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[0:00:29] Terms apply. Hawaii with the whole crew? With Vrbo, now you can lock in the home or condo your group loves with $0 due today. Vrbo. Reserve now, pay later. Hawaii is waiting. Terms apply. Available on select homes. Oil is up. Trump talks to CNBC and one of the world's largest AI companies. Files to go public. Welcome to Power Lunch, everybody. With Kelly, I am Brian Stocks.
[0:01:00] They are higher again. And we have got a big interview coming up. OpenAI boss Sam Alban speaking exclusively to CNBC. That in moments. Plus, we're following the energy trade with oil seeing its biggest jump in two months as tensions simmer in the Middle East. A sustained move or a headline trade? We've got a portfolio manager who's been navigating all of it and outperforming all the major averages this year. You will want to hear his playbook.
[0:01:26] All right, all of that is ahead. But let us start this fine week with the markets and your money, because this week could actually be a monster one for the record books. Here's why. If the S&P closes out this week higher, we will have a 10-week win streak. And my friends, that'll be the first time that has happened since December of 1985. That is right. The S&P has not gone up 10 weeks in a row since Rocky IV.
[0:01:55] Broken Wings by Mr. Mister was the number one song, and IBM was the largest company in the entire world. Now, to get 10 weeks up in a row would be an incredible feat, nearly an impossible feat. The team at Jefferies notes that over the last 90 years, only 30% of nine-week win streaks have made it to the rarefied air of double digits. So, using the math, we have a 70% chance of keeping that 40-year...
[0:02:24] Hi, Brian. Yeah, this is incredible because...
[0:02:52] Each time these stocks move higher, you can tell from, let's say, take Micron as the key example of that today, just leaping just over $1,000. It looks more and more mathematically, I think, so parabolic, so straight up that there's not much chance anymore to reach at some point even higher highs because it should at some point actually correct, right? So this is a market where we're getting about 5% of the S&P in this sort of parabolic move, which I think at some point will just be unsustainable and cracks by itself.
[0:03:21] Well, now that Brian's laid out the history, I'm worried about this week. I know. I jinxed it, didn't I? Not so much jinxing. You warned us that it would be highly unusual for us to be higher by Friday because we've almost never had a 10-week history. Well, to be fair, Jeffrey's warned us. I just read their note. David, what do you think about that? Well, I think the right question to ask and the reason why these things are going parabolic is, is this a cycle or is this structural?
[0:03:49] Is this secular? Should Micron be trading at 10x or should Micron be trading at 20x? And that's the question on the table. Dell just doubled in a week. Yeah, well, it used to be cyclical. Now it's not. We don't have cycles anymore, I guess, is what's happening in the market.
[0:04:03] I mean, if you look at the five-year earnings growth rate estimate for the analysts now, it's 23%. If you look at it across tech, it's 60%. Wow, wait, wait. For the coming five years? Correct. For the coming five years? Yes, 56.6% is what analysts think tech companies are going to earn every single year for the next five years. Every single year? Yeah, there's no cycle anymore. If there's no cycle, we should go parabolic. The one warning I would say about things going parabolic is that gold and silver are stores of value.
[0:04:31] Gold went parabolic. Now it's down 20%. Silver went parabolic. Now it's down 40%. So it's the music playing. Everybody's dancing. It might be musical chairs, but we're not going to resolve that this week. I'm going with the over. I'm going higher this week. Okay. Well, why not sell what you can to buy stocks, I guess, Ben? I mean, listen, either the earnings and guidance that we just came out of have changed the thinking, sort of to David's point, and or...
[0:05:00] This is panic buying. And to me, having done this for a long time, maybe Kelly too, it's kind of starting to feel a little bit like panic buying. What do you think? Yeah, I think exactly right, Brian. I think we're getting to a stage where people feel really pressured to buy these stocks.
[0:05:19] As they go higher and higher, and although, you know, these are maybe the best performing stocks in the market currently, because given their incredible return, I mean, the risk that you're taking here currently at these levels, say you buy 5% of this stock, and it does draw down, and that could be a pretty big burning of portfolio. So I've been telling my clients saying like, if you really like this Micron team, and it could become a larger company than it is right now.
[0:05:43] You don't want to buy 5%. You buy half a percent and then let it draw down and then add to that weakness as it goes down because this is just too steep of a climb. It's like, do you paraphrase Brian, the Rocky team, right, in 1985? He goes all the way up to the mountain, right, and screams Drago. And I think that's kind of where this micro stock is heading. And that's when he has to climb down because he's out of breath. Well, let's just talk, David, about the S&P 500, which might be just kind of the broad way to... It doesn't have to be about micro. It doesn't even have to be about the triple Qs. You could just...
[0:06:13] I mean, look how we've gone from 5,000 two years ago, 6, 7, 7,500. Now everyone's scrambling to raise their price targets for year end. And all of that seems predicated on incredible earnings growth. The earnings growth that we're living through is the only time it's ever happened before as I understand it.
[0:06:31] Either coming out of recession or in the late 90s. So it's been a while. In the late 90s, if you looked at 95 to 2000, I think earnings were up about 60%. They're up 70% over the trailing five years now. So the analog is right. But what happened in the late 90s was we went through this moment. So if you index where we are in the cycle with ChatGBT and Netscape, you're 60% through. It is now June of 1998, right?
