Cracks in the AI Trade, A Content Clash, and The Key Questions for SpaceX 10/20/26

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1:01Thank you very much, Scott. Stocks are rising today, but this time it's the Dow and the broad S &P leading the way, while the Nasdaq is barely higher and the tech trade continues to wobble. I'm Kelly Evans, and welcome to the exchange. Shout out there to the small caps, too, the Russell 2000s of 1.5%. But in terms of the Dow, earnings from 3M giving that a boost today. The company raising its guidance and expanded its relationship with Amazon to deploy optical connectivity in data centers. The S &P, as you can see, they're up a third of one percent. And the Nasdaq is trying to stay green. CoreWeave is also trying to rebound, up about two percent right now off session highs, also off session lows.

1:37Other neocloud and software names seeing a little bit of a bounce. Watch the Sox Semi Index trying to snap an eight-day losing streak and only up about half of a percent right now. That's that third line item on your screen. And also keep an eye on WTI reversing lower today on reports that Iran and U.S. talks continue. But those reports are being called into some question. And you can see crude oil prices are now moving higher by a third of one percent. In fact, nearly back to one hundred and four dollars a barrel. But let's begin with the A.I. trade a little calmer on the surface today. But there are reports that Amazon is sitting on stacks of unsold GPUs.

2:15Doug Clinton is the CEO of Intelligent Alpha. He says, we are watching a game of AI musical chairs right now. Love that kind of way to think about it, Doug. Welcome. And so for you, then, this is more about which players survive and less about calling the whole cycle into question? I think that's right, Kelly. I mean, I think you think about bull markets when they are driven by technological innovations like we have here with the AI trade. Nobody wants to be the last person standing. I think everybody is hyper aware of the possibility of a bubble. I don't think we're in a bubble right now. I think that stocks are very much supported by fundamental reality.

2:51But I do think that when we hear these reports last week, OpenAI, for whatever reason, people were disappointed with some of the revenue numbers that came out. I think that was just kind of the excuse to say, look, the AI trade has been hot. People have made some money, particularly coming off of the July lows. And I think that just gave traders and investors a reason to kind of sell off a little bit, even though the fundamentals for AI remain strong. What fundamentals would you point to? Because some say the kind of cost of renting older GPUs is still rising as a sign that the market is still tight, no matter what these reports are about, whether Amazon has inventory sitting around.

3:27What can you tell us? It is. I think you look at Anthropic, their revenue grew 45 percent quarter over quarter, and that's off a mid-teens billions revenue base. So you're talking about still very strong growth, Q2 to Q3. Microsoft has talked about$80 billion in Azure demand that they can't fill because they don't have power. And I think the biggest piece for me, Kelly, is you think about GrokBot, you think about Muse from Meta, these new agentic platforms that just came out basically a month ago. They only have a few million users, but I think those products are destined to have billions of users in the next five to 10 years.

4:04And so think about the infrastructure that we still need to support that ultimate end demand in the future. What happens, though? There's kind of some data making the rounds, Doug, about how after initially being downloaded, Muse isn't used as much as other social media platforms. Do we know for certain that widespread adoption is going to happen and going to keep fueling demand? I can tell you from my own personal use case, I've tried Muse, I've tried GrokBot, I've tried Dot from OpenAI and a few of the other personal assistants. And once you really, I think, understand how to use them really well for your own use cases, they do become addictive.

4:41And it is hard to go back to old traditional workflows. And so I wouldn't really comp these to traditional social networks, which I think very much are more entertainment driven, where people just want to kind of spend time. It's very easy to get demand and attention from videos and different content like that. For these tools, it's really about productivity, getting things done. And in some cases, I think maybe even having a companion, depending on how people set them up. So I think there is a little bit more of a learning curve here than social media. But over time, I think people will find they make their lives easier and they will spend a lot of time with them as a result.

5:16What are you looking to hear in earnings this week and going forward? I mean, as you say, the CapEx numbers keep going up. You know, there's if you look at Microsoft, they're saying they have 80 billion of Azure orders. They still can't fill mostly because of power limits. Samsung's Q3 operating profit was 80 billion dollars. reportedly the largest quarterly profit any kind of tech company like that has ever posted. So that is a picture of a world where you think these stock prices were still flying, but they've leveled out. And, you know, a neocloud business model like CoreWeave is smack in the middle of that, kind of saying maybe for you, you would separate that out.

