Goldman Sachs' 2025 AI Predictions, Bitcoin Falls & Mag 7 Performance 12/26/24

Summary

---

Squawk on the Street - Detailed Episode Summary

Podcast: Squawk on the Street
Date: December 26, 2024
Hosts: Sarah Eisen, Brian Sullivan, with guest Tom Lee; segments by Kate Rooney, Bob Pisani, Julia Boorstin
Main Theme: Assessing the final trading days of 2024, with a deep dive into AI's impact for 2025 (featuring Goldman Sachs' predictions), Bitcoin and Mag 7 performance, interest rates, the state of markets post-election, and sector highlights.

---

Episode Overview

This episode unpacks the year-end market momentum: reviewing 2024's stock market highs, surging megacap ("Mag 7") tech performance, and the influence of interest rates, the dollar, and global news. The team debates whether recent gains "borrowed" from 2025, examines the interplay between policy (post-election) and markets, and highlights early 2025 predictions centering on artificial intelligence and sector trends. Special panels analyze AI's next wave per Goldman Sachs, the dichotomy between market optimism and Fed moves, and the cyclical resurgence of small caps and energy. Noteworthy moments include candid audience Q&A, memorable quotes, and playful banter over cultural icons and holiday movie picks.

---

Major Discussion Points and Insights

1. Market Recap: Year-End Surge & Santa Claus Rally

• Stock Indices & Record Highs
  • S&P 500 up 26.5% for the year, closing at record highs 57 times in 2024 ([03:00-03:20]).
  • Noted "Santa Claus rally" season: last 5 trading days + first 2 of the New Year ([00:52-01:31]).
• Skepticism About 2025
  • Are current gains "pulling ahead" from 2025? Brian frames it as a key question ([03:30-03:57]).
• Earnings Outlook
  • Earnings and growth expectations remain stable going into 2025 ([03:57]).

"It's been a good ride overall for the year. I don't think anybody came into the year expecting the S&P 500 to be up 26 and a half percent. ...57 times the S&P has closed at record highs this year."
— Sarah Eisen [03:00]

---

2. Macro Forces: Rates, Yields, and the Fed

• The Fed's Rate Cuts and Bond Market Skepticism
  • Recent 25bp and September's 50bp rate cuts seen as “weird” given resilient economic data ([05:01-05:23]).
  • 10-year Treasury yield trending up, now back near 2022 highs at 4.6% ([04:23-04:46], [06:52]).
  • Disconnect: Despite Fed cuts, consumer mortgage and credit rates aren’t falling ([05:56-06:17]).
  • Political analogies: "Bond vigilantes are back" shaping the rate reality ([06:17]).

"The Federal Reserve can say what it wants. But as the political pundit Bill Carville once said, he wants to come back as the bond market. Yeah, power take revenge. And I think the bond vigilantes are back."
— Brian Sullivan [06:17]

• Election Impact
  • The presidential election shifts expectations for deregulation, debt issuance, and fiscal policy ([07:41]).

---

3. Currency Moves & the Mighty U.S. Dollar

• Dollar’s Surge
  • The dollar strengthens sharply post-election due to growth optimism and America-first policies ([08:43-09:44]).
• Global FX Context
  • Strength is a headwind for multinationals but boosts U.S. market attractiveness ([09:44]).

"Dollar has been a story just spiked because the Dollar is strong... people are excited about the US Growth prospects. Tariffs are considered also Dollar positive. Hurts our trading partners like Mexico or Canada if he does go through with it. China's currency has been really weak. Japan's currency has been weak. We're the envy of the world right now in the growth arena." — Sarah Eisen [08:50]

---

4. Sector Winners: AI, Semiconductors, Crypto, and Energy

• Top Stocks & Thematic Surges
  • Winners: Applovin (up 600%), MicroStrategy (Bitcoin play), Palantir (AI), Robinhood, Nvidia ([10:12-10:59]).
  • Common denominator: “massive energy use” across all these “AI/crypto ecosystem” stocks ([10:59]).
• Rise of the “Mag 7”
  • Magnificent Seven (Apple, Nvidia, Microsoft, Tesla, Meta, Amazon, Broadcom) drive more than half (53%) of S&P gains ([36:00-36:50]).

---

5. Tom Lee Interview – 2025 Market Predictions

• Optimistic on 2025
  • Tailwinds: less Fed/inflation anxiety, cash on sidelines, election behind, potential for M&A ([12:09-12:44]).
• Yields Not a Dealbreaker
  • Says even 5% Treasuries don't upend the bull case ([12:56]).
• US Market Leadership
  • Weakness in Europe/Asia means global money continues to flow to US markets ([13:32-14:11]).
• Valuation Concerns (Is it a Bubble?)
  • Some froth in AI/tech, but not full bubble yet as clients remain skeptical ([15:38-16:30]).
• Small-Caps Poised for Rebound
  • Historical underperformance positions small caps for outsized gains if deregulation materializes and skepticism fades ([17:05-18:37]).

"I think 2025 is a year where we're going to find the AI and a lot of these applications actually do sort of re architect the way America does business and it's, it's vastly cheaper and that's why these companies are doing so well."
— Tom Lee [15:38]

---

6. Deep Dive: Goldman Sachs’ 2025 AI Predictions

• AI Past and Present
  • AI’s progress is likened to the takeoff of cloud computing—but unfolding faster ([20:21], [Kate Rooney]).
  • Major move: From chatbots to multimodal AI (images, video generation).
• Future: Hybrid Workforce
  • Prediction: In 2025, Fortune 500s will deploy AI more impactfully, leading to “hybrid workforces” of human and AI agents ([21:17-21:42]).
  • Emergence of industry-specific AI experts.
  • AI safety to become board-level (not just regulatory) priority.
  • Commoditization of large language models: "many cars, fewer engines," where proprietary data is the competitive edge ([21:42]).
• Skepticism and Hype Balance
  • For AI to keep supporting tech valuations, it must deliver real-world margin/efficiency improvements—not just hype ([22:19-22:39]).

"He [Goldman's CIO] says he's never seen anything like this in terms of the pace of development... the biggest surprise was this tech moving beyond things like chat bots into multimodal... He says next year Fortune 500 companies are going to start to deploy this in a much more impactful way and it eventually will evolve into what he calls a new hybrid workforce with AI agents working alongside people."
— Kate Rooney [20:21]

"It's got to help margins at some point in order for this narrative to continue. So I think there's a lot of pressure for this to actually start to impact normal companies, not just tech companies. If that doesn't happen, I think it takes some of the air out of what's going on here."
— Kate Rooney [22:19]

---

7. Market Mechanics: Historical Signals and Barometers

• Santa Claus/January Barometers
  • “If the market does not rally between now and the first trading day of January... January tends to be down. So these next five days, and this is all history, folks...” ([24:26-25:36])
  • On average, good Santa Claus rallies precede +10.4% S&P gain, but lackluster years see January decline ([25:12-25:36]).
• Apple as Market Juggernaut
  • Nearing the $4 trillion mark, which would make it nearly as large as the U.S. mid- and small-cap universes combined ([36:50-37:04]).
  • Notably, up >2% per week for five straight weeks—the first time since 2010 ([26:50-27:14]).