[0:06:59] The market on the NASDAQ went up another 150%, 170% from there. So we went to 2,000 to 5,000, then we went back to 2,000 by early 2001. So, you know, the fundamentals right now are pretty analogous to where we were. It's a question of when we get into silly stuff. A lot of those companies were unprofitable. That's right. A lot of those companies were startups. They were fake. I was at the NASDAQ. I reported on them. But they were still real. Here's where the fake companies are now. They're in the private sector.
[0:07:28] I mean, you can take a private company now and grow it all the way up to a trillion dollars in total market cap. Once those market caps wash into the S&P 500, the PE is going to go from where it is now at 21, 22 to 24, 25, which is where we were. The only pushback I wanted to offer to your whole thing about how there's no cycles anymore is... Oh, no, I think there are. Well, you're saying the market is saying there's no cycles anymore, basically.
[0:07:55] But we spoke with Dave Cody last hour who said, look, we're 40 years into what could be 150 year period of the kind of this akin to the industrial revolution, the digital revolution. So while we all keep drawing analogies to the late 90s, but as we know, we never repeat things exactly the same way. So instead of the clock ticking down to 1999, what if we should be looking at this as how many more decades do we have? I'm not worried about that as much. So the S&P, equal weight, I love it, right? I mean, if you look at the sectors.
[0:08:23] This past quarter, every sector made money. Like I'm perfectly happy being up 10% right now on the year in the S&P equal weight and not 80% in the semiconductors, right? So I think there's going to be plenty of money being made. You know, I like Smid caps. That's worked too. Internationals are working. So there are plenty of ways to participate in the rally. The repricing that we just saw between the end of March and today, it's very exciting. But if you're up, you know, a thousand percent in a memory name over the last year, maybe consider taking a little off the table.
[0:08:53] That's all I'm saying. Yeah, I mean, Ben, listen. The question I get from all of our wonderful viewers and listeners when they see me walking through the airport is, when is this going to end? When is this going to end? They're all obsessed with this idea that it's going to end, but everyone's too afraid to get off the bus before the bus stops, right? Nobody wants to be the first one off. I think this pace will end, but do you think this market run is going to end anytime soon?
[0:09:23] No, I don't think that is the case because, again, when we talk about a small part of the index that's really showing this frothy parabolic movement, the broader index is still performing just more in a nicely trend and not extreme in any way. And if you look at the economic data, let's take the ISM report this morning again, it shows all the strength underneath in the economy. And that's, I think, what's driving the broader market. But if you think of these particular names, is it going to end, I think,
[0:09:50] Brian, we could see some kind of a drawdown in some of these names pretty soon just from profit taking in itself. But the market itself, I think, is in a healthy trend here given the economy. I mean, to that point, would I rather own today with Fresh Capital, SpaceX, or FedEx Freight?
[0:10:08] Right. Which is spun out of FedEx at like half the valuation of its peers. Right. Probably pays down a little bit of debt. There's enough economic tailwinds in the system. I think there are plenty of ways to make money in this market without having to go into companies trading at 100 times revenue. FedEx free over SpaceX. Yeah. That should be a powerful. I'd rather have trucks than spaceships. Ben, what about you?
[0:10:31] Yeah, I do echo that to an extent, although, you know, SpaceX, let's see if it plays out, right? Because this is just a phenomenal event, I think, in the next few weeks where, you know, we're getting the first real mega, mega, mega cap. And, you know, what will that do to rotation in the market? It will probably create some opportunity, I guess. But, you know, to his point is that if this is industrial cycle, as you say, Kelly, like it's a longer term cycle.
[0:10:55] Then you want to stick with the big blue chip names as part of your base of your portfolio. If in 1985, IBM was the biggest company, today it's again in vogue. IBM, I think, would be one of my names I would pick here. Oh, wow. All right.
[0:11:09] Well, how about that from some of the brand new to some of the older guard, I guess. Like you said, happy to be in those areas as well. Thank you both. Really appreciated David Waddell, Ben Amons for joining us this hour. Unlike the stock markets, which have been hitting record highs seemingly day after day, according to creative planning, the bond market is in the midst of its longest drawdown in history. 70 months and counting as of May, if you go back to August of 2020, the 10-year trading around 447 today.
[0:11:38] All right, President Trump speaking exclusively with CNBC's Eamon Jabbers on his negotiations with Iran. The gentleman, at least one of the two that was on the phone with the other one, is now joining us. Eamon Jabbers, really, I thought the comments also, because we set the transcript around as you saw it, his comments, of course, on oil were what caught my eye.
[0:11:59] Yeah, that's why I called him, Brian, is because we saw this spike in oil this morning on the report that the Iranians had broken off negotiations with the U.S. I wanted to see if the president could confirm that and what his reaction to it was. We talked earlier this afternoon, about 12.15 East Coast time, on the phone over cell. And the president said, I said, do you think the negotiations are over now or is this a bluff?
[0:12:25] And what the president said was, I don't care if they're over, honestly. I really don't care. I couldn't care less. If they're over, they're over. If they're not, you know, I think they took too much time. Frankly, I thought they started to get very boring. The president also said that he thought that the Iranians were.
[0:12:42] He said he thought they were stringing along for time and ultimately the negotiations weren't going anywhere. Then we saw just within the past couple of minutes this post from the president on social media. So about an hour and a half later, the president says talks are continuing at a rapid pace with the Islamic Republic of Iran.
