AI's Biggest Winner, AI's Newest Victim, and Housing's Huge Miss 2/12/26

Summary

The Exchange – CNBC

Episode: "AI's Biggest Winner, AI's Newest Victim, and Housing's Huge Miss"
Date: February 12, 2026
Host: Kelly Evans

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Overview

This episode dives deep into the effects of the AI boom on public markets, focusing on who stands to win and lose most from AI advancements – particularly in hardware, software, transportation, and real estate. The show features market analysis, expert interviews, and a detailed look at the worsening situation in US residential housing. The tone is urgent and analytical, reflecting heightened market volatility.

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Key Discussion Points & Insights

1. Market Selloff & AI Disruption Fears

• [00:57-02:51] The major indices were down sharply (NASDAQ -424, Dow -666, 10-year yield at 4.12%) amid a selloff blamed largely on anticipated disruption from AI, hitting diverse sectors:
  • Trucking: Companies like C.H. Robinson (-22%), Expeditors, RXO all down
  • Commercial Real Estate: CBRE (-15%), Newmark (-10%) and more, with two-day declines totaling ~20%
• Hardware/memory suppliers (Sandisk, Western Digital, Seagate) are up massively (~40% monthly gains).

2. The Winners & Losers in AI Hardware/Software

Memory Squeeze:

• Guest: Mehdi Hosseini, Senior Analyst, Susquehanna
• [02:51-08:50]
• AI-fueled demand has led to a severe spike in memory prices, benefiting producers but squeezing downstream OEMs:
  • "OEMs… unable to pass on the extra cost to the end customer. We thought 60-70% of costs could be passed on, but memory price increases have been more than expected, and OEMs’ ability to pass on costs is even more limited." – Mehdi Hosseini [02:51]
  • Companies relying more on memory—Dell, HP, NetApp, Pure Storage—are seeing heavier margin pressure than companies like Cisco or Apple (who may have more diversified revenue streams or downward pricing flexibility).
  • “This could potentially last into ‘27... the margin pressure could intensify into mid or latter part of ‘26." – Mehdi Hosseini [05:24]
  • For consumers, it's unclear how much higher prices for laptops, phones, and other devices will go, but enterprise customers might absorb more of the cost than individuals.

3. Value Investing in an AI World

Who are the "safe" bets amidst disruption?

• Guest: Chris Grisanti, Chief Market Strategist, MAI Capital Management
• [10:02-16:34]
• "It's a great time to be a value investor finally...we absolutely love Nvidia and Microsoft. Both are selling at 10-year low valuations on next year's forward earnings." – Chris Grisanti [10:03/10:51]
• He argues the real question is not which firms will benefit from AI, but which will receive the massive AI spending. Microsoft and Nvidia are positioned as both growth and value stocks right now.
• Warns against trying to “pick the falling knife” among disrupted names (e.g., Adobe, Booking) unless they have truly unique assets (e.g., Intercontinental Exchange with proprietary data).
• "There's clearly baby getting thrown out with the bathwater here...stick with what you know best." – Grisanti [13:27]
• Market volatility seen as potential opportunity: reminiscent of late 90s pre-dotcom boom convulsions (but not the same bubble valuations).
• "I think we have panic and I think that spells opportunity for careful investors." – Grisanti [16:04]

4. Data Center Hardware: Behind-the-Scenes AI Powerhouses

• Guest: Edwin Rocks, CEO, TTM Technologies
• [18:45-23:19]
• TTM, a major circuit board supplier for data centers, is riding the wave of physical infrastructure investments for AI. "About 30% of our business is in data centers and networking, and that's basically riding the wave at the moment." – Edwin Rocks [19:09]
• They are not seeing major supply chain constraints and believe they can meet expected 15-20% annual growth for the next three years.
• TTM is deploying AI in its own operations for tasks like optical inspection of circuits, and plans to expand hiring both in production (18,000 employees currently) and R&D to keep pace with rapid innovation cycles.

5. AI’s Newest Victim: Trucking & Transport Sell-Off

• Report: Frank Holland
• [26:30-28:57]
• A brutal day for trucking brokerages and transport stocks: C.H. Robinson (-20%), Expediters, JB Hunt, Landstar, Knight Swift all down.
  • Partially due to an article about a new AI platform ("Algorithm" with a "y") enabling smaller companies to scale without adding headcount, stoking fears of margin disruption.
  • Some analysts call the sell-off “irrational” since automation is not new and leading companies already use AI extensively.
• "There’s a lot of concern about the economy. But...the main word I’m hearing from (analysts and investors) is irrational” – Frank Holland [26:52]

6. AI Panic in Commercial Real Estate

• Guest: Alex Goldfarb, Senior Analyst, Piper Sandler
• [31:01-36:29]
• Major commercial real estate firms like CBRE and Newmark have seen >20% declines over two sessions, with market panic centered on the idea that AI will lead to mass white-collar layoffs and empty office buildings.
• Goldfarb thinks these fears are misplaced and echo earlier panics (e.g., the “retail apocalypse” from e-commerce).
  • "There is a fact that AI is bringing an incredible efficiency and people are trying to figure that out. But ultimately it comes down to collaboration and working in the office." – Goldfarb [32:10]
• Opportunities: Newmark highlighted as oversold, with strong fundamentals and global reach.
• Leasing activity in NYC and San Francisco is picking up, particularly among AI companies.

7. AI Safety & The Politics of AI

• Report: Deirdre Bosa
• [37:17-40:17]
• Funding battles: Anthropic puts $20 million into pro-regulation super PAC, OpenAI and allies back a different PAC with $125 million aiming for minimal federal-only rules.
• Major resignations and public warnings from AI safety researchers mark growing internal and external tensions as the latest AI models begin to “self-improve.”
• Growing concern over the origins of AI-generated content and the efficacy of proposed safeguards.

