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Big Gains for Small Caps, Health of Housing & Holid-AI Shopping 11/26/25
00:43:33
The small-cap names to watch as the Russell 2000 outperforms the major averages during the shortened holiday week. Sellers are pulling their homes off the market at a rapid rate, and Redfin CEO Glenn Kelman warns there could be more housing pain ahead. Plus, how consumers are using AI to shop for gifts this season.
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The heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the international space Station and wielded at business dinners like a samurai.
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My sword.
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It's a classic corporate power move, but the real power move, having end to end visibility on your most critical shipments. FedEx, the new power move. All right, thanks very much, Frank, and happy Thanksgiving. Eve. Welcome to the Exchange. I'm Dominic Chu in for Kelly Evans. Today, stocks are higher and on track for a winning week, a week that saw, by the way, a big shift in AI and a big move towards a rate cut next month. All of that helps helping these small cap stocks to the biggest gains, relatively speaking. The Russell 2000 is up more than 4% just since Monday, outperforming the major three indices. So is the setup finally right to own that small cap trade? And we're watching Nvidia shares, of course, the biggest Mag 7 laggard so far this week as Google's Gemini 3 stole the AI spotlight. Nvidia responding that its chips are a generation ahead of the competition. But now there's new competition coming out of China. We've got that story as well. And while Alphabet went from a laggard to a leader, another name has fallen from grace. That's Oracle. It's getting cheap enough to own right now. Is it? Or is it a good trade to fade right now? That's all ahead, but we're going to start with stocks rallying for a fourth straight day on the hopes of a rate cut next month. And while investors are focusing on the Fed as the next major market catalyst, my next guest says there is another one out there and it should not be overlooked. The one big beautiful Bill act kicking into gear early next year. Joining me now with his thesis is Bill Stone, the chief investment officer over at the Glenview Trust Company. Bill, you're talking about taxes and regulations being that big macro driver. Why is it going to be as big as you think it's going to be?
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Well, I think, you know, certainly the economy at the moment seems to be in a, you know, we don't have all the data yet, but seems to be in a bit of a soft patch. But we're going to see quite a bit of stimulus coming in through A number of tax cuts both on the consumer and the business side that should give us a shot in the arm. So as long as we can kind of hold it together until then, economically speaking at least I think that gives us an even better chance to, to get it kind of restarted and get going again. Particularly if the Fed does follow through and cut rates as we expect here in December.
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Where will we see the biggest impact bill of the regulatory easing that is anticipated with regard to the tax rates that could be cut that will be beneficial to certain parts of the market over others? What exactly is going to be the outperformer when it comes to the market given that one big beautiful bill act catalyst?
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C
I mean I think it could see the consumer again have more money in their pockets which should help drive spending. And we all know a big part of it is obviously the US Economy is driven by, by consumer spending. And so you know, it's, it's a win win on that side. So we may see like a, certainly an Amazon and, and some others benefit from that and maybe hopefully we hope the housing market as well.
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B
Now it's also the regulatory side of things is one big view here, but it's also about whether or not we see the economy doing better because of it. You mentioned consumers getting maybe some relief, corporate entities maybe getting a little bit of relief on their tax bills as well. How exactly does that play out in your mind for the macro economy in the first half of next year? What kind of growth expectations are you maybe factoring into your models at this point?
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Well, I mean I think it's more for us is thinking about whether we can avoid recession because stocks are currently pricing in, you know, since the sell off in late October. You know, I'll call it a pullback. It's not much of a sell off which is a good thing. But you know, they're not still not pricing in much of a chance of recession. So I think that is part of what would support stocks. If you continue to kind of move away from the chances of recession. If you continue to have to price in more chance of recession, then you know, it gets a little harder in terms of, of how things work out next year.
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B
What's the market view then for next year? What are your expectations for the S&P 500 for that big tech trade given that backdrop you've laid out?
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C
Yeah, I mean, I guess I'm hoping we see a little more broadness in the market. You know, we really at the end of October in particular got extremely narrow to just some of those big tech names. You talked about it just a moments ago, the small cap starting to pick up. I'm kind of hopeful that they'll finally show up because I think a lot of what is laid, you know, over the top of them has been worries about the economy at times. Also, you know, frankly, the growth has all been in terms of earnings. Growth has all been in those tech names. If we see some sort of spreading out in terms of growth rates, maybe you finally get a little life out of those.
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All right, let's get actionable about this. In your mind, what are the top picks for this coming year?