5:53And what is your opinion about CoreWeave? You know, I would split out the companies that can finance with very healthy balance sheets, primarily using free cash flow. So obviously, the big hyperscalers, the mega cap tech companies, and then the companies that are more reliant on debt, maybe equity capital markets as well. So I think there is a tale of sort of haves and have nots that are playing out in the market right now. And obviously, the debt holders are saying they're a little bit nervous about the availability of continued financing for companies like Of course, we've dealt with the Oracle CDS issues earlier this year.

6:30But I do think that if you look at these companies, SpaceX reporting later tonight, I think the thing that we want to pay attention to, Kelly, is how do they talk about their CapEx? And Elon has been particularly aggressive when he's talked about 2027, adding up to, I think he's talked about 20 gigawatts, getting prepared for that, and I think maybe eight incremental gigawatts of demand online next year. I mean, that's a$400 billion CapEx spend to build out entirely. So we're still talking about really big numbers here. And I think to the extent the hyperscalers keep reiterating those big numbers, the trade should still be able to work.

7:05Then a quick final question. When you say the trade, can you get super specific about that? You say we remain bullish on it, but acknowledging this is some musical chairs. What parts do you think are a slam dunk and what parts would you question a little bit, if any? Absolutely. The power names are the names that we do continue to like. Like, as you mentioned earlier, Microsoft, Azure, their demand bottleneck really is getting power to their data center. So in our GPT ETF at Intelligent Alpha, we own Vistra, VST. We own Constellation, CEG. And then in addition to that, we do own some of the chip names.

7:38I think TSM, they had a great quarter. They reported last week. They continue to be the beneficiary where everybody has to go. Anyone who's making chips to benefit from AI right now has to go to TSMC. and they said they've seen no slowdown to the AI demand so far. So that's another one that I think you can win with. All right, Doug, thanks so much. Really appreciate it. Thanks, Kelly. Doug Clinton of Intelligent Alpha. Let's broaden out the discussion now with our next guest, who was one of the voices more than a decade ago, saying the stock market at that time was the only game in town. And we've seen some huge gains since then.

8:11But times have changed. Now commodities are putting in one strong year after another. Bonds offer high yields again. And all of that means competition. not just for stocks, but also for private equity, one of the hottest asset classes of the low interest rate era. Joining us now is Jason Trenert. He is the chairman and CEO of Baird Strategas. Jason, it's great to see you again. Great to be here. Do you think it's fair for me to kind of emphasize the warning in here for private equity? I think it is. I think it's an appropriate warning for any company or any investment firm that's highly dependent upon leverage.

8:46And the Tina call 13 years ago was largely the idea that the Fed was closing off all the exits for investors who needed returns because you were at 0 % interest rate, so you couldn't rely on the fixed income markets to give you returns, so you had to go into equities. Now you have a situation where the Fed is tightening, and long-term interest rates are broadly moving higher, in my opinion. So you have other alternatives. So we call it Tara. You know, there are realistic alternatives, not that not that creative. But in any event, I think there are I think there are other there are other alternatives other than stocks these days.

9:27And I think the cost of credit is going to be meaningfully higher in the future and more consistently high in the future. Yeah, I know. It makes me think of a yearbook, you know, from from Tina to Tara or something like that. And we talked about it yesterday a little bit, too. But if that's the case, who else do high interest rates pressure, meaning do they pressure the stock market broadly? What kinds of other business models could be vulnerable? Well, listen, Kelly, as you know, I mean, I think a good portion when I think about financial repression, right, the one group of investors that got hammered by financial repression and which means purposely lower interest rates, manipulated interest rates lower, would be the hedge fund business because you had to have shorts.

10:10So in a period in which you have very low interest rates, levered longs like private equity, like venture, do very, very well because your main input cost is very cheap. But for a long, short hedge fund manager, that's very difficult. For an active stock manager, it's very difficult to pick stocks when kind of everyone gets a trophy as far as interest rates are concerned. So in my opinion, the active manager is going to do better. I think the hedge fund manager is going to do better. The stock picker will do better. And then I think more balanced, I do think more balanced portfolios, especially among fiduciaries, will make more sense.

10:49And fiduciaries mean pensions, endowments, foundations, that type of thing. I think a lot of people in venture capital would say, yeah, it's been a little chilly. I mean, it's fascinating to see the market at all time highs and we we can't get any IPOs going that that I find fascinating. Yeah, I mean, I think, you know, it's the amount of debt that's out in the system, I think, is it's really kind of staggering. And just because, you know, there used to be kind of a crowding out effect with the U.S. government back in the 70s. It's kind of cute now that at that point people thought that the government was crowding out private credit.