"Half of the 27%, 53% is because of seven stocks. The other four hundred and ninety three, well, they're responsible for 46% of the gain. This is sort of the simplest way to understand the tyranny of large cap stocks that exist and how they exert influence on the stock market today."
— Bob Pisani [36:30]

---

8. Sector Spotlights

• Energy
  • S&P Energy sector down 11% on the month [41:45].
• Utilities & Financials
  • Both up 27% in 2024; utilities’ strength tied to electricity/growth of "electrification", financials to potential M&A/deregulation ([39:41-40:29])

---

9. Other Noteworthy Segments

• Netflix’s NFL Bet ([31:58-33:30]):
  • First NFL streaming test for $150M—a gamble to lure subscribers & enter live sports.
• Disney’s 2025 Movie Slate ([42:30-44:05]):
  • Bob Iger's turnaround strategy banks on blockbusters and franchise reinventions.

---

Memorable Quotes by Segment & Timestamp

• “All these names that we just showed all have one thing in common and it's extensive energy use... fueling the rally.”
  — Brian Sullivan [10:59]

• "Small caps may not have hit escape velocity yet, but their underperformance for the last decade is 91 percentage points versus the S&P... never have small caps underperformed the next three years or five years."
  — Tom Lee [17:05-18:37]

• “Will you go out and pay $1,000 for a new iPhone because it has AI? I don’t mean artificial intelligence, I mean Apple intelligence. ...If the answer is yes, then maybe there’s something to that. If the answer is no, I don’t know.”
  — Brian Sullivan [28:43]

• "Bob Pisani: Apple is almost not quite as big as the 1000 stocks in the S and P stocks that are not in the S and P500, the small and mid caps. That's kind of a way to look at how dominant Apple and really the frankly, the biggest 10 stocks in the S and P are."
  — Bob Pisani [37:04]

---

Key Timestamps for Main Segments

• [00:52] – Open; setting the day’s market scene, year in review
• [03:30-03:57] – “Are we stealing gains from next year?” discussion
• [04:17-07:23] – Bond yields, Fed cuts, and market reactions
• [08:43-09:44] – Dollar strength and FX landscape
• [10:12-11:31] – AI, crypto, and energy-intensive stocks
• [12:09-18:37] – Tom Lee’s 2025 predictions: market trajectory, small caps, sector leadership
• [20:21-22:39] – Goldman Sachs AI predictions, Kate Rooney interview
• [24:26-25:36] – Santa Claus/January barometer stats and signals
• [26:50-28:34] – Apple’s historical streak, implications for market structure
• [36:00-37:04] – Mag 7 breakdown, Apple’s market gravity per Bob Pisani
• [41:45] – Energy, utilities, financials year-end review

---

Conclusion

This episode delivered a comprehensive look at the pivotal forces driving the final days of 2024’s bull market and set the stage for 2025, with special attention to the AI paradigm, rates/FX dynamics, and leadership sectors. Guest experts and hosts debated whether surging valuations are sustainable or “bubble trouble,” highlighted the lasting dominance of U.S. large caps, and dissected whether technology’s narrative—especially AI—will be validated with real profits in the year ahead.

Transcript

[Commercial Announcer]

Bundle and safe. With Expedia, you were made to follow your favorite band and from the front row we were made to quietly save you. More Expedia Made to travel savings vary and subject to availability. Flight inclusive packages are atoll protected.

[Fidelity Representative]

Hey Fidelity, Can I get a second opinion on stocks in the Fidelity app?

[Fidelity Advertiser]

With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions.

[Commercial Announcer]

That's right.

[Fidelity Advertiser]

I am always right.

[Brian Sullivan]

Investing involves risk, including risk of loss. Online US equity trades and ETFs and retail fidelity account sell order assessment fee not included, some account types and securities excluded. [e-mail] commissions Fidelity Brokerage Services, LLC Member NYSE SIPC Market Moving insight and analysis Join Jim Cramer, David Faber and me.

[Fidelity Representative]

Carl Quintanillo on the opening bell hour of cnbc.

[Sarah Eisen]

SQUAWK on the Street Good Thursday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Brian Sullivan today at Post nine of the New York Stock Exchange. Carl, Jim and David have the morning off. Take a look at futures. We got a full day of trading here coming up and we're headed for a lower start. Dow futures down to 31s and P futures down 28. Santa Claus rally looks so good before the holiday. We'll see if it can continue and things turn around. Remember, we're in the five final trading days of the year, plus the first two of the new year. That's the Santa Claus rally. NASDAQ futures, which have been A winner, down 100 stocks, are as I mentioned, poised for a lower open after back to back gains for this holiday shortened trading week.

[Brian Sullivan]

Yeah, we got a crypto watch as well. Bitcoin falling in near $95,000 even as MicroStrategy, which is a software company, it's really a bitcoin play, plans to issue more shares. And let's talk about Apple's melt up. Now. Apple is closing in on a $4 trillion market cap valuation. But Sarah, Apple may do something that it has not done at since 2010. So first time in 14 years.

[Sarah Eisen]

Which is?

[Brian Sullivan]

Well, you got to stay tuned to find out.

[Tom Lee]

Oh, okay.

[Brian Sullivan]

Call that a deep tease.

[Sarah Eisen]

At first I thought you were gonna say 4 trillion, but it's not. It didn't do that in 2010. It's never done that anywhere.

[Brian Sullivan]

They call that a deep tease.

[Sarah Eisen]

Before we get to the markets, Brian, we do have some news about you. There's a big announcement. You're joining Kelly Evans as the co anchor of Power Lunch beginning a week from today. Very exciting.

[Brian Sullivan]

Yes, it's very exciting for Everybody but Kelly. January 2nd, that, yes, Kelly's awesome. The show team is great. And look forward to it.

[Sarah Eisen]

I know you've. There have been different iterations of Power Lunch, but this is a, this is a big, triumphant return at a time where, look, any show that's on during the market, during the market hours these days is an exciting show.

[Brian Sullivan]

I will both commute in the morning and at night during daylight, which is a win.

[Sarah Eisen]

And you have a big commute, which very far away.

[Brian Sullivan]

I do. Sometimes I'm in the city, but sometimes. So I look forward to it. Tune it. But by the way, we have today.

[Sarah Eisen]

We have today. We do. And we have tomorrow. Lucky me.

[Brian Sullivan]

Lucky.