8. Housing’s Huge Miss: Stuck in a "Stalemate"

• Report: Diana Olek | Guest: Ryan Serhant, CEO, Serhant
• [41:04-47:46]
• Existing home sales plunged by over 8% MoM (biggest drop since 2022), with inventory up just slightly YoY but still critically low (3.7 months’ supply versus 6 months balanced).
• "The Realtors chief economist called it a new housing crisis. Movement is not happening and Americans are stuck." – Diana Olek [41:04]
• High prices and locked-in low-rate homeowners mean little buying or selling; the only gains are at the high end ($1M+).
• Serhant disputes "crisis," calling it a "mobility crisis" or "stalemate”:
  • "Homeowners are fine. First-time buyers are being squeezed. Supply needs to meaningfully increase…I think it's a housing stalemate." – Ryan Serhant [44:10]
  • The real problem: US housing policy rewards scarcity, protecting existing homeowners and punishing mobility.
  • Lack of inventory is the core challenge; even favorable loan terms can't help if there aren't enough homes to buy.

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Notable Quotes

• Mehdi Hosseini [02:51]: "OEMs… unable to pass on the extra cost to the end customer. We thought 60-70% of costs could be passed on, but memory price increases have been more than expected, and OEMs’ ability to pass on costs is even more limited."

• Chris Grisanti [10:51]: "We absolutely love Nvidia and Microsoft...if the AI spending is going to be spent, and I think it will be, then a lot of it's going to go to Nvidia and Microsoft, and they're both selling below a market multiple."

• Chris Grisanti [16:04]: "I think we have panic and I think that spells opportunity for careful investors."

• Edwin Rocks [19:09]: "About 30% of our business is in data centers and networking, and that's basically riding the wave at the moment."

• Frank Holland [26:52]: "The main word I'm hearing...is irrational with these transport names that have been outperformers...potentially being sold by investors trying to cover losses in other areas like software."

• Alex Goldfarb [32:10]: "There is a fact that AI is bringing an incredible efficiency and people are trying to figure that out. But ultimately it comes down to collaboration and working in the office to create the very product that people are fearful of."

• Ryan Serhant [44:10]: "I don't think it's a housing crisis...I think it's a housing stalemate. Homeowners are fine. First-time buyers are being squeezed. Supply needs to meaningfully increase."

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Important Timestamps

| Segment | Timestamp | |------------------------------------------------------|-------------| | Market Open & AI dislocation overview | 00:57-02:51 | | Memory pressure (Hosseini) | 02:51-08:50 | | Value investing & AI (Grisanti) | 10:02-16:34 | | 10-year bond auction (Santelli) | 14:27-16:04 | | TTM Technologies CEO on data center demand (Rocks) | 18:45-23:19 | | Trucking/transport sell-off (Holland) | 26:30-28:57 | | Commercial real estate panic (Goldfarb) | 31:01-36:29 | | AI safety & politics (Bosa) | 37:17-40:17 | | Housing/mobility crisis (Olek, Serhant) | 41:04-47:46 |

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Memorable Moments

• Chris Grisanti calling Nvidia and Microsoft (traditionally “growth” stocks) his “value investor” picks, marking a clear paradigm shift. [10:51]
• Frank Holland jokes there’s “no fun name” for this trucking sell-off, unlike prior crises, highlighting the speed and unease of the panic. [28:09]
• Ryan Serhant reframing the US residential “crisis” as a policy-manufactured stalemate, not a classic market failure. [44:10]

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Summary

This episode provides a high-level view of how the AI revolution is shaking markets, upending old narratives about technology, value investing, industrial sectors, and even housing. Hardware suppliers are the new kings, while software, transport, and real estate players struggle against investor panic—often driven by uncertainty rather than new facts. In housing, the American dream of ownership is stuck not just for first-time buyers but for everyone, due to structural inertia and policy mismatches. Throughout, seasoned voices urge listeners to separate fleeting market panic from lasting structural change and to look for opportunities amid the turbulence.

Transcript

[A]

Oh, could this vintage store be any cuter?

[B]

Right.

[A]

And the best part? They accept Discover. Except Discover in a little place like this? I don't think so. Jennifer. Oh yeah, huh? Discover is accepted where I like to shop. Come on, baby, get with the times.

[B]

Right.

[A]

So we shouldn't get the parachute pants. These are making a comeback, I think.

[C]

Discover is accepted at 99% of places.

[A]

That take credit cards nationwide.

[D]

Based on the February 2025 Nielsen report.

[C]

The this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update.

[A]

Wherever you get your podcasts, you're listening to THE Exchange. Here's today's show. Thank you very much, Scott. New victims, new margin concerns and a big miss on the housing front. Welcome to the Exchange. I'm Kelly Evans and we have a sell off on our hands this afternoon. Take a look across the major averages and you see declines of more than one and a half percent. That has the NASDAQ down 424 points. The Dow is down, hate to say it, 666 at this hour. And the 10 year yield, well that has sunk to to about 4.12% right now. Fears over AI disruption are claiming some new parts of the market today like trucking with the C.H. robinson on track for its worst day in more than two years. It's down 22% today. Expediters RXO also selling off and in commercial real estate, CBRE, as you can see there, it's down 15%. Newmark is down as well. That's 10% today. And now back to back drops of about 20% for a couple of names here under pressure. We'll circle back to that in a moment. But let's begin with kind of the flip side of this whole trade. As bad as it's been for software, it's been great for hardware. Anything that goes into making AI and memory specifically. These winners now even starting to take a bite out of Cisco on margin pressure today. That has Cisco shares under pressure. But Sandisk, Western Digital and Seagate, they're all higher, bringing their one month gains to more than 40% as prices for their memory components soar. While they're winning, the names reliant on those components are feeling the squeeze that's sending Dell, HP, HP and NetApp down as well today. Many of these companies have already reported that pressure. Who will be able to navigate it the best? Let's bring back Mehdi Hossani. He's a senior analyst at Susquehanna. Mehdi, you told us right here a couple of weeks, might have been a month ago now, just how good I guess we could say things are for the memory makers. Well, now we're seeing the flip side of that. Welcome.

[E]

Right, thank you. Thanks for having me on the program. I think what you're seeing and reflecting in Cisco's results is inability of these OEM to pass on the extra cost to the end customer. We have been under impression that maybe 60 to 70% of the incremental costs could be passed on. But there are two factors here. The memory price increase has been more than expected, and OEM's ability to pass on the extra costs is more limited than what we thought it would be in the past.