[0:13:04] How do you square those two things? Well, it seems like sometime between my phone call with the president and his social media post, he got some information either from his negotiating team or directly from the Iranians that tells him that the negotiations are ongoing. But I had asked him earlier in the day whether the Iranians had communicated that the negotiations were off to him and to the White House. And he said, no, they haven't. He said, they told you, but they only want to tell the fake news.
[0:13:32] His point there being that the negotiations were taking place through the media and that the Iranians had sent this signal through state media that the talks had been called off by the Iranian side but that they had not communicated that to him. And now we see him saying, well, in fact, those talks are on. So where does that leave us? It leaves us still with a very big question about what's going to happen in the Strait of Hormuz. The president said he thought that NATO needed to come in.
[0:13:58] And help solve that problem. And then in the very next answer to my very next question, he also said, I don't think we need NATO. So it's a fluid situation. And again, some critics would say, does this mean Iran is calling the shots, Eamon? But we'll leave that for when we see you next time. Who is Iran? Well, to Brian. And by the way, the Dow is positive now, up eight points on all of this. Right. Perceiving as what it perceives, no matter who. Multiple people, as I've reported, maybe speaking for the country of Iran. Yeah.
[0:14:26] Right? Yeah. We'll see what happens. Sure, that complicates things. We're just getting started, though. Still ahead today, oils up following those renewed tensions with Iran and Energy Portfolio Manager's playbook on how to play that volatility. But after the break, our exclusive interview with OpenAI CEO Sam Altman as rival Anthropic beats them to the street, filing its IPO first. That and more of the latest out of Florida against OpenAI as well. We're back after this. Financial growth begins long before the first investment.
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[0:15:56] Streamline your buying process, save time and money, and gain valuable insights to make smarter decisions. Empower your team to buy with confidence. Learn more at AmazonBusiness.com. Welcome back, and let's head out now to Saline, Michigan, where OpenAI is building its massive Stargate Data Center project. That's where we find our very own David Faber with a very special guest this hour. Hi, David.
[0:16:22] Hi, Kelly. Yes, that's right. Of course, I am joined by Sam Altman, the CEO of OpenAI. We're both looking around. You kind of never get over the size and scale of it, Sam, even if you've seen it. You can't read the numbers and understand what you're kind of looking at. Yeah, every time I come to one of these sites, I'm struck again. And you're totally right. The numbers say one gigawatt, this many jobs or tens of billions of dollars of capital. It doesn't really get across the feel of watching something like this materialize.
[0:16:48] Yeah. I mean, that said, the numbers are pretty staggering too. $16 billion just to develop the site, build the buildings. But then in talking to Clay McGurk from Oracle, at least another $30 billion going into it. And so I guess, you know, when you talk about something like this, $45 billion, maybe $50 billion, OpenAI being the main customer, do you feel like that $50 billion will generate the necessary return for both OpenAI and for all the people financing this deal?
[0:17:17] At this point, we're very confident. So one gigawatt is a huge amount of compute, but we understand what demand looks like and how much people want to use these models and the degree to which revenue is ramping at our company and the industry. And more than that, the degree that value is now ramping, it's not just, oh, let me try this. But people are really saying, you know, the future of my company, the future of my scientific research program, it is going to depend on this. Can you promise me compute long into the future?
[0:17:43] Well, can you give me some examples? I mean, because that conversation has shifted even recently. Sort of something seemed to have happened. Maybe it was the end of last year. I've heard you discuss this as well in terms of just an uptick. Maybe it was the power of the coding model. I think that was the single biggest driver of what people realized was the coding models have so transformed how companies are doing their work and the efficiency and the speed with which they're able to build products.
[0:18:10] The coding models got really good late last year, early this year, and then another step forward in recent months. So I think you're right that that's the single biggest driver. But we are now seeing scientists really use these models and a much broader application of knowledge work beyond coding. But yeah, I think it's fair to say that coding is the magic right now. It was a key thing. I want to come back to that. But back to that, let's call it $45, $50 billion. I mean, the price of tokens continues to come down, correct?
[0:18:37] Yes, but not as fast as the desire to use those tokens at the lower price goes up. And so that is what gives you part of the confidence? Yeah. That, in fact, I mean, again, the numbers are staggering when you think about it. This is just one of so many projects, and yet this will consume $45 billion in capital. We still don't think the world has appreciated how much AI every person and every business is going to want.
[0:19:03] You know, right now, you still send a request to an AI and it does something for you and gives you an answer back. But very soon, an AI will just be running for you in the background all the time, helping you with your job, looking at all your information, aware of all your context, doing as much as it possibly can to help you out. And I can already tell in that world, I and everybody else is going to want so much more of this AI infrastructure than we think. Yeah, I mean, I was listening to you on a recent podcast and on the same theme, you said, you know, the models are still quite dumb. I'm quoting you.
[0:19:33] But not far from a model that knows you well in the world. Is that what you're talking about when you say sort of the usage pattern? Absolutely. So what does that look like? Well, for my own job, I could imagine a model. I can't keep up with all the information inside of OpenAI. I can't read every document someone writes. I can't read every Slack thread. I don't have all of the context. And so I miss interesting connections or new ideas that could make things better. And there's no way I'm going to be able to do that. But a sufficiently smart AI.