[Sarah Eisen]

And it looks like we are starting for lower open today. It's been, I mean, look, it's been a good ride overall for the year. I don't think anybody came into the year expecting the S&P 500 to be up 26 and a half percent. And here's the other one stat for you. 57. 57 times the S and P has closed at record highs this year.

[Brian Sullivan]

50. Is that an RBI? It sounds like an RBI. Random but interesting. We could use that.

[Sarah Eisen]

Is that, is that, that's a Brian Sullivan trademark.

[Brian Sullivan]

That is. It might, may or may not.

[Sarah Eisen]

It's not so random. It's pretty relevant.

[Brian Sullivan]

57 times. All right, so we have Tom Lee coming up in a couple of minutes. And here's the question. With last year's gains and this year's gains, what does it mean for next year? What does it mean for 2025? Does it bode well for 2025? Or are the gains that we're taking now in the 57 record highs that Sarah just referenced, are they stealing? Not stealing. What's the right term? Pulling.

[Sarah Eisen]

Pulling ahead.

[Brian Sullivan]

Pulling gains from next year. I think that's, dare I say, the only question that we have to answer today.

[Sarah Eisen]

Well, I mean, earnings expectations for the coming year have been stable. Growth expectations have also been revised. Higher or stable. We just got jobless claims. Again, nothing to worry about. On the initial jobless claims, they went down to 219. We're still at sort of historically low levels, signaling Americans are keeping their jobs.

[Brian Sullivan]

Channel my inner Sarah Eisen, please. Because I want to talk about currencies.

[Sarah Eisen]

Okay.

[Brian Sullivan]

And I want to talk about bond yields.

[Sarah Eisen]

Yes.

[Brian Sullivan]

Because the one thing I would say, and the market literally was not even open yet, and I'm already ruining Boxing Day. Slash Hanukkah is that we look at the 10 year yield and the 10 year yield, bond market, stock market, they're both open today. The 10 year yield is moving back up. We were below 4% a couple of months ago. I know we're, we're at four point. Look at that. Six, four on the 10 year.

[Sarah Eisen]

This is year to date.

[Brian Sullivan]

Year to date. Look at that pop off the base in early September. And I just wonder what happened in.

[Sarah Eisen]

September by the way, that started cutting rates.

[Brian Sullivan]

So the one thing I think you and I agree on greatly.

[Sarah Eisen]

Yes.

[Brian Sullivan]

Is that I both think we agree that that half a point cut in September was weird.

[Sarah Eisen]

It was weird. Not only that, I think the 25 basis point cut that they did last week was weird as well, given all of the direction. And the data is pointing to an economy that is resilient and inflation that is a little bit sticky on the path from 3 to 2%.

[Brian Sullivan]

I'm not sure in the, gosh, 20, you know, when I started doing this job, they say, these typewriters, okay, so I'm not sure in that time I've heard a Fed chair speak up the economy right at the same time cutting rates as if cutting rates by 25, you know, a quarter point. I get it. Not the half point bazooka. So that the economy and doing the half point cut in September and the bond market, you know what the bond market has said. We don't necessarily, I think believe you Fed and Jay Powell. And we're going to, we're going to, we think inflation is going to remain sticky.

[Sarah Eisen]

No markets fighting the Fed. And I think a lot of people are going to find it odd that as the Fed is finally cutting interest rates, their mortgage rates are going up and their credit card rates are going up because that's the market rate. And that is the effect of what you just showed. The 10 year yield rising since September. It's now higher on the year.

[Brian Sullivan]

It's an important point you're making. And I think a lot of people and I think of course everybody should watch CNBC all day long every day. But for those who don't and I, by the way, I get it, you might be wondering, I don't. Why are, why are we paying nine and a half percent on a used car loan? Why are we paying 26% on a credit card debt? Why, why is my mortgage still at six and a half or maybe 7% depending on my, my credit rating. And I think it goes to your point, which is that the Federal Reserve can say what it wants. But as the political pundit Bill Carville once said, he wants to come back as the bond market. Yeah, power take revenge. And I think the bond vigilantes are back.

[Sarah Eisen]

Well, look, we're at the highest level, near the highest level on the 10 year since 2022. It's probably not what the Fed expected or wanted to see as it began lowering interest rates. Now, how would they respond to the move up in yields? Well, a lot of it can be explained by the fact that the economy has done better than expected. That's a continual theme from the entire year that inflation has remained a little bit sticky. And the. The outlook for next year on rate cuts has been trimmed by a lot. The Fed itself went from expecting three months ago, four cuts next year to now expecting.

[Fidelity Representative]

Amazing.

[Brian Sullivan]

The change that they could have in just the two to three months.

[Sarah Eisen]

The data, it's changed. When the facts change.

[Tom Lee]

It's really amazing.

[Sarah Eisen]

And so the Fed funds are now happening between then. We had an election.

[Brian Sullivan]

No, I was talking about Christmas, actually.

[Sarah Eisen]

That too. There was, there was a lot.

[Brian Sullivan]

There was, there was yesterday.

[Sarah Eisen]

The outlook has improved a lot. And you're right, I mean the election has been a game changer in terms of outlook for the economy, for deregulation, for lower debt taxes, essentially debt issuance, but also government efficiency and cuts. We'll see if.

[Brian Sullivan]

If that really results in the Department of Government Efficiency. Do that. Musk and Ramaswamy are.

[Sarah Eisen]

I am.

[Brian Sullivan]

Well, let's see if they can because I think Congress might have something to say. I know you're originally from Cincinnati.

[Sarah Eisen]

Yeah.

[Brian Sullivan]

So my parents live outside of Washington D.C. now. It used to be way outside of D.C. used to be in the.

[Sarah Eisen]

You're from everywhere. Every time I anchor with you, I learn a new place that you're from.

[Brian Sullivan]

Well, I like to move around. I do like to move around. So I went to high school out west of D.C. used to be in the what they call the Shenandoah Valley beautiful part of the country. Now it's a D.C. suburb. D.C. has just grown. Six of the 10 richest counties in America are all within the D.C. area.

[Sarah Eisen]

Interesting because a lot of people are shorting D.C. real estate on Doge and on this new mantra because the Trump administration.

[Brian Sullivan]

So what about the quickly. What about the US Dollar? Interest rates on the move. That's your world. Wrote a book on currencies.

[Sarah Eisen]

Yes, thank you for saying that. It's still on Amazon. The dollar currencies after the crash. Shameless plug. The dollar has been a story just spiked because the Dollar is strong, dollar strong against. Look what happened. And that's really an election story because it hadn't been doing much of anything all year and then started taking off. This is on President Elect Trump's plans. It makes the US the destination of capital. People are excited about the US Growth prospects. Tariffs are considered also. Dollar positive. Hurts our trading partners like a Mexico or Canada if he does go through with it. China's currency has been really weak. Japan's currency has been weak. We're the envy of the world right now in the growth arena. And then also, you know, America first policies tend to benefit the US Dollar. That's going to be a headwind though, for corporate earnings, at least for you big US multinationals that do a lot of business overseas.

