you do a few days from now. No. But you can understand the initial reaction in the market being this is going to in some way impact him. Oh, I agree. Without a doubt, being that he is not just the world's wealthiest man, but one of the most powerful men in the world as well. So you lessen his power, but does that hurt as he does a big BALCOM deal? I know. No, it's a great question. What gets impacted if, in fact, that were to happen? And again, it's very much unclear how. And of course it does help his goal, perhaps, to putting data centers in space when we clearly may not want them as many terrestrially.

27:55I think we have to just pull back a little bit of skepticism, some skepticism in data centers in space. I believe in it because Jens Lamar uses it in his actual numbers. I did not ask Lisa Su about data centers in space because I felt like we've got enough terrestrial support. I didn't even go that far. We'll talk more about it in a second. Let's get the opening bell this morning. At the big board on Wall Street, it's cloud-based data analytics company, Samsara, celebrating some commercial sales initiatives at the NASDAQ and Times Square. It's UC Berkeley and it's SIBO in Chicago. It is Business Insider.

28:30Almost a thousand point gain here for the Dow at the open. It's interesting. I feel like that when you get granular and you say, well, wait a second, do I go by HPQ with the new CEO? So, Dave Mellowams announced this morning, and I look at that and I say, the stock's up. Do I buy that? It's only eight times higher. No. I mean, you can't pull things apart like that. Today is a day where people have said, look, it's a rebuke of tariffs. Tariffs were inherently inflationary. It's a rebuke on what I regard as being, you know, the people want to annihilate the working man. And, again, I think that one's more ethereal.

29:07But I do think I'm going to say it's deflationary because we do think that that's what good luck is. Well, there's also the question about the war in Iran, whether that will happen. But we don't know. Oil potentially coming down. I was going to mention that, but then I figured. We'll see. And then, you know, Carl, I don't know what the expectation was for a potentially contested election that would obviously be met with a lot of consternation. But certainly that has been eliminated as a concern. We talked about it with Jim yesterday. I think that explains a lot of the gain this morning, Jim, is that the sturm and drag that you were worried about yesterday, less likely now.

29:42No, I was very worried about the orderly way that the Democrats can take over from Republicans. Right now, it doesn't look like the Justice Department is gearing up. I will point out that I think that David's call on Iran and possibly a settlement is being echoed now. It wasn't at 4 a.m. Now, oil's really coming down. You know, oil down, that means that, wait a second, inflation may be in control, doing better. We do have tariffs that are clearly, I think, going to be the province of Congress again, and therefore we will see rates go down from that. But in the end, Carl, I've got to tell you, we're making these judgments, and we don't know what the president's really going to do.

30:23We know he's a little less powerful, but we don't know whether he does lash out in Iran because he lost here. We also don't know what the Democrats are going to do when they have control of both houses as well. Why aren't we sitting here saying the Democrat Socialists have become more embedded, even though they can't necessarily swing the contingent, and so therefore capital gains taxes are going to go up? Yeah, or estate taxes. I've gotten, I know some. Or equity stakes in companies. A friend who said this morning, yeah, it could be that. That said, I think there was a concern that if you had a close House, but that the Democrats had it, but it was a small contingent of DSA, they would have more power as opposed to what is going to be potentially a 70-vote difference.

31:12They would be the locus of change, yeah. And obviously you did not have far-left candidates win the Senate in states such as Iowa or Kansas or South Carolina or North Carolina. And we're still watching Mississippi. Or Mississippi, potentially. And we're right. We're still watching both of those. But there are radical revisions of stocks this morning that I find irritating, even though they're in favor of my travel trust. By the way, I mean, just to interject, Amazon is up almost 7%. One, you get Amazon. You don't have Andy Jassy spending writing a check to Iran. Well, not that he would necessarily do that.