[A]

Really. So some might say, okay, like take an Apple. And you and I discussed this as well. You know, is Apple going to raise handset prices 15% because of the memory chip?

[F]

Maybe.

[A]

I mean, that's what some analysts are out there saying. They also have huge pricing power. What about Cisco? I mean, not that you're an analyst on those names, but my point is, should we expect everybody that uses memory chips because of the squeeze across the board to face these pressures, or do you think they'll fall harder and some areas maybe be a little easier for those who have massive heft in the market?

[E]

I actually think the, the margin squeeze will be more severe for the likes of Dell, NetApp, Pure Storage, HP on a relative basis, memory costs for a smaller portion of the bill of material for Cisco. As you look into Dell, HP, NetApp, the memory cost mix is actually much higher. I think for companies like Apple or Dell that have a large volume, they could always tap into suppliers from China for the systems that are shipped to outside the U.S. this is kind of a gray area. We still don't know to what extent these big OEMs could procure from China for shipment outside of China. But ex US but others like NetApp, HP, they have more of an exposure to the US and to that extent, their margin pressure could be intensified.

[A]

Yeah, and you do cover those names. I mean, you have a hold pretty much across the board as far as I can tell. Although I don't, I don't see Cisco in the, in the coverage space here. So how long does this persist, Mehdi? I mean, we know, and we've heard that it could take years. You know, when we talked to the CEO of Western Digital a couple of weeks ago, he said, look, we're booked out for a couple of years. At this point we're talking 20, 28. So should investors move to the sidelines on those who are receiving, you know, memory chips? Is there any. What's the next layer of this?

[E]

So you asked me two questions. How long is it going to last? We don't know. Number two, would investors be better off moving to sideline? I think so. Look, we were on the program a month ago and this memory price increase has been known. Yes, maybe it's a lot more severe than in the past, but these OEMs have had plenty of time to prepare. They also don't know to what extent this is going to last. What you and your listeners need to know, it takes several years to add incremental capacity. So this could potentially last into 27 and this is where the margin pressure could actually intensify into mid or latter part of a 26.

[A]

Is this going to be another inflationary? You know, we always think about technology as putting being pretty deflationary over time. This looks like an area where we could see some inflation pressures. And I don't know if that's anything that the consumer feels that much. Although again the sticking laptop prices maybe. I don't know if handset prices, TVs, I mean just the cost of kind of data usage certainly for the enterprise. How much do you think they might try to pass along? Like if we're talking about 15% price hikes, is that about in the realm of how much more expensive? Because the memory prices themselves, you saw those first quarter numbers, they were saying they were going to raise prices 60 or 70%.

[E]

Yeah, I think the short answer is I don't know anything to do with consumer is more of a black box. Apple does have non hardware revenue which, which carries a higher margin. To what extent can Apple scale that outside of Apple? It's a black box. I think enterprises to a large extent would be able to absorb some of that cost increase compared to consumers. Dell that has some exposure to consumer Notebook could feel it more on the consumer side. On the enterprise could relatively be easier to pass on. But we're in an environment where there are many questions with limited answer. But going back to your original question, what should investors do? I think investors should be very cautious. The unit volume or higher revenue is not going to offset margin pressure and this could be sustainable for more than.

[A]

One or Two quarters And there's shares of Apple which are actually having one of their worst sessions in some time maybe now down about four and a half percent. Again not a name that you can speak to per se unless you'd have any final comment on that.

[E]

I think we actually do another supply chain as it leads to Apple. I think there are some cool features coming out with iPhone 18 could consumers pay a little bit more? I don't know but I think, I think this is a question to be put into the service providers. Could Verizon T Mobile, those guys be able to absorb some of the higher costs because they're right now subsidizing and this is something that's beyond my focus but at the end of the day I think going back to the my coverage universe, the Dell HP that they don't have a whole lot of a non hardware revenue and they should probably feel more margin pressure than an Apple that could probably try to scale their services business and find a, find a way to work with the service providers for higher subsidies.

[A]

Yeah, they kind of made me an anecdote the captured all My husband broke his iPad. Just use every. It's old right and he has to Gemini if he should replace it. They said now wait for one with better features and I said well but if prices are going up you should buy it now. So that conversation between the iPad, the memory shortage and Gemini is all happening in one household. I can only imagine the ripple effects that this will have really in the months to come. Many thanks as always for dissecting it for us. Mehdi Hosseini joining us there. Let's turn to the broader markets now as stocks are picking up some steam in the sell off as software names continue to decline. Another group of stocks has taken over as the leaders in tech and that's all the old economy, Ray. Industrials, energy, staples, that's where we're seeing the broad market leadership while software crypto, hyperscalers, they're all lagging. Will this trend continue and what should you do about it? Let's bring in Chris Grisanti, he's the chief market strategist at Mai Capital Management. Chris, it's great to see you. I'm curious which way you're leaning. Is it, you know, with the rise of the old economy, especially in tech. I know you've had some sympathies there or now that we're seeing the sell off to such an extent, is it the time to look at a workday, a salesforce, a service now?

[G]

Sure.

[H]

Well Kelly, first of All. It's always great to be back with you. I'd say it's a great time to be a value investor finally. I've been talking about the old economy stocks on your show for several years now, and finally they've come into their own. But as a value investor, all of the sudden, while these guys are doing great, it's time to look at the stocks that are down so much. And, and for us, it's much easier to look at the folks that are going to benefit from AI than to try to pick a falling knife of the ones that may or may not be disrupted. I think that's just too hard a question to answer.

[A]

Yeah. The too hard pile that Munger is famous for is the Dow is now down 637 points. All right, so where you always have kind of specific names you're looking at, what are they right now?