[Brian Sullivan]

So we talked about, let's bring it all back to the stock market. Huge year, as you said. By the way, stocks overall have been good. Certain stocks to Palantir, Lovin. Okay. Which reminds me of like a movie from the 90s, all these names. Oracle.

[Sarah Eisen]

Wasn't the 90s super bad? It wasn't that long.

[Tom Lee]

Was it?

[Brian Sullivan]

Super. What year was that? I'm just getting so old. 2000, was it early 2002? I mean, you know, it's. We're different generations.

[Sarah Eisen]

It's an ad tech business. You know what they do? I mean, they're.

[Brian Sullivan]

I don't know, but the stock's up 600%.

[Sarah Eisen]

It's unbelievable this year. Yes, well, they. Well, it's part of the AI theme. They provide app developers with tools to basically host their apps and monetize their apps and so things we didn't need 30% a year, we didn't need it.

[Brian Sullivan]

All five years ago. Now we can't live without.

[Sarah Eisen]

This is a company that just went public back in 2021. Applovin. But look at some of the other winners. MicroStrategy. We know the cult of Michael Saylor, who just continues to buy Bitcoin.

[Brian Sullivan]

Issue point.

[Sarah Eisen]

Debt to buy Bitcoin. Palantir. That story has been AI, both enterprise and government. Robinhood. That's been a crypto story. Right. Engagement and Nvidia. So there's obviously a common theme. It's AI, it's semiconductors, it's crypto.

[Brian Sullivan]

All these things also that we just showed. Throw that back up. We got Tom Lee. I know Tom. Tom can answer all these questions. Just a second. A lot of those names that we just showed all have one thing in common and it's extensive energy use. MicroStrategy, Bitcoin Play. Bitcoin. Takes massive energy. Nvidia massive energy and Palantir, Robinhood and Applovin benefit off the ecosystem that for the most part uses massive amounts of energy. It all comes back to gas boring fossil fuels. I think fueling the rally but I.

[Sarah Eisen]

Am talking well we're going to talking.

[Brian Sullivan]

About a little bit.

[Sarah Eisen]

I want a full deep dive on energy here but let's stick with the broader markets for now. Santa Claus rally kicked off Tuesday gaining more than a percent on Christmas Eve for the first time since 1974. But and a racing December losses. We're actually positive now on the month. Let's see if it can continue. 86% of respondents to CNBC is delivering alpha survey forecast more gains ahead for big cap stocks in the new year. Tom Lee Funstrack Global Advisors co founder and managing partner joins us now to break it all down. So you've been right on the direction of the market for a long time now, Tom. You think the gains continue?

[Tom Lee]

Yes, I think that there's a lot more tailwinds building for markets in 2025 than have existed in 2024, mainly because, you know, now we're not worrying about the Fed worrying about inflation and bringing a halt to the economy. We have an election that's behind us and now we have a lot of cash on the sidelines and I think companies finally having more courage and what I think we'd call animal spirits and a willingness to start to do mergers and other things that like capital markets that actually help stocks next year.

[Sarah Eisen]

But and we were just talking about this, treasury yields at the highs of the year, dollar at the high of the year. Those two things have acted as headwinds for stocks in the past.

[Tom Lee]

Yes. I mean that's been a foil for markets to an extent. To me, I think yields even at around 5% still aren't really that damaging to markets because that means you're paying 20 times for a 10 year bond. And in some ways I think, you know, it's not clear why yields have been rising. It could be inflation, it could be the robust economy. It could be markets concerned about, you know, the incoming administration's policies around tariffs, etc. So it is something I'm watching but I don't, I don't think it's a foil at even at 5%.

[Brian Sullivan]

Tom, first off, happy New Year. Good to have you on how much is the rest of the world's minister prime problems benefiting the United States. Sarah kind of alluded to it at the top, which is this is the place to be the reality is the United States is the greatest economy in the world. The entire German Dax, their Dow Jones industrial average. You add up all their, the biggest companies in Germany, you total them all together. They are not as big as just Apple or Nvidia by itself. How much has Europe's woes, China's woes, how much does that benefited the U.S. economy, benefited the U.S. stock market, if at all?

[Tom Lee]

I mean it's hard to, to link causality. I mean for a long time, as you know, outside the US Most of the rest of the world is small and mid cap stocks. I think 95% of all listed stocks outside the US are small mid caps. And I think it's the US has really seen companies make the bets in the right places. You know, US dominates technology, health care and financials. Those have really been the strongest industries and the ones that benefit from technology. And the US edge is enormous, right? I mean outside the US are there really any, are there thousands or dozens of great technology companies? There really aren't. So I think in 2025, however, if industrials start to do better than I think Europe and Asia start to outperform. But I think if it's a tech led market, it's really going to be us.

[Brian Sullivan]

Do you worry? I mean we showed some of these gains. Tom. Listen here, Tom. You don't worry about a whole lot of things, but I would say when we're looking at stocks that are up 550% and 300%, okay, there are paradigm shifts which will bring in a lot of money to new things. Is there any part of Tom Lee, not the drummer that does worry that things are a little bit, a little bit hot at 40 times forward earnings on many of these like, like an Oracle, a name that we didn't talk about much for years.

[Tom Lee]

I mean at some point valuation becomes a liability when the market isn't able to be surprised or the market has overpaid for future growth. But to me the last couple of years is really a story where investors have been underpaying for technology and the amount of innovation. I think 2025 is a year where we're going to find the AI and a lot of these applications actually do sort of re architect the way America does business and it's, it's vastly cheaper and that's why these companies are doing so well. But you're right, Brian, at some point it's a bubble. I don't, I don't really think that that's the word yet because I don't find that much Buoyance in our clients. I think our clients are still pretty skeptical about valuations, which is why I think valuations aren't really a problem just yet.

[Sarah Eisen]

One point I'll just raise on the skeptical note, which is on the on the call for small caps, Tom, which a lot of people were on the small cap bandwagon this year and there were times where that really worked. But I don't know if December is a preview of what's to come. It's small caps are still down 7% in December as the S and P has gone flat. Nasdaq far outperforming on the year the small caps. Everyone hoped this was the time where the rally would broaden out. But then when the Fed pared back how many rate cuts it was going to get next year, smallcasts didn't work. So what makes you think that this will be the year?

[Tom Lee]

Well, that's a really fair observation, Sarah. Small, small caps really are probably the best expression of when they believe the Fed is cutting for the right reasons. And there was a rug pull in December. I do think your viewers have to keep in mind small caps may not have hit escape velocity yet, but their underperformance for the last decade is 91 percentage points versus the S&P. It's the second worst 10 year underperformance since 1998.