31:49I'm using a metaphorically hot aid. They don't have to spend. People have spoken. And Amazon doesn't allow it to spend as much because the permitting process is where I think that they really nail the data centers. But you take a look at stuff like Home Depot. Home Depot has been hurt by tariffs. Home Depot is up 16. Well, is that that suddenly housing is going to be affordable? I mean, this reminds me of 2018 when you had this kind of moment where you thought that rates would not go up as fast because power would come in hot. And then suddenly it says, well, OK, and then, boom, we have a big downtrend.

32:21I think that the idea that Home Depot, which might get my Chapels and Stones being up 18, is factious. Yeah, I know. Sherwin-Williams up there, too. I'll tell you what, Jim. Cat has not had a five-handle since January? $20 now between this and going red for the year. I think the idea of putting 1 ,000 Cat engines together and linking them to natural gas may have peaked as a concept, given the fact that there are pollution issues. Are you surprised, Jim, though, that the somewhat muted reaction, there are stocks down, obviously, on the concern around data center buildouts being significantly hampered.

33:01But, I mean, if I had told you Greg Abbott was going to lose the governorship of Texas yesterday, are you surprised that we're seeing such a muted response? Yes, because that was a referendum, I felt, on naked, rapacious capitalism versus capitalism with a human face, so to speak. And the takeaway there is go buy Constellation Brands, which Hispanics have been throttled because of ICE. Which, yeah, B of A today, immigration unlikely to get much worse on STX. I know, Constellation Brands is a very inexpensive stock. Again, to pull it apart and talk about individual stocks seems to be, again, a waste.

33:36But look at that. No, we looked at HCA earlier on the idea that perhaps health care spending in states like Texas will start to increase or that we'll get more funding from the federal government or vote in. Molina. And then look at the day. Centene this morning. And then you've got these companies that have just been victimized by tariffs. Wayfair with a good quarter, but have been hurt by tariffs. Some people think that's going to go away. I'll tell you, one of the biggest winners today is a company that I'm always loathing to say something good because it just scalded people. Nike, which is having a 4.5 % gain.

34:09Wow. And Nike is a possible winner, of course. And then you get to the defense stocks, and suddenly we're like, we're not going to rearm it well maybe the possibility is we don't the deals will be harder to come by i mean rtx is down a percent yeah that's it are you surprised at that i mean some would say yeah time to short that group based on the idea that i think you hedge the group you go and you are not going to go back to war well you know maybe the the nice mix is is that we think that inflation come down therefore gasoline come down and you can go buy general electric aerospace because they could be a winner longer term.

34:46And they don't have as much defense. I mean, you can buy Boeing, not as much defense. Boeing looks good today. What do you make of a first solar sun run plug? I mean, these are bounces off of multi-month lows. Yeah, I do think that that's the kind of knee-jerk play. And if you want the knee-jerk play, here it is. It's NextPower, which is Daniel Sugar, Dan. And I think that that is the one you just buy NXT. It's been hampered of late, but the stock can really fly. It actually has earnings. I like that. I think earnings... David, I don't think earnings went out of style in this election. No. Earnings still matter, right?

35:22Well, that's really what it's going to come down to. We're like pretending. If we look at CBS, we say, well, how much is that up on the split up? We say, oh, wait a second. That didn't happen. It's not up at all. I do have a data center company that is up. It's a small, Riot. Remember Riot? It was a Bitcoin miner. They do sign a new deal with in their Corsicana facility. Me too? I think it's with Anthropic, but they're not saying. But it's doing a lot of positive things for them, allowing them to need a lot less debt, lowers their CapEx requirements, 15-year powered land lease, $28 billion of initial contract value, $54 billion with two five-year extensions.