[H]

Well, you know, this isn't like rocket science, but. But it's a shocking thing for value Guy to say. We absolutely love Nvidia and Microsoft and the reason is both are selling at 10 year low valuations on next year's forward earnings. And the question everyone's asking is, will this huge AI spend be worth it? But I think that's the wrong question. I think the question for investors for 2026 is, is that money going to be spent? Because if it's going to be spent, and I think it will be, then a lot of it's going to go to Nvidia. And Microsoft, which is capacity constrained, will start to see growing revenues, growing earnings, and they're both selling below a market multiple. So that's what us value guys love. We love to see bargains plus earnings growth. We don't usually get that.

[A]

I love when we bring on a guest who says, my two big value ideas are in video and Microsoft.

[H]

Right. You know, the stars are lining up.

[A]

So that's pretty remarkable. There's plenty of people who are pointing to these valuations and saying, we haven't seen these names at these entry points in effectively years. How do we know, Chris, that the moment is not past us? And sure, well, you got to put.

[H]

Things into three categories. One is the things that may or may not be disrupted. And that's just too scary for certainly for us value guys. So you're looking at Adobe and things like that. So in that group you try to find the ones that have some proprietary nature, like I think ice, Intercontinental Exchange, they have proprietary. So I don't understand why they're down so much. As opposed to booking which is an aggregator, which is a great aggregator. But AI, that's what AI does for a living. It aggregates things.

[I]

So.

[H]

So I would be more, much more worried to own booking than I would for Intercontinental Exchange. Then you get to the folks that win with AI and there's nobody that wins more than Nvidia. So if the AI spending shocked everyone, and clearly it did, then Nvidia's earnings just connect the dots. There are not very many of them. In videos earnings have to be much better than we they were going to be three months ago and yet the company's at a market multiple. So that's what's exciting.

[A]

What's not exciting to you? You know, where would you, as you mentioned, you're not necessarily ready to kind of pick through the rubble in the sell off because it would take a specialist maybe in the software space or in, I mean when chr are these gifts on some level to wake up and see a stock that has earnings and it has revenues and it has, you know, a moat in it. Like is that moat going away or is this a gift when stocks are down 20% because there's just people casting around for the next possible victim many years from now.

[H]

There's clearly baby getting thrown out with the bathwater here, Kelly. But, but I think the best thing to do because so many stocks are done is stick with what you know the best. So I'm not comfortable with trucking stocks, so, so I'm not going to go there. But I am comfortable with hyperscalers. I'm comfortable with value added data sources like S and P, Global like ice. And I'm confident that that's a baby with the B example because they have proprietary data and they'll use AI to offer their clients a better way to get it. Only the data that they possess. I won't get their hands on their data. So, so that's, you know, that's where we're spending our research time and we're like, you know, kids in a candy shop because all of a sudden we've got value and earnings growth and that's something a value investor doesn't get all that on.

[A]

All right, Chris, if you just stay there for a moment. Rick Santelli is standing by patiently but with the results of something very important, which is the 10 year auction that we've been watch long, Rick, didn't go so well for the 10 year yesterday. What about today?

[C]

The 30, right, 30 year 25 billion. And it was a spectacular auction in terms of demand. 25 billion. As I said the yield 4.75, which is 2 basis points lower than the when issued market, lower yield, higher price. Government was the seller, it priced aggressively. It doesn't end there. The bid to cover 10 auction average is 2.36, meaning 2.36 times as many bids as there is securities available. This auction went off at 2.66. That's the best bid to cover since 2018. It still doesn't end there. Okay, it's like the buffet table. The primary dealers get all the leftovers of whatever the customers didn't buy. Well, they only got 5.9%. I have 20 years of data on 30 year bonds. I couldn't find a smaller percentage. So that is a solid number. No matter how you slice it. The difference between yesterday and today is significant. And what does it mean? Means two things, and I'm not sure I agree with them, but here's what I think it means. They're doubting yesterday's strength in the labor market and they're confident tomorrow's CPI for January is not going to come in hotter than expected.

[A]

Good point, because that would certainly change the narrative. Rick. Thank you. Chris Christanti, let me just circle it back to you for a quick final take here. Maybe falling bond yields will help this market ultimately find its footing. But would you broadly describe what you're seeing as panic over a new innovator on the scene? Is there an economic element to it? What, what do you think's going on here?

[H]

Yeah, it's not so great getting older, Kelly, but, but sometimes it is in the sense that I remember the late 90s and I remember the interdicted disruption of the Internet with the stocks we were managing and they'd go through these convulsions, you know, every six months or so, and they turned out to be opportunities. Until, of course, the peak in 99. I don't see the peak. I don't see the valuations. Believe me, Microsoft was not selling at a market multiple at the peak in 1999. So I think we have panic and I think that spells opportunity for careful investors.

[A]

All right, Chris, we'll leave it with those sage words. Thank you for joining us. Good to see you this afternoon.

[I]

You too.

[A]

Chris Grison with May I. Speaking of this new economy, our next guest is fueling the transition from copper to fiber optics. We'll speak with the CEO of TTM Technologies. With a stock up 30% year to date, plus the worst drop in home sales in four years. And could that be why the market is in such a foul mood Today. We'll get power player Ryan Sirhan's take on that and why he says the bottom half is seeing real distress. We're back after this.

[C]

This is the exchange on CN.

[A]

Thy ticket lady Jennifer of Coolidge. Well, many thanks, good sir.

[F]

Here is my Discover card.

[A]

They accept Discover at Renaissance Fairs? Yeah, they do here. Discover is accepted at the places I love to shop. Get it with the times. With the times. You're playing the loot. Yeah, and it sounds pretty good, right?

[C]

Discover is accepted at 99% of places.

[A]

That take credit cards nationwide, based on.

[D]

The February 2025 Nielsen report.

[C]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview, delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[A]

Not every sale happens at the register. Before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sailor, too. Sometimes I do miss the bonding time. Sometimes.

[J]

AT&T business Wireless connecting changes everything.

[A]

Welcome back. Shares of TTM Technologies are up 31% this year as they continue to see huge demand from data centers. They make printed circuit boards and could potentially be one of the big winners in Google's $185 billion AI infrastructure push. Joining us now is Edwin Rocks. He's the president and CEO of ttm. Edwin, it's great to have you here. Have you ever seen anything, anything like this?