[Sarah Eisen]

And then before that necessarily bullish. I mean that's that.

[Tom Lee]

Well actually it is very bullish here. It's super bullish because if you go back to 1900 and use pharma data, it's the second worst in history. If you take the three worst instances, never have small caps underperformed the next three years or five years. So what we've done is essentially discounted so much bad news. There's so much skepticism. I think almost everybody that talks about small cap says, well they haven't worked so they're not going to work. They're trading at a 10 forward P E. They're going to benefit from deregulation. 40% of, well, 49% of small caps are cyclical stocks which are really primed to do well next year. So I think that the probabilities for a very good year are high at a time when skepticism is high. I mean, isn't that what Fang was at the start of 2023? I remembered how many people said, but you know, put a fork and fang at the end of 2022 they're done and they just put in the two best years I think anyone could have ever expected.

[Sarah Eisen]

Sentiment is key. And by the way, Fang had a having a great year this year and a great month too. Thank you Tom Lee. Appreciate it. Happy holidays. Good to see you. Still ahead, how Will companies use AI in 2025? Goldman Sachs has some new predictions. We'll bring them to you next. More squawk on the street when we come right back.

[Fidelity Representative]

Introducing Fidelity Trader Plus.

[Sarah Eisen]

With customizable tools and charts you can.

[Fidelity Representative]

Access across all your devices, try our.

[Sarah Eisen]

Most powerful trading platform [e-mail] TraderPlus investing.

[Brian Sullivan]

Involves risk, including risk of loss.

[Sarah Eisen]

Fidelity Brokerage Services LLC Member NYSE SIPC.

[Fidelity Advertiser]

OnDeck is built to back small businesses like yours. Whether you're buying equipment, expanding your team or bridging cash flow, Gaps on Deck's loans up to $250,000 help make it happen fast. Rated A by the Better Business Bureau and ear thousands of five star Trustpilot reviews, OnDeck delivers funding you can count on. Apply in [e-mail] depending on certain loan attributes. Your business loan may be issued by Ondeck or Celtic Bank. Ondeck does not lend in North Dakota. All loans an amount subject to lender approval.

[Tide Advertiser]

Did you know Tide has been upgraded to provide an even better clean in cold water. Tide is specifically designed to fight any stain you throw at it, even in cold butter. Yep. Chocolate ice cream. Sure thing. Barbecue sauce. Tide's got you covered. You don't need to use warm water. Additionally, Tide pods let you confidently fight tough stains with new coldzyme technology. Just remember, if it's gotta be clean, it's gotta be Tide.

[Brian Sullivan]

Welcome back everybody. 9:21 here on the East coast on December 26th. Well after a huge year for artificial intelligence, what is in store for next year? I. I don't know. Kate Rooney probably knows because she read the Goldman Sachs reports. Great to see you Kate.

[Kate Rooney]

Great to see you. Great to be here in person guys. So I did speak to the bank's top tech executive. He shared his outlook on AI for next year. I spoke to Goldman's Chief Information Officer Marco Argenti exclusively on the topic. He spent the bulk of his career at US Amazon Web Services and Nokia back in the day now handles Goldman's AI efforts. We first talked about what happened this year he said right now and it feels like the emergence of cloud when he was at Amazon, but faster. He says he's never seen anything like this in terms of the pace of development. Said the biggest surprise this year was this tech moving beyond things like chat bots into into multi modal which is pretty much fancy way of saying AI that generates images and video, says that next year Fortune 500 companies are going to start to deploy this in a much more impactful way and it eventually will evolve into what he calls a new hybrid workforce with AI agents working alongside people.

[Brian Sullivan]

You might think of a future of.

[Tom Lee]

A workforce where you're going to have.

[Brian Sullivan]

Managers that are going to manage both human employees and AI employees. You might have the role of human capital management functions that are going to become human and machine capital functions that are going to be working on both evolving the career of humans and also evolving the career of AIs.

[Kate Rooney]

Argenti says there will be an emergence of AI experts that have a very niche specific type of industry knowledge. So think of banking, for example. In the case of Goldman Sachs. He is expect expecting major robotics breakthroughs as well. Says safety is going to become a bigger priority on company boards, not just for regulators. And then large language model commoditization, he says we're going to see. He described it as many cars, fewer engines, the engines here being the underlying models. As that happens, the data the companies trade off, he says, are going to really start to emerge as an edge.

[Brian Sullivan]

Guys, is it going to change the world now or because it doesn't seem like it's quite ready for prime time yet?

[Kate Rooney]

That's one of the big predictions. I think this is also part of the narrative and the valuation story that if you. It's got to help margins at some point in order for this narrative to continue. So I think there's a lot of pressure for this to actually start to impact normal companies, not just tech companies. If that doesn't happen, I think it takes some of the air out of what's going on here.

[Sarah Eisen]

All right, well, it's going to be a fun year for you on the front lines. Lovely to have you here. Taking another look at futures here as we count you down into the opening bell. They're lower Dow futures down to 30. More squawk on the street when we come right back.

[Tide Advertiser]

Did you know Tide has been upgraded to provide an even better clean in cold water? Tide is specifically designed to fight any stain you throw at it, even in cold butter. Yep. Chocolate ice cream. Sure thing. Barbecue sauce. Tide's got you covered. You don't need to use warm water. Additionally, Tide pods let you confidently fight tough stains with new coldzyme technology. Just remember, if it's gotta be clean, it's gotta be Tide OnDeck is built.

[Commercial Announcer]

To back small businesses like yours. Whether you're buying equipment, expanding your team or bridging cash flow gaps. Ondeck's loans up to $250,000 help make it happen. F Rated A by the Better Business Bureau and earning thousands of five star trust pilot reviews. On Deck delivers funding you can count on. Apply in [e-mail] depending on certain loan attributes, your business loan may be issued by On Deck or Celtic Bank. On Deck does not lend to North Dakota. All loans and amounts subject to lender approval.

[Sarah Eisen]

We've got a nice little crowd here on the floor of the New York Stock Exchange day after Christmas. We're looking at the opening bells and the CNBC Real time exchange here at the big board Columbia University football team celebrating its Ivy League championship over at the nasdaq. Make a wish granting wishes for children with critical illnesses. Important work that they do. Just looking at the opening trading here. Look, we had a good day on Tuesday. Half that was a day that the market closed early. That was the technical start of the Santa Claus rally. We're opening with declines today. The S and P is opening about a third of percent, low, lower and every sector's down in the early action.