[0:20:05] That's running all the time, that understands my goals, that understands all the information, OpenAI, everything our customers are saying and want. That could give me really great advice and say, hey, here's the thing to do in a way that I couldn't, nor could any other person do on their own. So is that one of the reasons why you prioritize compute? Yeah. We have seen from our founding that the more compute we can provide, the lower cost of services we can deliver.
[0:20:33] The smarter models we can make, this whole stack integrated together, you know, from, if you really think about it, in some sense, we are transforming electricity into this useful tool for people. And the better we can do that, the more we can make that smart, cheap, abundant, helpful, have all your context, the more people want to use it. And we really do build that entire stack. And that is, I think, a special thing about us. But that is what we want to deliver to the world.
[0:21:03] Prosperity through abundance of AI. A lot of it that people can integrate into their lives and work. On the subject of prosperity, I think you've also said, you know, there are different futures and one is a floor of up to tenfold of what we have right now. Sort of this abundance, but still with significant inequality and sort of different variations of that. Yeah. You still believe that's kind of what we're headed towards? I think that's just one possibility. I think that it seems clear that AI is going to massively increase.
[0:21:33] But getting the questions of equality, fairness, distribution right, that's going to take work from all of society together. So I no longer have much concern that AI can deliver on the magic potential or the wonderful, all these things we talk about. How society integrates this and makes sure that it really benefits everyone, I think that will be the big question in the next few years. But you were most recently also quoted on another key area, which is, of course, what it's going to do to jobs. You'd been fairly...
[0:22:03] Sobering in the past when you discussed that, you seem to have sort of said, maybe I was wrong in a more positive way. I'm curious as to what you've seen that's led you to that conclusion. So first of all, I should say I'm not sure. Like I still... Well, none of us know the answer here, right? But a positive update for me has been watching how companies have adopted Codex and other coding tools. The companies that I know that have adopted AI the most are also the ones hiring the most. And the companies as a general rule,
[0:22:32] that are talking about doing layoffs because of AI are the ones adopting AI the least. But it's a convenient way to explain it. I think I underestimated how jagged these models are going to be. They do some things incredibly well, but they don't do kind of the long-term complex task supervision well at all. And so watching people who are really good at using these models, they can do an amazing amount of work, create way more economic value.
[0:23:01] And I think that's going to go on for much longer. Then there are all the other things about, you know, people really like other people and want to interact with other people. They want to collaborate and work with other people. When they buy a product, they want to talk to a person at the company. You know, most people, I think, don't want to watch an AI generated creator. They want to know about the person behind it. So I think we have under, and this is really good. I'm really happy about this. But I think our industry underestimated how much.
[0:23:30] We're going to be able to keep people at the center of everything in an economy that is, in a world that is based on people. But to your point, we obviously don't know the answer. I mean, when you introduced, I think it was 5.2, you said it outperforms professionals across 44 occupations. You can understand why there may be an AI backlash when people hear things like that. Totally. What I wish we had said then is that it outperforms professionals at small tasks in 44 occupations, which is, I think, a more accurate.
[0:23:57] Yeah, maybe one of the biggest. Yeah.
[0:24:19] And so it would be imprudent not to have some real caution around that. Well, on the AI backlash, and I have been speaking to a number of the leaders in the industry who have been saying maybe we haven't done enough to articulate the benefits, which may be difficult to do. But there's not just opposition to data centers like this. There is a more significant, perhaps, opposition to what it's going to do to society. How do you feel as the leader, one of certainly the key leaders in this, in terms of your ability to combat that backlash?
[0:24:49] Yeah. So it's a huge challenge. And again, as I said, I think this is like there's something good about this. Like society should have antibodies against too rapid of change. And there should like part of the reason that we believe in this strategy of iterative deployment is we want society to see the technology. We want society to really understand what's happening and have a chance to debate, react, sort of say, hey, this doesn't make sense or this isn't going to work for me. Like this has got to be.
[0:25:18] I've no interest in building a super smart AI that accomplishes some non-human goals. This has got to be about something that is working for people and that people are at the center of it and human values are what we drive forward. So people should react. People should say, hey, this is what I want and not this. I don't think it's about not explaining the benefits. Because we say, hey, AI is going to cure a bunch of diseases. And people say, okay, that's great. But that's not really my question.
[0:25:47] My question is, what is my role in the future? What is my economic future? What is my agency? How do I know that my kids, my family will still be able to have a fulfilling, creative expression, struggle to drive the world forward, to grow, to kind of do this thing together in a way that has worked for a long time? And when you have...
[0:26:11] People in AI say, well, yeah, sure, there's going to be no jobs or 50% of jobs are going to go away or 90% of jobs are going to go away. And, you know, AI is kind of going to be smarter than you at everything. And, you know, we'll give you some basic income, but there's like, you're not really going to have a role. That's horrible. And by the way, you know, this AI company, maybe we're going to destroy all the jobs. We're the most valuable company in the world. People just look at you and you're like, yeah. So I think it's a terrible message. And I don't think it's that we haven't articulated the upsides. I think people actually believe us.
[0:26:41] Like, you know what? Go cure cancer. That sounds great. I think we have failed to articulate as an industry how people stay in control of determining the future at every step and have a really meaningful life in all the ways we care about. Another part of it may be the pace of change itself. I mean, you're releasing a major model. What is it, every six weeks or something like that? It's very hard. Things seem to be changing so quickly. You know, maybe you're right.