[I]

Thanks for having me, Kelly. And no, I've not seen anything like this. It's. This is really an inflection point also for us. You know, about 30% of our business is in data centers and networking, and that's basically riding the wave at the moment. So while these data center customers invest, let's say, hundreds of billions, there is a lot going in hardware. And this is exactly what we supply. We supply the connectivity to. To basically interconnect all these sophisticated chips in a very efficient way. So I'm very happy with this.

[A]

Are you? So let's go back over the timeline. And now there's this scramble for all of the. The Physical stuff that goes into quickly putting together these data centers and we're seeing shortages as a result. We were talking about the shortage of memory. Would you say that your supplies are in shortish supply or are they scarce at all? Are they plentiful? How quickly can you meet demand?

[I]

No, exactly. Basically what we guided to street is about 15 to 20% over the coming three years. And that's. That demand is there, that and that supply is there. We don't see any issue at the moment from our suppliers and we have, we have our capital investments, let's say around the globe to be able to supply this. So, so we are able to support this, this growth as well as the innovation by the way, going let's say from copper to optical.

[A]

Yeah. And I mean you yourself have a long pedigree in kind of tech defense. This area. Your company has been through so many different cycles. How quickly are you able to identify when something like ChatGPT or now the whole AI wave is coming? I mean, did you notice right away going all the way back to 2022, is it picking up steam? And now that we see, you know, when I'm looking at what you can do with the software coding now, right, like how does that translate into what you're experiencing on the back end now?

[I]

First of all, all these, these, these investments, these big data centers are mostly still in Hardware. So 75% of the budget is used for hardware. The physical layers, basically that's energy and basically where we play in. We have very, very strong and very close relations with our customers. We have our roadmaps, let's say in copper, we have our roadmaps. In optical, we are very good in making a lot of layers. So if you make a lot of layers, you get compact systems. So it is mostly Kelly, it's mostly that, that alignment with our customers which makes sure that we are on time, that we invest and that we, that we are, let's say, a good partner for these customers.

[A]

Are you yourself using AI in the company?

[I]

Yes, we do, we do, we do a lot of optical inspection. We do a lot of, let's say inspection of our big circuit boards. And for instance, that a good example where, where we use AI, you can, you can expect when you inspect them with the human being, but that's, that's not the most efficient way. So we use AI for these type of things.

[A]

That's just one example how labor intensive is both kind of your corporate sort of staff and then also what's happening on the factory side. So as we look at a business that's getting a big boon from what's happening. Most of the focus has been on, hey, look at anthropic. They only have 700 people or whatever the number is. How labor intensive is your business and what does growth there? Is your growth growth going to lead to more hiring?

[I]

Yeah, absolutely. Absolutely. At the Moment we have 18,000 people in the company, mostly in production, of course, around the globe. That, that, that means China, Malaysia, US and soon Europe. So that's happening. But we also have a lot of R and D staff also, let's say different parts of the globe to make sure we are on time and we are making sure that we have that innovation cycle. As you can be aware, you know, it's going so fast that innovation has to be also very fast. So indeed, R and D is critical. Bringing things very quickly in production is very critical. So again, 18,000 people and we're growing.

[A]

Yeah, that's fascinating. Edwin, thanks for joining us to kind of pull back the curtain a little bit amid the explosion of this technology. We appreciate it.

[I]

Okay, thank you very much, Kelly.

[A]

Edwin Watt Rocks with TTM Technologies. Stock down marginally today, as mentioned, some 31% since January 1st. Coming up, what a difference a week makes. On Friday, C.H. robinson was at a record high. It's now having its worst day on record. And dragging the Dow transports to their worst day since April is a disruption targeting trucking stocks. We'll dig into that. And as we head to break, here's another look at the broad markets which are under pressure. The dow had a 300 point gain this morning. It's now down 615. We'll have more of the day's biggest movers when we come back.

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Welcome back. And we're monitoring this market sell off. Dow is off the lows still down 583. Not a great session. And the small caps are actually the worst hit, down more than 2% right now. Quick check on Bitcoin as well. Gives you maybe a sense of risk or liquidity or maybe not. Maybe it's just bitcoin. It is down 3% though to just over 65,000. And we have a broad based sell off in the metals, gold, silver, cotton, copper, she said and platinum. Look at silver down almost 10% today. It's a pretty huge move. It's trading back around 76 now. We mentioned Apple and the update to Siri has been internally pushed back to maybe or potentially later after being expected to launch within a couple of weeks. We showed the shares earlier thought it was more of a Cisco memory issue, but now we have this word about what's happening with Siri as well. And those shares are down almost 5% to their worst day since April. On the flip side, fastly is soaring 60% toward their best day on record. This is a cloud platform operator. It beat earnings estimates this morning, gave strong full year guidance. The stock is back to its highest level in two years on an 80% jump today. And check out the transport logistics names which are seeing some big selling pressure. C.H. robinson is down 20% today, worst day on record and they say it's AI disruption fears rattling the trucking stocks now. Got to turn to Frank Holland for more detail. Frank, on this one, what do you know?

[J]

All right, Kelly. So disruptions, that could be one factor I want to point out it's not just the trucking stocks. Dow transports overall on pace for their worst day since April 3rd following the so called Liberation day tariffs and a lot of concern about the economy. However, as you mentioned and trucking and truck brokerage stocks are the hardest hit. C.H. robinson Expediters J.B. hunt and Landstar, they're the biggest laggards in the transports. You also see Night Swift, the nation's largest, largest trucker falling with a lot of analysts and investors. I'm talking to the main word I'm hearing from them, irrational with these transport names that have been outperformers this year potentially being sold by investors trying to cover losses in other areas like software. There's also an analyst note out from Baird saying it may be due to a new AI platform. When I get to that in just a minute. But real case in point about this potentially being irrational. Knight Swift just announced a double digit increase to its dividend, A move that generally signals to the market confidence in future operations and cash flows. Also in the transport C.H. robinson seen as the poster child for the use of artificial intelligence again in transports. We spoke with CEO Dave Boseman on several occasions about how AI is helping that company reduce headcount and expand its margins. Last quarter margins expanded by 80 basis points. Now one other possible factor Here is the FedEx Investor Day. The stock at one point up over one and a half percent. Now you can see it's in the red. Its revenue forecast for 2029 and some of the other targets, they could be seen as a bit tepid, especially with logistics giant emphasizing it's pushing the data centers and then also the circular questions about that build out.