11:23But now, again, when you had financial repression, you've had a crowding effect. And so the private markets have taken on an awful lot of debt. And I think there's been an assumption, because that policy has lasted so long, that it will last forever. And I'm just not so sure about that now, because I do think the Federal Reserve is in a different mode right now. It's very serious about getting to the 2 % target of inflation. And I think that's a very big change in what we've seen in a long, long time. I think they're meeting. What's today? Is it next Wednesday? Next week. Yeah. Yeah, next week.

11:59And the market's kind of, you know, passed on the odds that first it was going to be a hike and then not so much. Where are you on that? Well, our firm, Don Rissler, is our chief economist, believes there'll be two more hikes, one in December and one in the early part of next year. October's a toughie because, you know, you're just kind of coming off one that was five weeks ago or something. So you might want to let it let it percolate for a while. You know, it's also right ahead of the election. So you probably don't want to fool around with that if you don't have to. I don't think it's getting away from the Fed inflation, but it probably it seems to me they're going to have to tighten more than just once.

12:36And just historically, it's it's almost never happened that the Fed only tightens just once. It's usually once they start, there's a couple in the series at a minimum. Yeah. How are you thinking about the market implications or fallout from the midterms, if any? Well, listen, I think the most important thing I'm watching from the midterms largely is the AI trade, because I think the biggest potential problem for the AI trade is this backlash against data centers, which I believe is very real. I think it's very understandable for a variety of reasons. And I think, you know, most politicians are policy entrepreneurs and they'll say, you know, if it's if it's good for my political career to be against data centers, I'm going to be against data centers and vice versa, too.

13:23So I think the midterm elections are an important signal in that regard to see whether this has legs or not. But I also I understand the average person's hesitancy and skittishness about this. I think it makes some sense to me. When you said entrepreneur, it made me think, you know, I believe that's that's a French word. You know, speaking of understanding. Yeah. What's going on? What are what's the is there an economic kind of next shoe to drop when it comes to what's happening in Europe? Or is this more of a socioeconomic geopolitical story? Boy, that's a fastball on the corner there. I think, listen, I think it's all of the above.

14:07I do think it's a little bit what's happening in France, a little bit of a commentary on multiculturalism. I also think it's a little bit of a commentary on deficit spending because, you know, you can't have it both ways. You know, you can have any sort of government you want, but eventually you got to pay for it. And you're either going to pay for it in terms of higher inflation and a lower quality of life? Or are you going to pay for it as far as weaker government spending and less services provided for the government? But there's really no getting away from that. You can't have your cake and eat it, too.

14:42I don't know if that was re-entroned that or not. I don't know. We're getting into the French thing now. Maybe there's something to all this that we've seen it before. Let me go from whatever is beyond a corner fast ball to end with this then, which is, you know, we face Social Security funding issues. We have higher budget. Thank God we have growth right now. Can you can you solve is do we need to solve those kinds of things here as well or no? Eventually. I mean, we we have the benefit of having the exorbitant privilege of the reserve currency. So, you know, theoretically, we could just print more money to pay our debts.

15:23But that's, of course, highly inflationary. And we don't have any. It's no divine right to continue to spend money you don't have, because there have been many societies that have had the reserve currency that sort of lost it. And they usually lose it in the same way. It's usually through war or through ridiculous social spending. And so it's, you know, bread and circuses and Roman times. So, you know, none of these things are particularly new. They seem new, but many societies throughout human history have gone through the same thing. So I don't think we're immune. We have more time than other countries with different currencies, but we're not immune from having to pay the piper at some point.

16:05All right, Jason, great to have you on today. Really appreciate it. Thanks for having me. I appreciate it. Jason Chenert from Strategas. Coming up, Netflix reports after the bell after it ousted two of its top creative execs and announced its biggest layoffs in four years. Is its dominance truly over or are the shares down 40 percent from their peak now starting to get too cheap? We'll talk about that next. Plus, our guest says the corporate bond buying binge should continue for another five years and will keep fueling this bull market. S &P up nearly 13 percent year to date. We'll dig into that ahead on The Exchange.

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18:19Welcome back. Shares of Lionsgate are popping on a report that Legendary Entertainment is reviving takeover talks and has submitted an offer. Legendary is owned by private equity firm Apollo, and Lionsgate shares had been halted for volatility, have since reopened, and are up about 14 percent. Sticking with media, Netflix shares are down 25 percent this year and its Q3 results, I should say, are due after the bell. Originals still make up more than 60 percent of the platform's titles, according to Barclays. But Netflix is reportedly considering adding everything from rival media companies to live news to boost engagement with viewers.