[0:27:10] I think at this point, people believe us that the models are getting smarter. And there was a time when the first iPhones came out that every iPhone release was a huge deal and people lined up overnight and got very excited. And now I couldn't even tell you the number of the latest iPhone. It's great. It's amazing. That's my favorite piece of technology. But I expect it to continue to get better. And I know they make a new one every year. I kind of think the same thing for this technology, which is...
[0:27:37] People expect the models to keep getting better. What they really want to know is like, what's going to happen with society? Yeah. And none of us, I mean, you don't really have the answer. You can guess. Of course, I don't have the answer entirely. But what I can say is our whole effort, our whole company is about giving this new kind of infrastructure at massive scale to people and trusting that the democratization of power.
[0:28:08] of wealth, of opportunity, of agency, will continue to do this incredible story of civilization going forward. Sorry, we're trying to figure out how much time you have left with us. But we're in this race with China. At least that's the way it's described. And that is one reason why we're just full speed ahead. Don't stop. Build as many data centers as you can. Move as quickly as you can. I think in some ways that's okay. And in some ways that's really dangerous. Like, I think it's fine.
[0:28:37] To say, hey, we're going to win this. We're going to have most of the economic benefit. There will be some global scale safety issues. And we have had time in the past, times in the past, like with the IAEA for atomic energy and weapons, where the world comes together and says, you know, none of us should be taking global risk. Different countries, different systems, they can sort of say, you know, I'm going to treat economics this way. You're going to treat it that way. I'm going to think about using AI in healthcare this way. You're going to think about using it that way.
[0:29:06] On the really big things, making sure we don't ever lose control of AI systems, cybersecurity, biosecurity. I think we need to not treat this as a race and treat this as a good future of the world isn't everyone's interest. That's not where we are right now, though. Well, I think we're still in the economic... I don't think we're... I think we're transitioning to a world where I have to think about that. I think we're still in a... This is mostly an economic story. But as the risks, potential risks have increased in the last few months or the last year,
[0:29:37] Heart warmed by, you know, a new recognition among leaders of companies and governments that, hey, there's a there's a category here we have to treat differently. You know, I read the news about Trump's visits to China recently, and I know they talked about this. So I think people are taking this seriously. Yeah. And when we talk about a race, Sam, you're also in a race with your competitors as well. One of them's Anthropic. I'm sure you heard today they filed used to be confidential. Apparently, it's not anymore. I just heard.
[0:30:06] I'm curious as to what goes through your head. Is there a race to be the first to come public? No, not for that. I think there is a race to deliver the best technology and build the best business. But going public is a financing event. And I don't think that's one that we're focused on the timing of. We'll do it when we think it makes sense. But you will do it as well. I assume we'll do it someday. At some point. And when it comes to sort of that competition.
[0:30:34] I mean, again, back to sort of where we started with how much money is being spent. Are you confident that all, you know, that you, that it's not a winner-take-all? I'm confident it will not be, yeah. I think the world will demand, this is going to be such critical infrastructure for so many things that the world will rightly demand robustness in the system with multiple providers. I think that's a very good thing. And you think that compute, you know, the last week I was hearing about compute, for example.
[0:31:01] Companies starting to wonder, well, what are we spending it on? Our bills are going through the roof and it's not clear to us exactly what predict, you know, in other words, I know a lot of my spend is going well, but I don't know which part of it. So I think this is the most fair criticism right now of AI, which is you hear companies saying, I am spending a ton of money on AI. And I know some great stuff is happening, but I know there's a ton of waste. And, you know, how long do I have to wait for it to really show up in revenue and how long do I have to wait to really get the costs under control?
[0:31:32] And I assume that the industry will figure that out pretty quickly, but I think that is a fair issue. You do. Yeah. Quickly being? I would bet that by another year or two from now, there is a much better rationalization of companies' spend relative to outcomes. And finally, Sam, are we ever going to see things like this up in space? Ever. I hope so. In the short term, I think it's probably better to do it. You know, there's like...
[0:32:03] As you can see, this is a huge project. A lot to put up there. Putting this in orbit at current launch costs or even at lower launch costs feels difficult. Also, you know, we know how to cool it here. We know how to get people to service it here. We have an atmosphere protecting us from some radiation. I hope that humanity expands to the stars someday and data centers along with it, but we're going to focus on building Earth for now. It doesn't sound like you think it's happening anymore. It's not a short-term priority for us. Sam.
[0:32:33] Thank you for your time. Appreciate it. Look forward to further conversations, I hope. Enjoy. Sam Altman, CEO of OpenAI. I'll send it back to you, Brian. All right. David Faber with Sam Altman in Saline, Michigan. Let's not bring in Kate Rooney. Kate Rooney joining us now is kind of a, you know, as Altman does, Kate, kind of a big picture, humanity kind of a thing. What stood out to you about that interview?
[0:32:58] Yeah, Brian, his style is very philosophical. They got into the labor discussion, talked a little bit about data centers in space. I think the big thing for investors and what stood out to me was the spending profile. We talked about the numbers. They're there in Michigan. It's a $45 billion commitment. And Faber's question of...
[0:33:15] Is this going to pay off? Is it going to be profitable? Altman with confidence saying yes, that he does think that level of build-out, that level of spending where they are, the scale of that is appropriate based on the demand. One of the things he said was, it's not just us using ChatGPT and using AI, it's this whole agent profile of, you know, there are going to be thousands of AI agents working in the background. He said...