[A]

Kelly, but no specific cattle. It's not like, you know, they always have a fun name like it's Harvey for legal, what's the one for? For financial stocks that wiped out or for trucking. It's not like, you know, Frank came on online and now everybody. What is the catalyst why today?

[J]

Well, according to Bear analyst Dan Moore just put out a note a short time ago. There's a company called Algorithm that put out an article today saying that they have an AI platform that can help smaller companies scale up to basically compete with larger companies without increasing headcount. That could be one of the factors weighing on this. But again, automation, as the analyst from Bear points out, is nothing new when it comes to transportation exports. And C.H. robinson really been the poster child for doing that already. That's a big reason for that stock's big climb over the last year. But we are seeing a very deep sell off. So it seems to be a multifactor situation.

[A]

Algorithm with a why, you know, and look, my hat is off to everyone who's taking this technology seriously. I mean this is the innovation, this is the new business. But to see these moves in established names is pretty shocking. And we look forward to hearing more and learning more about these new businesses. Frank, thanks so much.

[J]

Kelly.

[A]

Thank you Frank Holland. Let's get to Pippa now for the CNBC news update. Pippa. Hey Kelly. A federal judge temporarily blocked the attempt.

[F]

By Defense Secretary Pete Hegseth to censure.

[A]

Democratic senator and retired Navy captain Mark.

[F]

Kelly over his participation in a video where he urged US Service members to refuse illegal orders.

[A]

The judge ruled Hegseth actions are likely unconstitutional.

[F]

Hexaf has been looking to reduce Kelly's rank and cut his retirement benefits. In his ruling, the judge said the Pentagon has trampled on the senators first Amendment freedoms.

[A]

Russia launched a series of ballistic missile.

[F]

And drone attacks against Ukraine overnight, further damaging Ukraine's energy infrastructure and knocking out power and heat to thousands.

[A]

The attacks come as Ukrainian President Volodymyr Zelensky says Moscow is hesitating about another round of US Brokered peace talks. And Switzerland announced it will hold a.

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Referendum in June on whether to cap.

[A]

Its population at 10 million people until.

[F]

2050 by limiting immigration. The petition was backed by a far right political party. Both the government and parliament oppose it, but the referendum was automatically triggered after 10000 people signed the petition.

[A]

Kelly wow. That.

[G]

Wow.

[A]

Okay, Pippa, thank you very much. Pippa stevens. Coming up, commercial real estate. They're getting crushed as we mentioned the past couple of days, as fears of AI disruption ripple through that sector as well. Our next guest though thinks that sell off is as sentiment has been overshadowing strong fundamentals. Can they survive the transition? We'll get his thoughts and top picks in the space next. Fears are rippling through commercial real estate today with names like cr, CBRE Group and Newmark under pressure. Both are down big and over 20% in the past two sessions now. But our next guest is saying to buy the dip that the fears are overblown. Alex Goldfarb, a senior research analyst at Piper Sandler. Alex, it's great to have you. First of all, what do you think is the catalyst here for these declines? Does it make sense to you?

[G]

It doesn't make sense. But having lived through the COVID sell off, you know, the dot com bust and the housing bust and everything else, there's always nervousness whenever things change in the market. Clearly AI is the focus. You've seen that in the software stocks. You've seen that insurance brokers and not surprisingly, it's coming after commercial brokerage. In the office stocks, there's a fear that's naturally human of job displacement. But even us on Wall street, you know, we were supposed to all be shipped overseas or off to, you know, lower cost markets. And yet employment, office using jobs in New York are eclipsing, have eclipsed pre pandemic levels and space availability in Manhattan is quickly compressing. So, so you're talking about physical versus the virtual. We've seen this in Retail. The malls were supposed to go away because of the Internet. That has not happened at all. In fact, quite the opposite. And the same fear is coming to office.

[A]

So. So just to be clear, you're telling me that the reason commercial real estate names are selling off is because people think that AI is going to lead to mass layoffs. And there's no one, there's not anyone to sign new office leases and fill these, fill these buildings.

[G]

It strikes us a lot like what happened with the Internet a decade ago when everyone thought people would skip the mall, skip the shopping center and just sit on their couch and order product. The pandemic upended that and showed that, in fact, physical retail is where people want to be. The same thing happened at that point with work from home. Everyone thought there'd be no need for office because everyone would sit on the couches and, you know, work from the comfort of their home or their apartment. And quite the contrast is JP Morgan has demonstrated with their new headquarters. People want to be back in the office. You're seeing that in New York, you're seeing that in San Francisco. I mean, San Francisco office recovery is being driven right now by AI companies and people who want to be in the office. But there is a fact that AI is bringing an incredible efficiency and people are trying to figure that out. But ultimately it comes down to collaboration and working in the office to create the very product that people are fearful of.

[A]

I thought perhaps there had been a new commercial real estate, you know, platform leasing platform or something that was AI based, that was going to do, you know, somehow make a better mousetrap. And maybe there is. I mean, this stuff is moving so fast. There could probably 10 of them have launched since Monday. It's even more interesting to me that it might literally be just a seats issue. It reminds me of what's going on with software where people are worried, oh, there's going to be fewer workers, so there's fewer people to, you know, pay out for a salesforce model. Fewer people to sit in offices. I mean, it feels a little irrational. I'll agree with you. What would you say are the best buying opportunities in your coverage space right now?