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Well, you know, we currently like I should stop and say, I know you're a sports fan. So I happen to get one stock from the great state of Ohio and one stock from that other state north of Ohio. So I'm going to go with Ohio stock first. Sherwin Williams, it's kind of a play on. It is a great high quality company. Housing has already been essentially recession, so we get some life in housing with some of the rate cuts, etc. I think you could see some nice move out of that. They've also got opportunity to continue to increase their sales internationally. So I think that's a nice one to think about. Again, very high quality. So it's secure. You know, it can go down, but at least you're not going to worry about going out of business even if we get more economic weakness. Second one, I love them. Despite being in that other state, Domino's Pizza, it's just a great company, great growth story and I always say, if you don't believe me, Berkshire Hathaway now owns over 8% of that company. So it is a interesting growth rate company. Particularly, it's interesting with inflation in the backdrop because the inputs to pizza are relatively cheap and they certainly are family friendly around the pricing of pizza and they have a great electronic presence in ordering. Certainly everybody kind of knows the delivery side of things and they've expanded that with uber eats and DoorDash. So I think despite the pullback in that stock, it's very interesting.
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B
I am not as biased as some people from those great states are. So I will say that the states are in fact Ohio, as you point out, and Michigan, that was the unnamed state as well.
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We can't say that. No, we don't say that.
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This week the game's going to be a big one for sure. All right, thank you very much. Bill Stone with the Glenview Trust. Happy Thanksgiving, sir.
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You too.
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All right, so we mentioned that small cap trade just now. Let's drill in on that trade as well. It's outperformed so far this week that small cap trade. So the Russell 2000 is up nearly 5% in three days. And our next guest now says the stage is finally set for those gains to actually continue with some momentum. For more, let's turn to portfolio manager of the Needham Small Cap Growth Fund, Chris Retzler, who joins us here on set this Thanksgiving eve. Chris, thank you very much for being here with us.
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Thank you for having me.
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All right, so let's talk about the small cap trade. You say that it does now have a setup for continued momentum. What exactly has changed in the last six months that now says it can be an outperformer for the coming months?
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Well, we certainly have the Fed behind us and we've gotten through another correction here in November which began to feel a little bit like the spring, but it feels like we've come out of that in the last few days. But what we have, you know, Fed cuts, I think looking to 2026, as your previous guest just mentioned, we're looking at tax cuts that are going to be for businesses, for consumers. So we begin to see and hope that the market will begin to expand out the breadth will, you know, expand and we're going to see more money going into investment which begins to help more the mid small cap companies and if they can get that top line acceleration with their revenue, we think that that drops to the bottom line for a lot of companies.
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B
Now Chris, small cap stocks have been viewed conventionally speaking as quote unquote riskier from a relative basis. That also means higher returns, higher volatility at times. What exactly do you think catalyzes investors towards more risk appetite to go into those small cap names with more certainty?
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So with the Fed cutting, one thing that we think is there's going to be liquidity coming into the market and small caps should be a beneficiary of those dollars coming in. You know, you've had the Mag 7 lot of dollars have flowed there really over the last three, four years outperforming small caps. That's been a cycle. With the Fed raising rates, we're now at a critical point where if they get low enough, are you willing to accept that in your money market rates or do you have to go out on the risk curve? We think that begins to happen. They trade a lot less liquidity. So it doesn't take a lot of money to flow into the asset class. We just were in California the last week met with probably 40 companies and if you had turned off the news you wouldn't know that there was any slowdown in the tech world. They're looking to meet capacity. That's their bigger issues. The orders keep coming in. We haven't really seen a setup like this I think since kind of 2019, 2020 when small caps had a really big move.
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Where are your favorite parts of that small cap trade? When we Talk about the Russell 2000 oftentimes we talk about kind of small, medium sized banks. Those, they're a big part of the portfolio. Some of those biotech companies are part of that mix as well. From a PM's perspective, where are you putting the biggest bets on the rebound in small caps?
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So we like a lot of the plays around infrastructure, military modernization. You know the administration has redirected dollars into these new programs and so we look at like a company like Parsons which has, you know, you know, readjusted some of the programs they were in. But it sets up for the next three years. And when you think about you know, military changes, modernization, you know, data centers, a lot of build out infrastructure on a global basis we think they're well positioned. There's also within the factory. So a company like Cognex would be a good for automation and ultimately into robotics. As we begin to see and re onshore manufacturing United States this is the modernization and with tax cuts that can be deducted immediately we expect companies to be spending money. So you know I think that again you don't have to just pick the big large cap nvidias. It's what are the other companies that making all that function.
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And one of the big point I want to make here is over the long term your fund, the need of small cap growth fund has been an outperformer. It has been a laggard so far this year. What do you attribute the underperformance to and are you willing to stick with some of those bets or are you readjusting portfolios?
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So it's been a lot of the volatility in tech and again a lot of the money flowing to the mag 7 so really leaving behind a lot of the small cap companies. But you know, looking forward, you know we're still very confident the management teams be able to manage through that. They've readjusted a lot of their cost structures. And another thing we've seen a lot in the last week are buybacks being put in and even company management teams putting money into their stock in the open market. That's a very Bullish signal.