[0:33:37] 24-7 is what it's going to look like. You're going to have agents in the background. That's adding to demand. And then cost. David asked him, cost is coming down. You have what are known as tokens. He said, yes, this is a key quote, but not as fast as the desire to use them. So for now, that makes sense. They need to have compute capacity because of that. He did also talk about the Fortune 500s and the rationalization of, hey, we're spending so much on AI. When are we going to actually see the outcomes? When is it going to be worth it? He said,
[0:34:05] At least, you know, a year from now, two years from now. So not immediate. Interesting that it's still about a year away, at least from Altman's estimation. Interesting moment, a sarcastic comment if you caught it. He did say on AI layoffs, the companies doing the AI layoffs are the ones using AI the least. So basically, kind of subtly blaming the company, saying it's actually not AI. We talk about that in tech all the time. We've seen thousands of layoffs in tech, many of which have been blamed on AI. He says that's actually not the case. It's the companies.
[0:34:34] for other reasons. So kind of a shot there by Altman. But again, you mentioned it, Brian, his style, almost sounding like a politician, acknowledging the reality of places like Michigan, where they are, might not be the most popular technology. He said, essentially, they have failed to articulate as an industry how we're going to make this work for average people. And then the last thing, I will just add that Anthropic news that we got that...
[0:34:59] Their biggest rival, their biggest competitor had files to go public confidentially. We didn't expect to get...
[0:35:05] A spicy answer from Altman, I would say, on that. He was very diplomatic, said there could be more than one winner, wasn't commenting on it. So we didn't get any fireworks around that. But this whole data center build-out is fascinating. The spending, he has again and again made the case that that is their advantage against Anthropic. Because they're spending this big, it's going to pay off in the long term. And he's doubling down on that. We saw it today, Brian and Kelly. Right. Team. No, and it's a great point. I mean, what he's saying is that companies are AI.
[0:35:34] They're blaming AI for layoffs instead of their own sort of poor market position or bloat. And that's contributing to the negative public perception about AI and they're not being honest about it, which is a spicy take. And by the way, he's not the only one who feels that way.
[0:35:48] Yeah, he's sort of saying it out loud. Exactly, Kel. Exactly. Appreciate you pointing that out, Kate Rooney. David Waddell is still with us. He's here to react. And Dan Ives joins us as well. Dan, I love it. There's no intro for you. It's just Dan Ives. What further explanation do we need, right? So let me just start with you on a very, very busy day for all of the kind of areas that you cover. And going back to this discussion earlier about are we four years from kind of the blow-up moment in tech or 40?
[0:36:13] Did you hear anything from Sam Altman that kind of tells you what the timeline is for some of these trillion dollar IPOs? Look, I think that that was as confident as I've heard Sam, you know, maybe in any interview. I think in favor hit on some of the key questions because this was not just a confident Altman, but I think doubling down in terms on the data center side, on the build out, that's tangentially bullish for Oracle as well.
[0:36:39] At a time where, you know, Anthropic with the S1, a little shot across the bow, this is an OpenAI that's very confident in their build-out, which is bullish for the broader fourth industrial revolution that we're seeing. David, jump in here.
[0:36:53] Well, I think it was telling that it was a conversation about what's unknowable with a Caterpillar tractor. That's it. The Caterpillar. Which is knowable. The Caterpillar placement. We did not place that Caterpillar there, by the way. Maybe they did. Yeah. That to me also signified, because you recommended FedEx freight earlier. I'm thinking.
[0:37:13] Whomever just happened to leave that Caterpillar crane there gets a raise. They need a bonus. Yes, exactly. Because that's AI. It's all the concrete and the moving of the earth and the wiring and the cooling. One dollar.
[0:37:27] Out of every $20 being generated, the U.S. economy right now is going to the AI CapEx build-out trade. That's far higher than any of these other super cycles we've seen in the past. Now, whether that can continue unabated for 40 years, as you said, I would sort of be skeptical of that. But it is happening. What the economics are for OpenAI, I don't know. I mean, that guy does a great job selling stuff. Caterpillar is up 50% year-to-date, 5-0, okay?
[0:37:55] OpenAI. That's no Micron. No, well, exactly. That's nothing to be excited about. OpenAI had op-eds by, you know, Sebastian Malaby, who's a respected financial historian, saying they might go bankrupt.
[0:38:06] And so, Dan, let me turn to you on that question. You felt that Sam was actually able to sound his most confident yet in the face of, look, they did prevail in that trial against Musk. They've had these allegations circling. These claims their business model is fundamentally broken. They're going to need to be taken out by the likes of Microsoft or somebody else. You think he was trying to answer that, sort of stare that down today?
[0:38:25] Oh, yeah. I mean, I think post-trial, clearly more confidence. You know, and then when it comes to the job and some of the AI alarmism, I think he struck a really good tone there in terms of what he's seeing in terms of more AI is actually more job hiring that we're seeing. And I think overall, this was just an example of him showing.