18:54And the company just axed both its chief film and content officers and cut a thousand jobs. So does Netflix have a content issue? And if so, how should they solve it? Let's ask Mark Douglas. He's the CEO of digital ad firm Mountain. Good to see you, Mark. Good to see you. Like, I'm getting a little MC Hammer vibes there. Anyway, so what's fascinating if you read the Wall Street Journal piece about Netflix today is they say there's a fight within the company over whether to blame the content creators out of Los Angeles or the programmers out of Northern California for kind of why viewers are not engaged.

19:28with the platform. What do you think is going on? Well, I think subjectively, when you go and watch Netflix, there's just been less to watch. I mean, it's undeniable. And at the same time, their competitors have had more to watch. So you see that the major new thing has been live sports. I mean, it's just massive amounts, everything from the World Cup, NFL and everything live sports. But I think there's just been great content on other platforms, on HBO Max, on Paramount, on Disney and things like that. But it's definitely been more challenging. I think it's a solvable problem. They're recognizing the problem.

20:04And, you know, that's the first step to fixing is to recognize and then invest in more original content. That's what people have always expected from Netflix. Right, so you're saying it's the bread and butter. It is the content. How would you solve it? Well, I think the move in terms of, you know, I don't know the content chief there personally. I think, obviously, if people, if consumers are saying, like, this is I'm not finding anything that I consider compelling. It's it's all about the team. They have the dollars. The company runs very, very profitably. They've traditionally invested massive amounts.

20:41And it's just about getting the right team in there that and using those dollars in order to basically take back that that top spot. But the key thing for Netflix, it always has been the first place you check for what you want to watch. That's the thing they never should give up. So any amount of money is the right amount of money to maintain that spot. I remember if you go back five or eight years, we would always say, how is any other rival going to match them? If my memory serves, they would spend$20 to$30 billion a year on content. And are you telling me they have nothing to show for that?

21:15I mean, how did everybody else who had worse balance sheets and started from a weaker position catch up? Well, I think one thing that Netflix has, it's both in that usually one of your biggest advantages is also your biggest weakness. So one of the biggest advantages is they're global. But they also then have to create content globally. So they have to create content for each market. So that same amount of dollars or even more is now spread across many more markets. If you look at their rivals, their rivals are still largely U.S. only, English speaking only. And I think there's data that proves that U.S.

21:53consumers don't like subtitled content. And I'm not saying that's all of it, but I think that is playing a role. And again, the handicap with they don't have the same level of live sports. So once like a Disney and NBC Universal started to bring all that content along with compelling other content, I think it started to become very compelling for consumers. And the issue with live sports back when they didn't go into it was always not about whether people wanted it, but it was expensive. I mean, live sports is really expensive and you're competing against, you know, top dollar places to kind of grab that share.

22:30So they're down and I'm sympathetic with Spencer Jacobs piece in The Wall Street Journal today as well, where he says, you know, basically, is the sell off overdone? We're down 40 percent from the peak. It's a 20 times P.E. this is about as bad as it could look in contrast to how great things looked at January of 25. Do you think this could mark a possible inflection point? No, I think it is overdone. And I think that the real thing that we didn't yet talk about is people perceiving YouTube as a threat. I think consumers intuitively understand the difference between user-generated content on YouTube and professionally curated content on Netflix and other streaming networks.

23:11And it makes it highly differentiated. If you thought YouTube was going to become a real threat, then you might think there's more to come in terms of sell-off, but it's not. Consumers intuitively understand the difference. They clearly want both. They watch both at different times of the day. And I think in terms of just Netflix competition with other rivals in streaming, which is where the real story is, they remain number one. All right. And we'll see what happens after the bell today. The shares are only up 10 percent over five years now, as we showed on that great chart earlier. Mark, thanks so much.

23:45Really appreciate it. Thank you. Mark Douglas of Mountain. Coming up, it's not just Netflix. SpaceX also reports after the bell today. The options market pricing in about a six percent swing one way or the other there. The analyst who just raised his price target and sees it nearly doubling from here. He will join us ahead.

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25:22Zero 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. Welcome back. Keeping an eye on markets. Nasdaq's now up a quarter of a percent, a little more cushion there. Russell 2000 continues leading the way. And 3M is leading the Dow after raising its full-year profit forecast, citing success in its cost-control initiatives. Some other health care names like UNH, Merck, and Amgen are also leading the blue chips.

25:51While Alphabet, Apple, Coca-Cola, and Walmart, those are your laggards today. More on Walmart in a second. Dow Component Salesforce are racing an early 3 % drop on a$5.5 billion deal to buy the AI marketing firm Braze. That deal is lifting other software names, which are coming off their worst week since February. Airline stocks also rising as oil prices fall somewhat, although less so today. Alaska will report after the bell with United today. Southwest and American later this week, and American is up 4%. And as I said, Walmart announcing a joint membership plan with subsidiary Sam's Club. Shoppers, you can now pay$120 annually for both Walmart Plus and Sam's Club Plus combined.