[Brian Sullivan]

So I don't want to be the, the angel of doom on the first day of first full day of Hanukkah. But here's the thing. There was a note out. I think it was btig, forgive me, whoever it was, if the market does not rally between now and the first trading day of January. So the next four or five. What happened four or five days. It doesn't bode well for January. January tends to be down. So these next five days, and this is all history, folks. Some people say something. Oh, oh, economics. So if the market does not rally between now and really January 2nd or 3rd, then history says the last couple of years. It doesn't bode well for January, which may not bode well for the year. I'm not saying it matters, but I'm not saying it doesn't matter. Something to watch.

[Fidelity Representative]

No.

[Sarah Eisen]

This is the January barometer. The hypothesis that January ultimately predicts the year's performance. This is all stock trader almanac stuff that you can see. One other stat that stood out on this, a Santa Claus rally, if we get one, does precede a 10.4% average annual gain for the S&P 500 since World War II, according to Sam Stovall at CFRA. So matters, I guess, 10.4%.

[Brian Sullivan]

So going to Carson Group. I'm going to see your Sam Stovall data and I'm going to raise you Ryan Dietrich and call Carson Group. If we have a Decline in the so called quote Santa Claus rally. January, five out of the last six times has been negative. So if we, if we go down the next few trading days, January tends to be negative. But again all that, what do they say in all the commercials? Past performance is no guarantee of future results. Also we didn't have Nvidia. We didn't have your favorite Apple Lovin. We didn't have micro favorite. We didn't have the markets and all the money going into these companies.

[Sarah Eisen]

We've got a mix here on the winners list today of some of the winners of the year. Apple's up again for instance Dell Technologies up again. But also some of the losers. We expect to see this toward the end of the year. Some of the losers playing catch up, like Walgreens for instance is at the top of the market this morning. This is a stock that has lost 64.6% year to date, has not been a winner.

[Brian Sullivan]

Well there was a very famous man named Tom Petty who said that even the losers get lucky sometimes. Here's the stat. Remember at the top of the show I teased something on Apple and you said, what is it? I said I'm going to wait because.

[Sarah Eisen]

That'S really, you really did a deep tease there.

[Brian Sullivan]

Here we go. This is BTIG. Apple is, is been up 5, but up 2% per week for five weeks in a row. So for five straight weeks Apple has risen more than 2%. It has never done that since 2010. So we are in a 14 year historical sort of outperformance cycle.

[Sarah Eisen]

Just persistent strength, persistent strength idea that there's a super cycle coming and Apple intelligence is going to lead to upgrades. The new AI story, I don't, I don't know.

[Brian Sullivan]

I'm not saying I don't know But Apple stock 2% gains five weeks in a row. First time that has happened since 2010. It's not like the Columbia alliance football team which we have here. Columbia alliance didn't do for years, did not. My friend Mike Doyle was a football player for them. Really Roommates with Marcellus Wiley as a matter of fact, didn't do well and now they won the Ivy League League. So it shows that even you can turn things around.

[Sarah Eisen]

I mean Apple's up again. Nvidia also starting positive here which is why information technology just went into the green. So let's see because typically when Nvidia flips then we could see an entire market flip. By the way, Wedbush, who has been longtime bull on Apple, Dan Ives increased his price target to the street High on Apple to $325. He's been out front on the super cycle theme. Says believe Apple is heading into a multi year AI driven upgrade cycle that is still being underestimated even with that performance by the street. Rome wasn't built in a day and neither will Apple's AI strategy. But the seeds of that strategy with Apple intelligence are now forming.

[Brian Sullivan]

So here's a question. Not for. Not for you, Sarah, not for anybody here, but for the. For the billions of people that are now watching this program. Billions.

[Commercial Announcer]

Mm.

[Brian Sullivan]

Will you go out and pay $1,000 for a new iPhone because it has AI? I don't mean artificial intelligence, I mean Apple intelligence. Will you spend that money on this to get. And if the answer is yes, then maybe there's something to that. If the answer is no, I don't know.

[Sarah Eisen]

That's the bet, right? That's one of the bets. The other is that there's a big replacement cycle coming. People have old iPhones. It's why I got the newest iPhone, because I had like it's.

[Brian Sullivan]

You got the newest iPhone because you're Sarah.

[Sarah Eisen]

Well, and I also wanted a pink one, so I got that. But that, that, that's the, that's part of the bull case clearly on Apple.

[Brian Sullivan]

So you have the, you have the AI functionality.

[Sarah Eisen]

Right? And I haven't really played with the AI functionality, but you would probably as a software update.

[Brian Sullivan]

So give us the. The aisin review. Why not just as a consumer, not as a TV news anchor.

[Sarah Eisen]

I don't know. I use. I, I use ChatGPT for my AI needs.

[Brian Sullivan]

Who is Brian Sullivan and what did it say?

[Sarah Eisen]

I haven't done that yet.

[Brian Sullivan]

Let's do it and see. Actually, let's. We should run that now they know who you are.

[Sarah Eisen]

Your biography online.

[Brian Sullivan]

I do have many biographies online. Who is Sarah Eisen?

[Sarah Eisen]

You have to ask like I did Scott Wapner, for instance. What should we buy Scott for Christmas? And they had a whole list of things.

[Tom Lee]

What was.

[Sarah Eisen]

What was Links was.

[Brian Sullivan]

I think one of them. Was it really?

[Sarah Eisen]

Yeah.

[Brian Sullivan]

For Wapner.

[Fidelity Representative]

Wapner.

[Sarah Eisen]

A new type financial textbook or something like that.

[Brian Sullivan]

But seriously, that is the question. Are you willing to spend $1,000 on a new one of these? Because it gives you that functionality, that Apple. And by the way, Microsoft. Big article today about how Microsoft is sort of forcing this new copilot AI technology on people like us. By the way, we use Outlook here at work. It's not our choice. Wink, wink. And the co pilot always comes up. Even if you don't want it to.

[Sarah Eisen]

Right?

[Brian Sullivan]

Right. Can they make money on that, by the way?

[Sarah Eisen]

$264.43. 63 cents. That would be Apple hitting the 4 trillion mark. So we're on watch for that. Apple to 63. To 64. 63. To 64. 60. 63. So not too far away.

[Brian Sullivan]

I wonder if Apple AI on your phone would know that.

[Sarah Eisen]

I wonder. We can play with.

[Brian Sullivan]

That was a cute. I want to test.

[Sarah Eisen]

I don't use it. I don't. I don't use the Apple intelligence yet.

[Brian Sullivan]

All right, so let's move on. 264. 63 is the 4 trillion dollar number correct? Okay, probably not. You never know. Apple's been on a heck of a run. Let's switch gears. Call it a Christmas. Christmas miracle. Netflix's big bet on the NFL appears to have paid off. Netflix shelled out $150 million to air its first two NFL games, all part of a three year deal. More relevantly, it marks Netflix's first move into football and a shift more into live sports since, let's be honest, the weird and glitchy Jake Paul Mike Tyson fight earlier this year. I know. I don't know if you watched it. We watched it off and on Netflix. Of course, people dunked on it online, as they always do. CBS actually produced it. We'll see, though now, Sarah, if this 150 million for two games ultimately pays off for Netflix.