[0:38:46] The amount of spending is going to accelerate. You look at the data center and they're building those more data centers under construction, active data centers. It's compute, compute, compute. It's an arms race with Anthropic. And, you know, right now, this boxing match is just beginning for trillions of dollars of spending. But what Dave Woodout, what he said, I'd almost add to it, for every dollar spent on a video chip,
[0:39:09] There's an $8 to $10 multiplier across the rest of tech. Caterpillar, across the board, infrastructure, power. It just shows third inning, one out in terms of AI. Yeah, and the market keeps moving up, David, on these bigger multiples. We've talked about it when I was down recently in Port Arthur, Texas, Louisiana, looking at a big LNG facility.
[0:39:29] It was not just the LNG facility. It was the truck drivers. It was the wire installers. It was the electricians. It was the hotel that I stayed in, by the way. Sorry about that. That was the hotel price saying that my credit card was declined because it was... Delicata. By the way, the motel, not hotel, was like $350 a night. The economic impact is trickling, I know it's a politically sensitive term, trickling down across...
[0:39:58] The spectrum. This is going to earnings estimates. I think, how much is this contributing to the overall growth of the market? Well, again, I think the growth in the market is...
[0:40:07] A function of what's going on, right? I mean, it's 50% now of the S&P in terms of what's AI, you know, either in the tech sector or add in the communications sector as well. And then you've got a 67% of GDP in the first quarter. I mean, we're all in what is generational, right? It's the railroads. It's the electrification. It's the highway system, the adoption of the automobile. And these two companies are great. I don't know which one is the Union Pacific and which one is the Central Pacific, but the steelmakers, the workers, like...
[0:40:37] That massive industrial revolution complex, and even with the railroads, benefited a whole lot of people, you know, and it was great for the economy. It wasn't necessarily great for investors, right? I mean, if you could time it correctly, I suppose it was. And this is a little different because it's not as debt sort of fueled as some of those.
[0:40:54] electrification and other processes in the past. But I think it is good for the economy overall, which is why I'm bullish on the market overall. I'm just skeptical of anything that goes parabolic. And these have gone parabolic in the private market. We have no idea. The three companies coming out will have larger market cap than every single company that IPO during the.
[0:41:13] It's wild to think about. Yeah. Dan, real quick comment then on the way out. We have the software stocks are up 15% off the lows. The semis are still having a pretty, NVIDIA's up 5% today. I was just, what is this market moment telling you? I mean, the SaaS apocalypse, a lot of that was sort of fictional. And now you're seeing the second, third, fourth derivatives play out. And it just speaks to our point. That's how we're getting the NASDAQ 30,000. All right. Dan, thanks.
[0:41:40] David, thanks. Dan Ives joining us. Still ahead, oil spiking today with the world's most important choke point still at risk. A top energy portfolio manager is finding opportunity and outperforming the broader markets. We'll give you his playbook next.
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[0:43:29] All right, let's go back now to energy because oil prices, they're on the rise again today. President Trump telling CNBC and Eamon Jabbers earlier that he, quote, doesn't care if the negotiations with Iran indeed are actually over. Now, this comes after Iran or whomever is speaking for Iran today, pointing that Tehran is threatening to, quote, close the Strait of Hormuz again. Whatever the ultimate outcome is with this, U.S. energy demand is only going one way, and that is up.
[0:43:58] And companies will benefit. Let's talk about that and which ones and more with Tyler Rosenlicht. He is a portfolio manager and head of natural resource equities at Cohen and Steers. And he is recommending a couple of stocks that largely have nothing to do with the fighting in Iran. Tyler, so it's good to have you back on set. Thanks for having me again. First off, before we get to your picks, your individual names, are you a buyer of the oil and gas companies on these still higher?
[0:44:25] Oil prices. We are definitely buyers of the equities because all the move in oil prices has been on the front month. And so when you think about an equity, you're really thinking about, well, what are prices going to be two, three, four years from now? And there really hasn't been much movement there. I mean, 2028 Brent is still 75, not much more than it was pre-conflict. And we think oil prices need to be higher than that in 2028 and 2029. And when you look at the equities with that sort of price level.
[0:44:49] Hey, there's a lot of upside, we think. Why do you think oil prices need to be higher?
[0:45:07] Marginal costs should set future prices for things like oil, and we have not seen enough to justify a reacceleration of drilling activity. Here, though, because I'm writing my newsletter now for Wednesday, and I'm going to argue in it that the UAE is probably going to go to four or five million barrels. Guyana is going up. Brazil is going up. Venezuela is going up.
[0:45:29] That's all stuff that though was invested in years ago, and you're starting to see the fruits of some of that labor. Now, the OPEC is talking about increasing production, but we'll see what they're actually able to produce a few years from now. I think that we're going to need a lot more production from offshore, from sort of marginal areas today, and we're not seeing activity really accelerate yet. Maybe it will, but the reality is prices we think are still too low for 28, 29, and 30. Interesting. I don't know whether to pivot off of that into some of your other plays then, because there's lots of other places in the world of resources that you're looking.
[0:45:59] Well, I mean, just going back on oil producers, for instance, I mean, one thing that we think people are missing is we're shifting from a world where oil companies were looked at as declining annuities. Hey, a company like Exxon, I'm going to get five years of $100 of cash flow and then it's going to decline for 15 years and then I have no terminal value. Cigar butts, right? Exactly. But the reality is oil is going to be around for a long time. Now, we think growth is going to accelerate in renewables and we're going to see a lot more in alternatives, but we're going to see oil produced in 2040, 2050, and 2060.