26:31Very exciting news for Pippa's household over here. And remember, Walmart shares tumbled 9 % after its latest earnings report in August. Despite raising its full-year revenue forecast, the CFO told CNBC consumers were stretched thin, especially with higher gas prices. And that brings us to today. The Fed's latest survey of consumer finances shows a startling increase in delinquencies. The share of households who are late on payments spiking to nearly 20 % last year, The first time since 2009. Higher fuel prices are not helping the situation and could continue to squeeze budgets. WTI touching a six-month high of$110 a barrel.

27:08It's given up those gains. We're around$103. Pippa Stevens is here with more of what's behind today's big reversal. Pippa. Yeah, Kelly, so we've seen a really volatile session here for oil today. And that's thanks to an unconfirmed report about a compromise proposal from Qatar and Pakistan to end the conflict between the U.S. and Iran. But oil is well off the lows of the day, perhaps amid some skepticism about that proposal. And earlier in the session, Brent hit a five-month high, topping 112, as Iran does step up attacks in the Strait of Hormuz and the Houthis target Saudi Arabia. But the action has really moved beyond the front month, and we've seen the entire curve lift.

27:44As CIBC's private wealth, Rebecca Babin, notes, the market is increasingly pricing a conflict with lasting consequences for balances, rather than just an immediate supply disruption. Now, you can see that shift by looking at the curve back in April. That is the orange line there. The front month was making new highs while keeping 2027 prices subdued. And that has now changed. The gentler slope points to higher for longer, which ultimately complicates the inflation picture. Now, diesel futures topping$5 once again this morning as the national average ticks up to 632. And according to the latest estimates from Brown University, the war has now cost Americans an additional$139.5 billion between gas and diesel.

28:27That's$1 ,065 more per household. Kelly. Sure. And now we have, you know, a lot of people are talking about the futures are not anywhere near the low levels they used to be. So you look out in 2027, even beyond, could be stuck up here for a while. That's right. And what's really important here is to look at the shape of the curve. So initially it was very steep, which means we are very clearly backwardated. There is a premium paid for barrels right here, right now, but not so much looking into the future. And that is what has now changed. Now we are seeing Brent for next year, you know, averaging above$95 per barrel.

28:59And so that indicates that the market is now saying maybe this is going to be a little bit longer term and stickier than we thought, especially with the need to refill inventories. Even just looking at the SPR now at its lowest level since the early 1980s, that all has to be refilled under that swap structure. So that changes the demand picture looking forward. And initially at the start of this conflict, it was all about 2027 is going to be a massive surplus. We're going to be awash in oil. And that was a narrative for a very long time. But now kind of recently, really in the last few weeks and a few months, we've seen that narrative start to shift with people no longer saying we're going to be awash in crude next year.

29:31All right. That's how you get prices where they are. Pippa, thanks for now. Appreciate it. Let's get to Frank Holland for the CNBC News update. Frank. Good afternoon, Kelly. France's government says targeted curfews helped restore calm overnight after violent protests and looting. Officials now plan to deploy troops alongside police ahead of war demonstrations on Saturday. The unrest followed protest over rising living costs and declining public services. The country's prime minister acknowledges security failures and promises a much larger deployment to prevent another weekend of violence. U.S.

30:00Postal Service says it will not enforce the Trump administration's new ballot mail for federal elections rule for the 2026 general election. Officials say ballot handling procedures will remain consistent with past elections. Extra deliveries and special pickups begin October the 24th. Voters are urged to mail ballots before Election Day and at least one week before their elections office deadline to receive them. And the Knicks are raising a championship banner tonight at Madison Square Garden, their first in 53 years. New York beat San Antonio in five games to win the NBA title. The ceremony is expected around 6.30 Eastern ahead of the opener for this season against the Philadelphia 76ers that include the Sixers' newest team member, LeBron James.

30:41And Kelly, by the way, I'm a Sixer. You know who I'm rooting for. You and AJ in my ear. All right, go Knicks. I stopped watching during the Porzingis era, so of course it's before they won the championship. Welcome to LeBron James era. All right, Frank, thank you very much. Coming up, Apple getting a downgrade to hold at Loop Capital today. The firm's saying it's on pace to fall short of revenue expectations tied to its iPhones. But our market guest calls it the T-bill of tech. She's here to make her case next.