35:59You can take a look. Stock had been up as much as 15 % at the open. But like so many others, of course, these neoclads have been crushed of late, but showing a bit of signs of life, despite concerns overall about data centers. Well, at least CoreWeave has 1.5 gigawatts already. You need that. Yeah, CoreWeave shares do continue to be down. And again, if you heard me, they don't say the tenant, I'm fairly certain it is Anthropic, which of course goes back to, we're waiting on more amended S1s from Anthropic, which will be very important to this market as well. But if you notice that none of us has said, you know what, this makes it so it's harder for Anthropic to the public.

36:39No one's saying that. No, well, a rally like this is helpful if this maintains. I mean, with the S &P up 1.5%, and NASDAQ also. But remember, this is a rally, this is a Procter & Gamble rally. Well, okay, but I got Apple up, Meta up, Alphabet up, Amazon up, Microsoft up a lot. I mean, I'm just an electric all-time high. Microsoft's up 5.5%. That's a data center name. I would say that there's a lot of talk, and you can see it from HP with the new executive CEO. So a lot of talk that DRAMs have peaked because of demand destruction. PCs got too expensive. There'll be DRAMs sloshing around. Maybe the long-term problem for DRAM is going to come down just when the people from Apple were talking about long, long problems in terms of cost of DRAM.

37:25I think they closed the top. That was the top of DRAM. Yeah, we did get Skyworks. The Apple call was the top of DRAM. Skyworks, Jim. Guidance wasn't so hot. Cell phone. Phones looking at mid-teen, decline quarter on quarter. By the way, the Corvo. They should have bought Cuervo.

37:42That wasn't bad. Finally, Jim, really quick, MCD, comps, although negative, not that far from consensus. That's going to be the best level for MCD in a few months. I liked what they had to say. I think that the beating of the same-store sales numbers is something that I really have always looked at for McDonald's. They miss the same-store sales, and I think we sell the stock. If they make it, then boom. And I think that the comps, 1.5 versus 1.35. The revs, okay, not that great. But I do think that Chris Kempchensky's starting to get some things going with the franchisees. That's what matters.

38:15The last we heard about was the franchisees rebelling against the plan. I think that might be reversing it. It's going to go Donald's way. And then between Uber and booking, are you willing to say decent things about the consumer? Look, I think the consumer is very strong. And I think the consumer benefits from gasoline going down, which is what people are interpreting. And remember, these tariffs. I know that people are saying, oh, Jim, the tariffs are already in it. No, the tariffs raised the price of everything, didn't bring a lot of goodwill. Or changed the trade deficit. No, I would go so far as to say they were stupid, but that seems like something you don't say on TV.

38:55Okay. Okay, with that, CBS Health, one of my favorites because of the turn that has happened. in the drugstore division, is splitting into two public companies. It supports third quarter revenue of$108.4 billion, raises its full-year earnings outlook. You can't tell from the stock, but stocks are often wrong when it comes to what big changes. And that's why I'm so glad to have the chairman and CEO, David Joyner, with us. David Joyner has shook up the industry. And I do want to point out, David, that you did not do this deal until the CBS actual standalone was quite strong. And it's quite strong because of moves you made.

39:33How are you able to maintain that momentum, particularly because in this particular quarter it did not seem the same sort of sales with what I wanted to see? Yeah, well, great. Well, Jim, thanks for having me here this morning. I'm extremely excited to talk about our strong earnings this past quarter, but also the momentum that we have heading into 27. And as we've talked about this decision to spin and or to split the companies, we're doing it out of a position of strength. So when I took over this job two years ago, we were focused specifically on two big areas. One is to improve the Medicare recovery at Aetna and also rebuild the strength of our CVS pharmacy business.

40:09So I know you've talked a lot about the importance of CVS pharmacy and the communities in which we serve. And we've invested heavily in our colleagues and the technology that actually has enabled our colleagues to better serve our customers. And then we've addressed specifically the reimbursement challenges in retail pharmacy by introducing a cost-plus model that actually helps the payers participate in our strength in purchasing and also make sure that we continue to be the low-cost provider in the market. So here we are two years later, now guiding retail pharmacy for a third year of growth as we head into 27 and couldn't be more excited about what the team and our colleagues have actually performed and delivered.