[Sarah Eisen]

They did it big. The Beyonce concert. I mean, it was. It was like a Super bowl halftime show with all the people that joined her. And it was quite a spectacle, an amazing show. And they didn't have technical glitches, which is, I think, important for Netflix.

[Brian Sullivan]

At the beginning. They talk to The Squid Game 2 promo sort of in the middle of.

[Sarah Eisen]

Was that a surprise? I was surprised to see Squid Game is coming back tonight.

[Brian Sullivan]

Is it tonight?

[Sarah Eisen]

Very exciting, yes.

[Brian Sullivan]

I'm going to watch the end of Bad Sisters on Apple TV plus, which actually came out. You should watch it from Ireland.

[Sarah Eisen]

Do you watch Squid Games?

[Brian Sullivan]

I watched the first one. It's a little. I'll watch it alone on planes because it's a little bit violent. But.

[Tom Lee]

I will say this.

[Brian Sullivan]

Netflix, 150 million for two games. Here again, it comes down to a very simple question, Sarah. Will the public, will people out there that do not yet pay for Netflix now sign up for Netflix to see an NFL game? Because if they don't, then all the money they're spending doesn't really get them much. Unless they maybe factor in people who would have left Netflix due to lack of hits. I don't know.

[Sarah Eisen]

Well, one thing that didn't help is Taylor wasn't at the game, but they did get Beyonce and it was a good game. By the way. Netflix is down a little bit in today's trade. Some of the winners though, adding to gains, applovin is up another 2%. Since we were talking about that, we mentioned Apple, Nvidia, Microsoft. So we've got a bid in some of these big cap tech movers. Tesla's down just a little bit. It's been such a big winner this month and this year. Let's get to Bobasani with more on today's market action. Hi there, Bob.

[Fidelity Representative]

Well, Sarah, good to see you. Brian, good to see you. And congrats on working with Kelly. Look forward to seeing you on on that show as well. So three to one declining to advancing stocks. Kind of a mixed market. Take a look. Consumer staples modestly to the downside, not had a good year. They're only up about 10%. Technologies down about 25%. Banks had a good year, but very bad December. Utilities also a good year, but a bad December. So we're approaching the end of the and I'll tell you what I see here, the advanced decline line is something you want to pay a lot of attention to. And we have had a very good advanced decline line. Two thirds of the S&P 500 are up on the year. One third are down. And here, look at the top there, 53, that's 10% of the S&P is up 10% or more. That's a terrific number. And only 51 or that's about 10% are down 10% or more. You see the bottom there. This is very good dispersion generally ad line like this, 2/3 on the upside, you're normally on an up year. And the fact that the biggest stocks are up the most really makes a huge amount of difference. So a lot of people thought the Magnificent Seven would be passe in 2024. We'd get better rotation. That is not proven to be the case here. You see the big names here. I'm just going right the old Max 7 here. Nvidia, Broadcom, Tesla, Meta, Amazon. Look at these gains here. They're all in the up 50% or more. Only Microsoft is underperforming the S&P 500 with the S&P up about 27%. That's the only one of the Magnificent Seven underperforming. So because these are the biggest stocks, they exert very Very large influence on the markets. You struggle to try to explain the influence, but here's the simplest way to understand it. The S and p is up 27%. What percentage of that is due to the Magnificent Seven? About 53% of the gains are due to the Magnificent Seven. Half of the 27%, 53% is because of seven stocks. The other four hundred and ninety three, well, they're responsible for 46% of the gain. This is sort of the simplest way to understand the tyranny of large cap stocks that exist and how they exert influence on the stock market today. You were talking about Apple. I know Sara was bringing this up. A lot of discussions about how do you get to $4 trillion. And here's how it works. There's 15.11 billion common shares outstanding. It's the shares outstanding, the common shares outstanding that matter. That's how S and P calculates this. So to reach $4 trillion in market cap, you need $264.63, as Sarah mentioned. And there you see the number of where we are. So we're $5 short of what we need to get to $4 trillion. The bigger question is how big is $4 trillion? And I struggle to try to figure out and explain to people just how big $4 trillion is. So here's a simple way to understand it. So we've got 3.9 trillion right now in Apple market cap. The mid cap, 400, 400 stocks in the mid cap. Everything below the s and P500, that's the next 400 is 3.1 trillion. Apple is bigger than the all other 400 mid cap stocks put together. How about the small cap? There's 400 in the S&P. Small cap, that's 1.5 trillion. So put it together here. 3.1 trillion on the mid cap, 1.5 on the small cap. You get 4.6 trillion. Apple is not quite as big as the mid and small cap together, but not far away. So Apple is almost not quite as big as the 1000 stocks in the S and P stocks that are not in the s and P500, the small and mid caps. That's kind of a way to look at how dominant Apple and really the frankly, the biggest 10 stocks in the S and P are. Sarah.

[Sarah Eisen]

Okay, when you put it in that perspective, it's really, really big. Thank you, Bob. Bob Pisani. Just want to hit some other movers today where there's news. U.S. steel saga continues. So the latest here is that Nippon Steel, which is trying to take over. U.S. steel has pushed back, delayed its close or its target close for this acquisition. It is now aiming for fourth or first quarter 2025 instead of the end of 2024. Why is this important? So we're in this period now, this waiting period where it's up to President Biden to decide whether this deal will be able to go through. We got got word earlier this week that cfius, that's the committee inside of treasury that decides on whether a deal like this can happen because of national security concerns, was split ultimately in their decision. So they have to punt it to the president. President Biden has said publicly he's against this deal, wants to keep US Steel domestic instead of taken over by a Japanese company, a company. And so there's, there's not a lot of mystery about what he, he's going to do. I think the question, and certainly with this decision is what sort of legal options and will they fight both Nippon and U.S. steel to be able to hold it over into a Trump administration now that we have this new close date in 2025? Now, President elect Trump has also said publicly he's against the deal. This is a very politically charged one. But he is spending a lot of time with business leaders at Mar a Lago and industry leaders. So I do wonder if there's potential for a deal there. The unions have been one of the biggest stumbling blocks. They've been against the deal from the beginning.