31:11Welcome back. Despite the fact that we've seen some wild swings in tech stocks lately, our next guest says some of the mega cap names are actually defensive plays this earnings season. Joining me now is Nancy Tangler. She is the CEO and CIO at Laffer Tangler Investments, and it's great to have you here. I know. Thank you. It's good to be here. OK, so big, very, very big picture. You could paint a lot of reasons. We were talking earlier about this. There now are alternatives to the stock market. There's commodities. There's look at bond deals. What do you think when you hear somebody say, Nancy, I could get 10 percent tax equivalent and muni bonds.

31:45What is your response to that? Well, I mean, with a portion of your portfolio, I don't think that that would be a bad thing to do at all. And we do that for our clients. But I think in this environment, this is a once in a generation, maybe once in a lifetime technological revolution. It's going to change the way we live. We've talked about this. I'm not going to have to have my home health care is going to be optimist and kids aren't going to have to take the keys away because I'll just hop in a cyber cab. So I think you want to participate in this. And if you get out too early, then you're just wrong.

32:17And so I think that's why I wrote this piece, you know, a good the best offense or the best defense is a good offense. No, best offense is either way. Yeah, they both work. But I wrote about defensive names because you want to be in the trade. And if you think growth is slowing, you've got to own technology because they're the reliable earners. So people are going to look at it and say, oh, but Corweave, it's the canary in the coal mine. And I would say maybe for CoreWeave, it is. But to put it differently and speak to these concerns, we all know that this is the build-out part of this incredible technology that you're referencing.

32:55And at some point, you feel a little nervous about what comes next. You read, oh, data center, they're slowing. Or you read this Amazon report. There's extra GPUs. They're not even using all. So speak to those anxieties. I mean, can you still be fully invested? Should you stick with the leadership? Because that's usually what takes you through all these rallies. And you're talking about mega cap defensive tech. But what about even kind of those, you know, strongest, most high flying parts of the AI trade? Well, I think you want to own some of that in your portfolio. But if you want to be in a position, if the market slows, if we get a correction, which we haven't had in a year and a half, a real one, if you think those are coming, then this is a great way to play it.

33:39I mean, you know, I had three names for you. One of them was NVIDIA. They're all obvious. Like, none of these are secret names. But you're getting paid to wait also for a number of these names. Apple, Microsoft and NVIDIA all pay dividends. All are buying back shares. So, you know, this notion that they're not going to be able to finance the build out. And these are debt light names that I gave you because there is concern. And that's good, Kelly. There was no concern during the Internet bubble. There was none. So when people say this is a bubble, I'm in the Howard Marks camp, I'm happy to say.

34:14I don't I don't see it. I don't believe it. I was managing money during the last one. It was very, very different. There was no skepticism. It was all euphoria. You know, people say, well, there was the dot-com boom and bust. Then there was kind of the housing bubble boom and bust. There's always a bust. And so NVIDIA is an interesting one to pick because the market cap is so high as it is. And maybe I'm too stuck on that. I mean, you could say the same for Apple,$5 trillion, right? Put that into some context. Okay. Yeah, but how much bigger can these companies continue to get over the next five, ten years and beyond?

34:52I think they could double. Easy. I mean, if you've got 96 % earnings growth, it's going to decelerate to 70 % next year in NVIDIA, for example. And then it decelerates to 20, 30%. We went through that with Azure, and the stock was still able to perform. If you're still growing at 35 to 40 percent, that's something to really pay attention to. But NVIDIA is trading at a 13 and a half multiple. So we put it in our value portfolio at the beginning of the summer. And we did the same recently with Meta. We did it with Google two years ago. These are really big companies, yes, but they can double in size.

35:32There's nothing that says they can't. Right. I need to think bigger. I mean, it's almost like you learn with age. You're not thinking big enough. speaking for myself. One more whataboutism. What about the consumer? What about these surveys were showing that they're starting to get pressed? And we've talked over the years about certain consumer names kind of come and go in terms of being in favor. Does that matter in a broader sense? To technology or just in general? I don't know, to kind of having broad exposure to the stock market right now. I see. Yeah, it does. But I don't think they're slowing down.

36:03So as long as you have the wealth effect and you have the top end of the income cohort spending, and they are spending. By the way, it's my generation that's spending all the money. They don't have debt. They are living at a point in their life worth spending. They've got enough assets. So I think, you know, the consumer sentiment surveys are very political in terms of drawing the lines. And that's where you get all this pessimism. But when you look at the retail sales numbers, they continue to delight. So I think it matters which technology aims you own, which retail names, which industrials.