[G]

So here at Piper Sandler, I mean, certainly in commercial brokerage, Newmark, if you look at the stock, it's down two multiples from Friday. So think about that. The Stock is off 20% since Friday. It's down two multiples despite the fact that we're forecasting upper teens earnings heading into 2017. 6. The company, under the leadership of Barry Gosin has done a phenomenal job of going global, improving their diversity of earnings streams, both from corporate users, data centers, leasing transactions. And what's really interesting and people miss is there's an entire wave of real estate transactions that were done back in 2021 at sort of aggressive underwriting and very low cost debt. All of that is coming due and it needs to either be worked out or transacted market. At the same time, you have corporate users, like I mentioned before, trying to figure out how to best get their workforce back to the office in a world where there is no new office buildings going up. So when you look at Newmark, in our view, the story has cleaned up tremendously over the past few years, especially with the departure of Howard Lutnick. And it really for people who are looking for companies leverage the earning to the economic growth. Newmark is a really good story.

[A]

Fascinating. Like you said, PE is contracting. You know, clearly all the worst fears that could be realized with a name like this are being realized in the market today. Alex, thanks, Alexander. Alex, if I may. Thank you.

[G]

Either way, my wife calls me a variety of names. I'm just happy when she smiles.

[A]

Probably depends on the day, you know. Thank you so much for making the time a really, really brutal day. I mean this is probably for you, would you say then the best, the worst day since COVID for the space that you cover?

[G]

Yeah, I mean I remember early days of COVID when the market was just going crazy and we just had no idea what was going on until, you know, you start a few days later. Reading about the virus for us Air has been a topic in real estate since last year. The office landlords have been peppered with it repeatedly. And what's really interesting is when you look on the leasing, if you look at SL Green, Boston Properties, Vornado, their leasing pipelines have only strengthened over the past year despite the AI and even with Mayor Mandani into New York, New York leasing was at record levels in the fourth quarter. People are now willing to pay 150, close to $200 in rents, levels they would have never paid before. And that's in contrast to the fears that have grown over the past year. So again, we think there are buying opportunities. Newmark, as I said, it's down two multiples from Friday, down 20%. And yet you're looking at a stock with upper mid, upper teens earnings growth into 26.

[A]

All right, Alex, thank you so much for bringing the data. The insight behind what might be going on here. We appreciate it.

[G]

My pleasure.

[A]

Alex Goldfarb with Piper Sandler coming up, all startups are spending big money. When it comes to AI, that's not news. The news is where they are spending it. We'll have some of those details next. And as we head to break, two retailers on very different footing today. Crocs having its best day in a year on a big earnings beat and smaller than expected revenue loss of 21%. Different story for Birkenstock, which is down 2% on a revenue miss. We're back with more after this. Welcome back. The AI race is getting more political and more divisive. Anthropic announcing Today they're donating $20 million to a super PAC that supports more guardrails around the technology. Open Air is following a different playbook. Deirdre Bosa has more in today's tech check. Deirdre.

[F]

Hey, Kelly. So put simply, AI's internal civil war over safety, it's going public. Synthropic just put $20 million into a super PAC that does push guardrails like kids safety, chip export controls and transparency rules. On the other side, you've got a coalition led by OpenAI's Greg Brockman and Andreessen Horowitz. They've poured $125 million into a pack that wants, wants just one federal standard and no state regulation. So the White House is with them. But the backlash, it's only increasing and it's coming from inside the building. This week alone, researchers left OpenAI Anthropic citing ethical concerns. XAI lost the co founder who ran safety. And Yesterday, a former OpenAI researcher published a New York Times op ed warning that putting ads in chat CBT is the Facebook playbook all over again. Now this isn't just Todd Kelly. OpenAI dismantled the team built to make sure AGI benefits humanity X I reorged with no dedicated safety function. And the reason this is so consequential right now is because the models are starting to improve themselves. And this is a line that safety researchers have warned about for years. AI building with AI. ChatGPT's recent model, the people that built it said that it helped write itself. And that's when you start to get to those scary sort of terminator type fears that were pushed a few years ago but have seemed to faded away until now.

[A]

You know, Alex Bors was on Squawk Box this morning talking about his the raise act, something like that. His AI, yeah, probably Raise AI, his proposal that would be maybe starting for New York but really would go nationwide. And it, it has a lot of common sense stuff. Just about the most serious harms where we've seen this technology being used. I know that the companies are, I mean, everyone's concerned. We don't want overbroad regulation that kind of slows down innovation. So I can't tell if this fight between the two companies helps or hinders these efforts. Right. They're very different approaches here. Yeah.

[F]

I mean, it's kind of been on brand for anthropic right to say and raise all these safety concerns. But it helps them because they say, okay, we literally are built with safety in mind. We left OpenAI to build a safer AI ourselves. So that helps them. Whether anything gets done about this, I don't know. I mean, the argument always comes back to China.

[A]

Right.

[F]

If we slow down, at least on the Silicon Valley side, if we slow down, that gives the lead to China. But then like you said, Kelly, there's sort of these common sense protections and we've talked about this before, in a way, China does have its eye on safety. It's just not as political as it is here. Right.

[A]

Or I think most people would be behind. Like just we just want to know if something's made by AI. Certainly in the deep fake case, but even a commercial. We're talking about this with Mark yesterday, Mark Jackson. So we just want to know is who generated it and where did it come from? So I think like that. Yeah.

[F]

Have you seen some of the new video generation tools? There's one from a Chinese company, ByteDance, it's called Sea Dance is their new model and it's blowing up right now because it is just so good. And when you talk about not knowing whether something's AI or not, I mean, it's here.

[A]

Exactly. Deirdre, thank you as always.

[B]

Thanks.

[A]

Deirdre Bosa. Coming up up, commercial real estate. It has an AI problem today that we were just talking about. But that same AI issue is a catalyst for the data center REITs. Names like Equinix Digital Realty and Iron Mountain are trading sharply higher. Equinix up nearly 13%, just shows you the trade has a very different impact just within one sector. And on the residential real estate front, some ugly numbers today. Real estate power player and TV personality Ryan Sirhan says the American dream is changing. He joins us next as the 30 year fixed mortgage rate is still around 612. We're back in a couple. A really big miss on existing home sales today. You have to wonder if that's partly what took down the market. Diana Olek has the numbers for Us Diana.