[Brian Sullivan]

I think it's one of these things where the Trump and Biden administration are probably very much aligned. You know, now they are on this type of thing. And Lorenzo Goncalves, who is the CEO of, who loves it when I call Cleveland Cliffs an iron ore company, that's for you. Lorenzo has strong views on this as well. Keeping this thing domestic I think is a policy priority for both Biden and both Trump. Truly amazing. Speaking of, it's not related by the way, Bob, I love his stats. 4 trillion by the way, same size as the German economy this year. I'm looking right now this live because we are. We're live, right? We are live. We are live. Real time data this year. There's 11s and P sectors inside the market. Financials and utilities on December 26 are exactly up the same amount, 27.01% with a couple of trading days left. Financials, utilities, top two performing sectors up the exact same amount and a pretty.

[Sarah Eisen]

Healthy amount that is.

[Brian Sullivan]

But I mean the exact same amount with a couple days left.

[Sarah Eisen]

I think the bullish stories on both are pretty interesting. For utilities, it's been the power. Electricity, no.

[Brian Sullivan]

Energy, no.

[Sarah Eisen]

Nvidia Vistra is one of the best performing stocks of the entire year. It's right up there with Palantir and Nvidia. And then financials, their outlook has brightened on the outlook for M and A which is pretty robust under Trump administration deregulation. They're one that's very much caught in the crosshairs of regulation from Congress. They're probably going to look at a slew of Republican regulators across the the FDIC and OCC and cfpb very different.

[Brian Sullivan]

Throwing out acronyms show off the Fed showing off the banks. And the forming financial company is actually not a bank. It's Apollo Global management.

[Sarah Eisen]

Yes.

[Brian Sullivan]

Number two is KKR, the massive private equity firms. They're up 86 and 82% respectively this year. You think about the gains in Apollo and kkr. What does that tell you about the market's view on interest rates? Deal making, deal flow and money flows means the market's bullish. And private credit, that's been a big.

[Sarah Eisen]

Story for both of them. And Apollo, a new member of the s and P 501 of the founders.

[Brian Sullivan]

Of Apollo just keeps buying sports teams. Your buddy Josh Harris.

[Sarah Eisen]

Josh Harris, yes.

[Brian Sullivan]

Bought the Commanders. Look at them. They're good this year.

[Sarah Eisen]

They are good.

[Brian Sullivan]

Right.

[Sarah Eisen]

Josh hired Mark Klaus, the CEO of Campbell Soup to lead the Commanders.

[Brian Sullivan]

Is that true?

[Fidelity Advertiser]

Mm.

[Brian Sullivan]

What's going on with your Bengals?

[Sarah Eisen]

I thought that burrows better.

[Brian Sullivan]

Is that. It's burro's hair.

[Sarah Eisen]

No. Didn't they get better? Didn't they have a.

[Brian Sullivan]

They're getting. Yes, they're getting much better. But they started off rough. I know was hurt.

[Sarah Eisen]

It's disappointing. I was the team not burrow before we had to break it is time for a bond report. Let's show you how Treasuries are faring this morning. Again the story has been higher yields and bonds selling off from December. Really? Since the Fed started cutting rates In September, the 10 year yield elevated near 2022 levels at 4.6%. Did get some better jobless claims this morning. Otherwise a light data week. We'll be right back here on squack on the street.

[Brian Sullivan]

All right. Welcome back. We've been talking a lot about what has been hot so far in the last month or so. Guess what has not been hot and that is energy. In fact, the S and P energy sector is down 11% overall this month. The price of oil is come down. I know many of you driving around over the holidays maybe paid 260, 270, 280 for a gallon of gas. Not one single energy stock is higher this month. And you got a number of names, Texas Pacific land, Devon Phillips, 66, Halliburton. They are down 16, 18 and 27% this month as the price of oil and gasoline, but not natural gas gasoline declines. More squawk on the Street Live post nine at the nyse. But.

[Sarah Eisen]

With Disney stock on pace for its best year since 2020, the pressure's on for 2025 box office rebound. Let's get to Julia Boorstin with that story. Morning, Julia.

[Julia Boorstin]

Good morning, Sarah. Well, Disney is back in its number one box office market share spot after falling behind Universal last year. And this sets up a potentially massive 2025 for Disney, which could lead the whole movie industry back to pre pandemic box office levels. Disney studios have an estimated 25% market share this year, according to comScore, including three of the top five films, Moana to Inside Out 2 and Deadpool and Wolverine. While Mufasa's opening weekend did fall short of expectations, the studio got a boost from its Bob Dylan biopic, a complete unknown opening yesterday, to positive reviews and awards buzz. But next year will be the ultimate test of CEO Bob Iger's focus on turning around Disney's studio as it expands from releasing eight movies wide this year to 12 wide releases next year, including sequels to Captain America, Zootopia and Avatar. What Comscore says is Disney's best slate since before the pandemic. While the studio faces ongoing pressure to turn old franchises into new blockbusters, as it did with Moana and Inside Out. Now, Disney shares have lagged the S&P 500 since Iger restructured the company two years ago and, among other things, prioritized improving the quality and performance of Disney's films, which are key not just for the profitability of the studio, but they also drive content and engagement at the Disney plus platform and also at the Parks division.

[Sarah Eisen]

Sarah okay, thank you very much, Julia Boorstin. By the way, we saw Sonic 3 yesterday because the kids wanted to see that more than Mufasa. But then we'll see Mufasa this weekend and Sonic 3.

[Brian Sullivan]

Big names. By the way, I know it's animated in the Cat, Jim Carrey's back.

[Sarah Eisen]

He was hilarious.

[Brian Sullivan]

He did double duty.

[Sarah Eisen]

Yes, he did. And then you had Idris Elba and his grandfather.

[Brian Sullivan]

Did Idris do the British accent or did he do the regular? That's the thing, people. They watch the Wire, they don't realize Idris is actually British.

[Sarah Eisen]

I don't.

[Brian Sullivan]

I don't think Keanu Reeves played Shadow some big names.

[Sarah Eisen]

Yes, the kids loved it.

[Brian Sullivan]

That's all that matters.

[Sarah Eisen]

Sarah 7 year old and 5 year old prime for Sonic 3 when we come back, software stocks shining so far this year, we're going to look at what President Elect Trump's incoming administration could mean for the likes of Palantir, Salesforce, ServiceNow and others. We'll be right back.

[Fidelity Representative]

You've been listening to the opening bell on cnbc.

[Fidelity Advertiser]

Squawk on the street all opinions expressed by the Squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal or their parents, parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information Squawk on the street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the street disclaimer, please visit cnbc.com squawkonthestreetdisclaimer Real.

[Commercial Announcer]

Talent is defined by what people can do, not where they learn to do it. So by stopping at the education section of a resume, you might throw away the perfect hire Skillsforce. Hiring helps you see talent others miss, like more than 70 million stars skilled through alternative routes, let their story unfold and gain a competitive advantage. Because hiring managers who start with skills are 60% more likely to find a successful hire. Hire your skills first. Learn why at tearthepaperceiling. Org, brought to you by Opportunity at Work and the Ad Council.