36:39And I don't get them all right, for sure. But in our business, you just want to be mostly right. And that gets you where you need to go. Final question, speaking of delight. I want to ask you about Tesla. I mean, what did you think about? You would have thought after the company does tricks with flying cars that literally looked AI generated but weren't, that the shares would at least be positive the next day and they weren't. They sold off. What's going on here? What's the larger story? I think the largest part of this story is that there will be a merger with SpaceX, in my view. And I think he's just teeing that up.

37:10So day to day gyrations. I mean, you know, the company still trades like an EV company, but it's actually going to be a fully integrated AI company when they merge. So I think it's a name you have to own in your portfolio. We were adding to it over the summer as we were with all the names I brought to you, Microsoft, NVIDIA and Apple. And I think that's I know that, you know, the bears always sound smarter than the bulls and they create volatility and volatility is the friend of the long term investor. So think of deep seek. We were in buying. I was on your show. I don't think. Yes, you were there.

37:48And that day. Yeah. And it was it was it was scary. It always is scary. But you have to really just double down, sit back. There's no hurry. And that's what we've been doing. And then we feel like we got clarity. I think we rally hard into the end of the year and this bull market continues with. But we do need a correction for sure. I love when Nancy's like, it's just too good. It's just things are coming up too well. Really appreciate it. Thanks for stopping by. Nancy Tangler from Laffer Tangler. Coming up, Apple's iPhone duo already in tight supply, leading to checkout limits and record wait times for preorders.

38:23The steps Apple is now taking to help mitigate those issues just days before it officially hits shelves. That's next.

38:33Welcome back. Pre-order sales for Apple's foldable phone, the Duo, were so strong that some will have to wait a record 14 weeks for their delivery. Apple announcing some new ways to boost supply today, three days before the Duo hits shelves. McKenzie Cigalos has more in today's tech check. I guess it can still hit the shelves even if it's sold out, Mac? Well, that's the question I keep putting to them. whether or not they're actually going to have stock available for people who didn't place a pre-order. Apple at this point leaning even harder into U.S. manufacturing, though, Kelly, for its newest iPhones, adding a Pennsylvania supplier to make titanium for the iPhone duo and then expanding work with Delaware-based CUNITY Electronics on the iPhone 18 Pro's new camera.

39:14But relative to Apple's broader$600 billion U.S. investment pledge, This latest move is still a drop in the bucket, with Apple committing$100 million over three years for the metal. Now, Apple says nearly 100 components in the Duo and iPhone 18 Pro now come from U.S. suppliers across a dozen states. So far, though, it is only publicly detailed around$33 billion of its broader domestic manufacturing commitment, and that still doesn't solve the Duo's immediate supply problem. The phone is assembled at Foxconn in China. And Samsung is the main supplier of its folding display. And then titanium is a relatively commoditized input.

39:52So this announcement doesn't appear to address the bottlenecks behind those 14-week waits. And Apple is still not saying whether it will be able to increase near-term output. Now, that supply question is also feeding pressure on the stock today. Apple was hit with a rare double downgrade, with one analyst warning that slashed iPhone shipments aren't likely to rebound next year, which makes the Duo especially important here because premium foldables tend to carry very high margins. And estimates suggest the Duo could come in above the roughly 45 % gross margin historically seen on the Pro Max, even as those higher memory costs squeeze margins on the iPhone 18 Pro lineup.

40:32Kel? But so there's kind of an interesting kind of thing going on here where their traditional phone has been disappointing so far in terms of the sales, at least as far as I understand it from the anecdotes out there. And yet this one is very, thank goodness they launched the foldable phone. Otherwise, where would they be? Well, exactly. That's part of why Loop Capital downgraded the stock to a hold, slashed their price target down to 330. They cited the fact that there's a shortfall of 13 million of the iPhone 18 Pros shipping in the back half of 2026. They don't expect them to sell that and make up for it next year, which is surprising.

41:07And they're not citing any sort of supply chain bottleneck with respect to the 18 Pros. So there's a question as to whether or not the demand is there. Of course, we had that report a couple weeks ago at this point about slashing component needs for the 18 Pro. And then on the flip side, to your point, you've got the foldable in high demand. People really wanting to get their hands on it, and they can't. Yeah, I love that they're adding suppliers from Pennsylvania and Delaware. It's like a very colonial, I think, feeling, vibe with the new iPhone. Mackenzie, thanks very much. Appreciate it. Mackenzie Sigalos.

41:36Coming up, SpaceX shares are up 10 % from their IPO, and Evercore sees them doubling from here nearly, raising their target to 275 from 230 last week. We'll talk about what's got them so bullish ahead of the company's results after the bell. That's next.