[B]

Yeah. And Kelly, after announcing the January numbers, the Realtors chief economist Laura Yun called it a new housing crisis. He said movement is not happening and Americans are quoting stuck and the numbers back it up. Existing home sales in January dropped over 8% from December, way more than the street was expecting. Sales down just over 4% from the year before. That is the slowest pace since December 2023 and the biggest one month drop since 2022. Now this count is based on closing so its contracts likely signed in November and December when the average rate on the 30 year fixed did not move a whole lot before dropping in January. Inventory came down from December, still up 3.4% year over year. But Yun said that is not enough. Now 3.7 month supply, 6 months is considered a balanced market. And that cape kept prices in the positive. The median for January was $396,800 up 0.9% year over year. But that did hit the highest January price on record. It's also taking longer to sell 46 days versus 41 in January of last year. Sales are strongest on the higher end of the market. The only price category to see year over year gains gains was that million dollar plus range. The lowest price range saw a 13% drop. Now Lawrence Yen was quick to point out, Kelly, that this is nothing like the foreclosure crisis during the Great Recession. But we are starting to see more borrowers underwater on their mortgages.

[A]

So more borrowers are underwater. But his, his real. He called it a crisis. Did you just say in the issue is he says a new housing moving, a new housing crisis because no one's moving and there's no inventory basically is what he's saying.

[B]

Right. There's an inventory problem even though it's up year over year slightly. I believe that 3.4% he many more homes on the market. And he also said that you know, for upward mobility people need to move upward. That is moving out of the small condo to the bigger house or moving from a rental apartment to a single family home that they own in order to build wealth. He said it's not happening. People are again, quote, stuck.

[A]

All right, Diana, thank you. Our next guest says the American dream has moved on from homeownership to never leave your home if you're lucky enough to own one. Ryan Sirhant is founder and CEO of Sirhant Real Estate and executive producer of Owning Manhattan. Ryan, it's great to see you again. I mean just pick it up where Diana left off and what Lawrence Yun is saying Because I think you're saying something very similar.

[D]

The word crisis is a, is a trigger word for me and I really don't like it when economists use trigger words for, for clicks. Nothing against, nothing against them. I think this is not a housing crisis crisis. I think it's simply a mobility crisis. I think homeowners are actually fine. I think first time buyers are, are being squeezed. I think supply needs to meaningfully increase. There is a bill proposed, I think it was passed by the Senate literally this Monday just happened. Still needs final approval. It's not exactly what the bipartisan group of lawmakers put forward to create more housing, which is exactly what. So I don't think it's a housing crisis. I think that's a solid headline. I think it's a housing stalemate.

[A]

Stalemate, That's a good word. That's a very good word. That's a very good. But you are. I mean it's funny because I hear that we don't want to be overblown about this, but you're the same one. And many people are saying like the American. It's worse to say the American dream is over because you can't buy a house. I'd rather we have a housing crisis and still have a dream. If there's no dream. I mean, if it's not a possibility. Right. Is that how serious it's getting?

[D]

I think the American dream is economic prosperity. That's the American dream.

[B]

Yeah.

[D]

Is to go to bed and not wake up at 3am wondering how you're going to pay tomorrow's bills. That is the American dream. Where you have opportunity as long as you attach it to a get up and go attitude. Having that directly attached to homeownership. As I think one of the greatest real estate brokers in the history of the world world myself. I've never, I've never said that before because I again, like, I don't want to sit here and say the American dream is broken. I think the, the U.S. housing market, if we're talking just about this country, isn't. Isn't broken and it's not dead. I think it's working exactly as it's designed to. And I think even you and I have discussed that before, which is the real problem. I think we built a system that rewards scarcity. I think it protects existing homeowners, which is exactly what's happening. Look at the equity gains in the real estate market across, across the country. But it punishes mobility.

[G]

Right.

[D]

Unless you create more housing stock. What was it, six months three months ago we were talking about the 50 year mortgage.

[G]

Great.

[D]

If we can lower payments, that's amazing. But the long term effect of that is more punishment on mobility. And I think prices aren't high by accident. I think they're high by, by policy. And so hopefully Monday's moves will, will help with that.

[A]

I know, but the whole policy is designed to get people to buy houses. The fact that we have 30 year loans are backed by Fannie and Freddie is the Fannie and Freddie. Some of the policy changes, they're making a difference and helping to unloc, you know, the market or bring down mortgage prices or anything like that.

[D]

I hope so. But Fannie and Freddie are completely useless if we don't have housing stock. People need to live somewhere. And you'd rather pay your mortgage than pay someone else's mortgage. I think, you know, we created a, a winner take all home ownership story. And also I think we've spoken before, right. The capital gains exclusion on your primary residents, like US tax code 121, right. From the Taxpayer Relief act of 1997 when the median price of a home was still under $150,000. Why have we not revisited that? Yeah, people don't need rhetoric. Any roofs?

[A]

And I mean, so it's always ironic to me because you're in Manhattan, which is such a different animal than the rest of the country. But what you're saying is really what the rest of the country, they're, they're saying build it. But I mean, I look around, I'm in Jersey. We don't have a lot of space to build it. You know.

[D]

Maybe in a specific town, but I think there's a lot of land in a lot of places. Well, we have conversations with buyers all the time. Is you have to determine exactly what's the most important to you, is it being in this specific, specific location. In which case, yes, inventory might be tight and pricing might be high. If it's having a certain size home, there are plenty of options. January sales, she just said, dropped what, 8.4% from December?

[A]

Yeah.

[D]

Rates slipped to just about 6%. That's the lowest they've been in three years. Homeowners are locked in now more than ever. I think the average homeowner now moves once every nearly nine years. And the bottom of the market is seeing real distress. But there's still plenty of housing there. I think housing permission is a shortage and I think that that's what they're trying to pass through the house right now. I think cities aren't out of land, and I think they're out of political will unless we fix it.

[A]

Well, K shaped how? You know, I think we're taking some time from next hour, but I think they'll be nice about it. Brian, thanks very much. Always great to check in with you. Ryan Serhant and Power Lunch is up after the break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place. Introducing Fidelity Trader Plus. With customizable tools and charts you can access across all your devices, try our most powerful trading platform [e-mail] TraderPlus investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC Member nyse, SIPC.