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All right, Chris Retzler at Needham. Thank you very much and happy Thanksgiving, sir.
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You too. Thank you.
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All right.
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Coming up on the show, Oracle is catching a bid today. But the stock has fallen far from its year high, down about 40% since that level. Is it getting cheaper enough to buy right now? Or is the former AI darling becoming an AI dog? That trade coming up next. Plus, sellers are taking their homes off the market at the fastest pace in nearly a decade. We're going to dive into what it could be saying about the overall state of housing in America. The exchange is back after this. This is the exchange on cnbc.
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What are you doing in a meeting? That could have been an email. That's right, you're losing interest. Don't let it happen to your money too. Vanguard's Cash plus account can't help you at work, but we can help with your savings because Vanguard believes in giving you more. So how much interest could you earn? Find out@vanguard.com cashplus offered by Vanguard Marketing Corporation member FINRA and SIPC.
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The heaviest metal credit card of all time, rumored to be one of only 18 in existence. Plated with the very same tungsten that forged the international space station and wielded at business dinners like a samurai sword. It's a classic corporate power move. But the real power move, having end to end visibility on your most critical shipments. FedEx, the new power move. We all take good care of the things that matter. Our homes, our pets, our cars. Are you doing the same for your brain? Acting early to protect brain health may help reduce the risk of dementia from conditions like Alzheimer's disease. Studies have found that up to 45% of dementia cases may be prevented or delayed. By managing risk factors, you can change, make brain health a priority. Ask your doctor about your risk factors and for a cognitive assessment, learn more@brainhealthmatters.com welcome back to the Exchange. Oracle shares are higher today after what's been a very brutal few weeks. The AI Darling that made Larry Ellison the world's richest man is now down more than 20% just this month alone. Fears about its debt and exposure to OpenAI is weighing heavily on that stock. But none of this comes as surprise to our next guest who launched his coverage of the stock Oracle as A sell rated one back in September. Those shares are down more than 30% since that call. For more, let's bring in Alex Heisel of Rothschild and Co Redburn. So Alex, this is an interesting call. It was very much non consensus. What exactly made you make that call at that point and are you willing to stick with that underperform or sell rating right now.
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D
First yes. Thanks having me on the show again, we stick to our sell rating in September. We said it's a risky blue sky scenario that the market is pricing in right now. It's still an optimistic scenario. So we do see more downside from here. The reason we have launched in September is because we were expecting like, you know, a large RPO number because we have seen this target announcements. So from a timing perspective we thought we have to wait to get this RPO boost out of the way. And the reason haven't really changed because we continue to see like these GPU deployments being very, very low value. And I just want to put some numbers behind this. We think that, you know, for every CapEx dollar you spend on these GPU deployments, you only generate 20 cents in NPV. And that's like a fix compared to the, to the, to the traditional cloud. And what we have seen over the past couple of weeks, obviously there have been more cautiousness around the overall trade. But also if you see how consensus has moved, we have seen some eps upgrades, the 2030 moved up by 15% but at the same time it cost them 50 billion more. If I just take consensus and it just reaffirms our view that the cost to grow are significantly higher. And from an Oracle perspective, the problem is also that they have to fund the bulk of this with that.
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All right, Alex, you mentioned the RPO is those remaining performance obligations that Oracle has. It was by the way, one of the biggest reasons for the bullishness in Oracle going into the peak that we saw recently. How has the story around those RPOs and the growth prospects shifted or changed in your mind from an investor standpoint given the fall that we've seen from the recent highs?
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Yeah, I think overall at this point it doesn't really matter if we see an increase in the RPO or not because there's just too much risk associated. And it also means you need more money to fund all of this growth. The other problem that you really face is whatever deals are being signed now won't drive revenues, let's say in the next two, three years. So it's really like India in the outer years. So the focus has clearly shifted. A lot of conversations we have is, you know, maybe would have been better having a lower RPO and less leverage and the stock could potentially be higher without some of these, you know, big deals they've signed.
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Now the leverage you bring up an interesting point here. Recently we've heard a number of other analysts, industry watchers, maybe take a more cautious approach to the leverage, the debt being used for some of those expansion plans going forward. How much of that does play into what your future prospects are for Oracle? The leverage, the capital structure side of how they're going to fund all of this expansion going forward?
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Yeah, I think the, you know that, that's the raising is basically to pay the GPUs. I think there's also another part to the equation which is like the lease obligations because Oracle doesn't build the data centers. But you still have to sign long dated leases. And I think that's a much, much bigger risk because if you think about it, if you sign a 15 year lease and let's say you have a customer that is signing like one hardware psyche over five years, you have to fill this capacity after. So these projects can really quickly become like value destructive. So it's not just the financial obligations, it's also the leases. If you had this on top, this is a major concern because they really have to execute and deliver on those targets.