41:54Welcome back. Quick check on shares of SpaceX. About unchanged today. They've been back and forth. They're lower a moment ago. Now they're fractionally positive again ahead of earnings tonight. Our next guest says the company will be judged less on third-quarter performance. and more on five key future catalysts. Cutgun Moral is an analyst at Evercore ISI. Cutgun, it's great to have you here. You recently did give that stock of the big price target boost. What's behind that? Yeah, like you said, I think we're very bullish on the numbers and estimates both near term and longer term. But really the focus for us is looking out into 2027 and how the narrative could evolve.

42:29And in all our investor conversations, there's a lot of focus on the complexity of the story and how some of these long-dated initiatives can feel more like science fiction than a financial model. But as we look at the near-term numbers as well as the proof points that we think about coming online in 2027, we think there's a lot to be optimistic about. And we've talked in our note and our analysis about Starship reaching orbit and deploying its first V3 satellites just a few weeks ago. And from our perspective, we think the whole reuse debate could be proven within the next few flights as opposed to folks having to wait until 2028 or 2029 to give it credit.

43:06The same thing for the orbital satellites, the mobile side. There are a lot of value unlocks that are, I think, ahead. And in the meantime, the existing business should continue to grow meaningfully. And the big focus right now, and especially for this print, is really around how they talk about terrestrial compute, either on building the compute and monetizing it with third parties or continuing to invest and feed their Grok cursor and Grok bot models. Bank of America was recently out just kind of tallying all the gigawatts coming online from the neoclouds and the hyperscalers and so forth. But they did include SpaceX slash XAI as a neocloud with perhaps, as Jim Chanos put it, he said it will actually be the largest global neocloud starting next year.

43:49And now that's kind of a dirty word. What would you say about that? Well, no comment on whether it's a dirty word or not. But I do think that the fact that SpaceX has ramped up its compute at such a rapid rate and our expectations in the near term are that, you know, they'll come in ahead of the street in terms of expectations for compute coming online, exiting 2026. And more importantly, I think the biggest toggle and the most important element for today's call will be around how the management team talks about 2027 compute. Musk has alluded to his ambitions of getting five to 10 gigawatts or the upper end of that range.

44:26I think the street is very skeptical on their ability to get there. Consensus is certainly not at that level yet. But to the extent that they give us more proof points and confidence that they could get to that level, the numbers will be massive. Even if we do see some sort of dip in terms of price points on what they could achieve with these third-party rental agreements, it doesn't take a lot to move the numbers quite meaningfully over here. And to the extent that they build it and they could monetize it, we think there's meaningful upside to the street estimates. All right. So what are your key catalysts you're looking for kind of maybe within or coming out of the report tonight?

45:03And what's kind of the financial equivalent of the Tesla merger speculation that is priced into the stock at this point? If that question makes sense, how should we think about kind of the option on that future merger? Is that a helpful thing for the shares? Is it a sell-off event? I'd just like to hear more about that. Sure. In terms of numbers, I think the most important numbers to look at today will be the compute, the capacity that they're bringing online, how they talk about capacity exiting this year and into next, and any indications around price points. And throughout all of this as well is how much of this revenue and EBITDA flows through to free cash flow and what's the CapEx required to get to that point.

45:52Unfortunately, I can't comment too much on the Tesla side, but I do think that the street is very focused on how the company's strategic vision will continue to evolve. And Tesla is certainly at the top of that list. Right. But I guess to put it differently, I'll just ask you from the point of view of SpaceX shareholders, would merging with Tesla cause a sell-off in shares? I know it would increase the market cap. I know that it's in Musk's incentives for maybe that and other reasons, but what would it mean for current SpaceX shareholders? I'm limited in being able to talk specifically around that and in general about M &A across any company I cover.

46:29But I do think specifically for SpaceX, there are significant opportunities just on a standalone basis, and they already have existing partnerships with Tesla's, for example, with the TerraFab facility and initiative that they're building. I think anything that they could do to simplify the approach and the vision that they have going into 2030 and beyond would be important. But beyond that, I can't share more perspectives. Yeah. No, I appreciate kind of just even kind of laying out the broad case there. And it will continue to kind of come and go as a talking point. Cutgun, really appreciate it.

47:07Thanks so much. Thank you. Cutgun Moral from Evercore ISI. That's it for us. Thank you for watching The Exchange. I'll join Brian Sullivan, my fellow I-80 road warrior, for power lunch after this break. We'll take an inside look at Norwegian Cruise Line's$15 ,000 new luxury suite. There's a sneak peek. We're back after this.

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