[0:46:28] Converting from a declining annuity to a perpetuity means a lot. Talk to us about geothermal. Yes. Well, we're also excited. Like I said, we just think energy demand is accelerating, and we think we need to generate as many molecules as possible. And people have been focused on things like wind and solar. There's other technologies out there that we think provide really favorable— And companies that make them. And companies that make them. So an IPO a couple weeks ago, Fervo is a great example. They do enhanced geothermal. It's clean.
[0:46:56] It's predictable, it's baseload, it's economic, has a way lower geographic footprint than things like windmills and solar. So as people are looking for power and they're looking for baseload and clean, we think there's great examples of companies out there that should be able to grow quite a bit. Is it going to make me money? Because I can go in Micron, I'm going to make a thousand percent in the next 30 days.
[0:47:14] You know, for me, I try to think three, five years from now, we think if you can find the right alternative energy company that's priced with reasonable expectations and then they're most importantly able to execute over time, then you can make money. And so we're constantly on the hunt for those. I feel like it's a lot easier to predict three or five years from now than the next 30 days. You also like Dominion Energy, which is interesting because Dominion Energy is supposed to be bought by next era. Some people don't think that deal is going to go through. You don't seem bothered by that. You're recommending D.
[0:47:43] Yeah, I try not to wade into merger ARB stuff too often. But in this example, we actually think it's really good for local customers. So if you're a utility regulator, it's what's happening to my local customers, in this case in Virginia. We do think it's a good deal for them. So it's a win for local customers. We think it's a win for the company as well. In Dominion's case, obviously, the stock prices are down post-merger. So we think that the valuation looks reasonable. And importantly, there's a really significant breakup fee if that transaction doesn't...
[0:48:10] And in that case, we think Dominion is actually a lot better off than it was pre-merger. So we're excited about the need to invest in utility infrastructure. We think that's a win-win for customers and companies. Tyler Rosenlicht, really fascinating stuff. I love the take. Thank you very much. Thanks for coming in. Appreciate it. We've got some breaking news now on the president's so-called weaponization fund. Emily Wilkins has those details. Emily?
[0:48:34] Kelly, we're seeing some new reporting that President Trump is planning to drop his request for that $1.8 billion. It's called the Weaponization Fund. It was meant to sort of repay those who feel they've been wronged by the government. This is coming from Axios reporting, saying that the Trump administration will no longer be pursuing this fund. Of course, it caused a lot of distress in Congress. A number of Republicans who were against the idea of this fund, citing concerns that it would be going to those who broke into the Capitol on
[0:49:04] January 6th, that it's going to Americans at a time where a lot of other Americans are feeling very high pressure when it comes to prices and gas and inflation. So there were a lot of concerns about that on Capitol Hill. It now seems like that is no longer going to be an issue, according again to Axios reporting. We know House Speaker Mike Johnson was meeting with Trump this morning over it, and we know that this was a major holdup when it came to Trump getting the funding that he's requesting for Customs and Border Patrol as well as ICE.
[0:49:33] We'll have to see if now that this fund is out of the way, if Republican lawmakers will be able to move forward on that funding and what's going to happen with the other controversial piece, which is, of course, the $1 billion for security around the White House, including that new ballroom. Kelly? A lot, like you said, Emily, of potential angles to cover there. Really appreciate it. Emily Wilkins with that news. Again, according to Axios, the president may drop that weaponization fund. More Power Lunch after the break.
[0:50:07] All right, let's wrap it up, Kelly, with a couple of streaky things. The markets are now up. NASDAQ's up. S&P's up half a percent. And as we said at the top of the show, if this week ends higher, it'll be 10 straight up weeks for the S&P 500. That has not happened since 1985. Right now, MGM, Datadog, Oracle, CDW, Gardner, and Dell, all up 10%.
[0:50:32] Today. It has the feeling of a market that you just can't keep down now that the Dow is positive. It's joined the S&P and the Nasdaq in that territory this afternoon. Speaking of streaks, how about this one? The S&P 500 has yet to fall since Kevin Warsh was appointed as the Fed chair. And according to Ryan Dietrich, if the S&P closes higher today, he will have the longest win streak ever to start a term.
[0:50:56] Topping William Miller. Who's William Miller? I was just about to say, I should have inserted a relevant historical analogy to that. I believe he was one of the ones during this. He was one of them. It was McChesney Martin. It was that Greenspan guy. He lasted for a while. It was Ben Bernanke. So listen, folks, again, as we've said, you don't often realize you're in history or making history until you look back at it. This is, for the stock market, history. Like it or not, hate it. Oil tomorrow could be 150.
[0:51:24] We'll see what happens. But for today, markets up. You're right. Didn't matter that oil was popping today. The software stocks, some of those were on that list, are up 15% as a sector since last Thursday. Because that economic trickle down is superseding gas prices. Thanks for watching Power Lunch, everybody. Closing bell starts right now.
[0:51:42] This year's girls trip to Telluride was the best. We went up to ourselves. With my Sapphire Preferred card. And with five times points on Chase Travel plus three times points on Vacation Homes with top brands, we got this incredible cabin. It was a mansion. And with three times the points on dining, we ordered a Wagyu steak dinner. And that pistachio gelato was too good. So, where should we go next year? I've got ideas. Chase Sapphire Preferred. The card that's preferred for a reason. Cards issued by JPMorgan Chase Bank and a member FDIC. Subject to credit approval.
[0:52:12] Terms apply.