40:47You know, I'm amiss by what the stock is doing because what I thought mattered the most this morning was their operating cash flow number, which was shockingly better than expected,$15.5 billion versus prior minimum of$11.5 billion. That's a gigantic increase. What's behind that? Because that's actually the cash. Yeah. It shows you that these are strong cash flow performing businesses, whether it be CVS Health or CVS Pharmacy. These are, again, what we look to be as solid investment grade businesses with strong balance sheet. The performance of these businesses had allowed us to get ahead of the leverage ratios ahead of our schedule.

41:23So as we look into 27, that's going to continue to strengthen. And again, we'll have more flexibility from a capital and a capital allocation in terms of how we make decisions to invest in this business. I think, David, that as I watched the stock trade all this morning, I think that people said, wait a second. The health care, the insurers have historically done not well under the Democrats. so therefore we want to sell CVS because what we're getting is Aetna even with a dividend. That's just untrue, isn't it? Yeah, I think if I look at the results today, whether it be the Dems or the Republicans, this is a bipartisan issue in trying to make health care affordable.

41:58And I think the organization that we've built with CVS Health is specifically designed to take cost out of the system, improve affordability, improve access to coverage. And so I think now more than ever, companies like ours are going to perform and actually, I think, thrive in this new market, because we're going to bring solutions to the health care and affordability issues that are confronting Americans today. David, if I could just jump in. You know, on the split itself, it was a little more than two years ago, I think, as you were coming into the job, there was a potential activist in your shares.

42:28Goldman Sachs did some work and advised the board at the time, keep this company together. It's stronger together because there was a belief perhaps the activists would be asking for a split. So what's changed in two, two and a half years to make you now decide that actually you're going to create more value as two separate companies? Yeah, I mean, two years ago, I was in a turnaround. So we didn't have the flexibility and we didn't have the cash position and or the performance of the business. So we were guiding retail pharmacy down 5 % two years ago. And so the investments that we've made and the focus specifically on the customer and becoming the low-cost provider has now turned a company that has been guiding down 5 % now to growing the past two years and now guiding for our third year into 27.

43:13So it's all about the strength of the business that affords us the opportunity to make what we think are the right strategic decisions for the future of this company. Is regulation also, though, now playing a role here? I mean, let's see, Warren and Hawley, separate parties, both senators, have a bipartisan breakup bill. States have been borrowing PBMs from owning pharmacies. The FTC just settled. I mean, I've got to think that figured into it or did it not? I think that's one of the external things that we assess. So as I look at, CBS and Caremark came together in 2006. So 20 years of change in terms of those businesses being together.

43:49And Aetna has been under the fold for eight years. So markets change and companies need to evolve with it. So I think what you see in the regulatory environment is clearly one of the things that we need to make sure we're navigating. And we're actually positioning the company to be able to thrive regardless of how these companies are being expected to operate in the states and at the federal level. Right. And we should point out the PBM goes with Aetna. So that was obviously bought by CVS. But now it goes with and you're going to be running the health care company, so to speak. That's right. So I'll remain as the CEO and chairman of CVS Health.

44:22And Prem Shah will be named as the incoming CEO upon separation for CVS Pharmacy. Pharmacy, nice change of pace. And he's a 10-plus year veteran. He's a pharmacist. He's led the turnaround over the last two to three years at this business. So I couldn't ask for a better leader. And it's the same operating team that's actually performed and delivered over the last two years that will be in place upon separation. So I really feel really good about the team that will be leading this. I don't want to be too granular, but you took over a company. You had a dogfight really near the tail end. Walgreens by an eight.

44:55You wiped them out, basically. But I saw this quarter a worrisome trend. I want to try to get some feel for it. I know that Walmart has decided to go in very aggressively in your category, and Amazon's gotten aggressive in your category. Are you losing share to those right now? Exactly the opposite. that CVS has been gaining share for the last two years because of the operating strength. I consider ourselves as America's pharmacy. We are the pharmacy that is in the right markets, in the right communities, in the right convenience. And that has actually allowed us to serve the consumer differently.

45:27So we have an omni-channel experience. So I think you know us more as the brick-and-mortar retail. But we serve equal as many people delivering to the homes. Drive-through is a really strong convenience. So we're trying to get ourselves organized around how the consumer wants to shop with us. And that is a really important part of what I think the strength of this business. That's not available to just a pure online play or a pure brick and mortar. What's the trend like on store unit growth right now on retail? So we are seeing, in fact, we've been reporting year-on-year growth. So the comps have been really strong.

46:00And it's in large part because of the fact that there may be some weakness in the marketplace. and we are the strongest in that market at the time, which, again, serving the customer. And when you serve the customer, you get the repeat business and you grow your business. Yeah, sorry, David. I didn't mean to get your attention there or break up. But, you know, you're splitting the company. It's going to take 15 to 18 months, I think you said as well. But investors right now are trying to figure out, all right, what's the appropriate multiple for the pharmacy business? What's the appropriate multiple?

46:29What did your bankers tell you? What are your expectations there in terms of how these things are going to trade? Obviously, there's still a lot to come, even deciding on debt allocation and things of that nature. Yeah, I think the bankers told us that only time will tell and you have to provide. Like, thanks. So I look at what we've done the last two years and what I need to do the next 15 to 18 months. I need to continue to deliver on behalf of our customers and we'll continue to grow and perform. So if I have that consistency, I can go into a third year. The idea now, I'm going to demonstrate the strength in both of the remaining businesses.

47:05And we've taken one great company and splitting them into two great companies. So both of them will be Fortune 25, Fortune 10 in terms of size, with a strong balance sheet to be able to invest. And as long as we can continue to show the next 15 to 18 months that these businesses continue to thrive in what is a dynamic and changing marketplace, then I think we will be rewarded with the appropriate multiples on these businesses. Well, David, I want to say that the first judgment by the market when the stock was at 99 seems more correct to me than the latter judgment, particularly after our interview, David Joyner, CEO of CVS Health.

47:40Health. And thank you for coming on the show. Thank you so much. Thanks, David. Thank you, Tim. As we go to break, watch bonds. Ten-year, relatively steady this morning amid all the changes around 494. ADP was pretty good, 86K. We were looking for 67. That sets us up for a jobs number in a couple of days. Don't go anywhere. Take a look at the Dow heat map. Better than 2 % gain on the blue chips as we re-approach 53K. More than half of that is just a handful of names. Goldman, Microsoft, Apple, Amazon, Depot. When we come back, Toma Bravo's Orlando Bravo is going to join us. We'll talk the midterms, what the results might mean for tech and the AI trade when we're back in a minute.

48:19Jim, what's on? No, let's just stop trading first. OK, yes. You see my cron down today. By the way, I could have done Dollar Tree and Dollar General. Those stocks are up because of tariffs. I'm looking at a different trade. I'm watching Micron go down. I'm looking at HP and what they're saying. You know, frankly, what Lisa Su said, PCs, OK, there's a glut. If there's a glut, there's no way demand pricing can continue to go higher. If you think that demand pricing can't go much higher, go back to the Apple call. Apple talked about that being their single biggest problem, I felt, and therefore Apple is up huge today.

48:50Own it. Don't trade it. Wow. Hard to believe that that margin, Rory, was a one-day story. What was that margin? What was that margin? I don't know. Is that margin call? These moves today are... Were you in margin call? Um, yes. I think I was. You knew I'd love that. No. Wait, I was in arbitrage. Margin call was the best of them. That was the best one. I wanted to be in it. We'll see you tonight, Jim. Mad Money, 6 p.m. Eastern Time. 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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