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And Alex, we know that you're bearish on this. You have a sell rating. I want to know though, from an investor's perspective, sometimes it is just about price, it's about expectations. So what exactly does get you to say, hey, Oracle is now worth a buy?
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Yeah, I think you would need to price, you know, the business X OCI and you know, we can, we can have a rough idea what the value is, maybe around 130, 140, $150. And then you have to take an assumption what the, you know, the cloud business is oci. I think investors are struggling because it could be, it's a lot of these deals have like a negative value. So I think you need to buy the debug end really to see upset from here at this point, we just still don't see it, unfortunately.
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All right, so a big key for Oracle, cloud infrastructure as well. Alex Hysel at Redburn, thank you very much. We appreciate it, sir.
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Thanks for having me on the show.
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All right, coming up on the show, the holiday season's finding the perfect gift for someone might be a little easier than in years past thanks to artificial intelligence. We're going to dig into how that's happening in retail right now. And we're watching shares of Alibaba taking a leg low lower on a Bloomberg report saying that the Pentagon is suggesting putting the company on a list for China military ties the exchange is back after this.
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What are you doing in a meeting? That could have been an email. Losing interest? Don't let it happen to your money too. Vanguard's CashPlus account can't help you at work, but we can help with your savings. Find out how much interest you could earn@vanguard.com cashplus offered by Vanguard Marketing Corporation member FINRA and SIPC. Black Friday more like Black Friday.
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30% off just about every regular price.
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Item at your DSW store.
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Smarter by CNBC make it an ever expanding curriculum of career and income boosting online courses. Get 25% off all 2025 courses. Now go to CNBCmakeit.com courses special offer ends December 5th. Welcome back to the Exchange. Let's get a quick check on the markets. Right now the Dow Industrial is up about, oh, just about 300 and some points here, but at the highs we were up 400, 459. So we'll keep an eye on that. The S and p is up 2/3 of 1%. Same for the NASDAQ Composite up nearly 1/4 percent, and the Russell 2000 up about 1% as well. Some of the notable stocks on the move this Thanksgiving eve include Robinhood Markets right now currently the best performing stock in the S and P, up 10.5%. The financial services company is catching a bid due in large part to news that it and privately held Susquehanna International are teaming up to launch a futures and derivatives exchange which will help it expand further into the prediction markets. A red hot part of the market right now. Robinhood shares up 10.5%, a couple of earnings movers also driving bigger moves. Shares of farm equipment giant Deere are falling BY Just about 5% right now after it posted better than expected quarterly results. But it gave a full year forecast that fell short of some expectations as it continues to deal with the effects of tariffs and global economic uncertainty. Deere down 4.5%. We'll end on a stock for the dogs and the cats and a slew of other pets. That's pet supplies retailer and services provider Petco soaring to the tune of 19% after it reported financial results that were generally viewed as in line to better than expectations, but it raised its full year forecast for a key measure of operating income and that's driving a lot of the volatility right now to the upside. Petco the ticker wolf up 19%. Now let's send it over to Christina Partanovellis for a CNBC news update. Good afternoon, Christina.
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Hi, Dom. Well, Taiwan has announced it will build an air defense system similar to Israel's Iron Dome. Taiwan's President Lighting Te announced that the country will spend $40 billion on arms purchases, including the air defense system. It comes as the US Pressures Taiwan to step up its defense budget and China escalates its aggression in the region. The U.S. state Department said it supports Taiwan's acquisition of critical defense capabilities commensurate with the threat it faces. Meantime, the death toll has risen to 36 for the fire at a Hong Kong apartment complex earlier today. Several dozen others have been hospitalized and at least 279people are still unaccounted for. The cause of the fire is still unknown, but authorities say it spread rapidly because of bamboo scaffolding and construction netting surrounding the buildings. And the NFL will be using commemorative footballs, field markings and branded coins in 2026 to celebrate America's 250, 250th birthday. They will be used beginning of the week 18th of the current season. That's January 4th and throughout the entire NFL playoffs. Dom, if I had some smart sports anecdote, I'd add it, but I can't fake it.
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Go sports. We'll leave it at that. All right, Christina, Parts and Nobles, thank you very much for that. Coming up on the show, the ITV Home Construction ETF is up more than 5% in three days alone as hopes of a race cut rise. But sellers are growing impatient and pulling their home listings at almost a record pace. What it means for housing from here, the exchange is back into.
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I was four months pregnant when I started the company and I couldn't find a prenatal vitamin that I trusted. And fast forward. Today we have the number one best selling prenatal vitamin in the US and the only leading one with a human clinical study. 15% of our ingredients are exposed to tariffs. So we've had to make the challenging decision to actually absorb costs for the consumer without raising our pricing. That being said, one thing that we have been playing around with is different models when it comes to cadences for deliveries. We actually started to offer quarterly subscriptions as well as a la carte.
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Because.
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We have direct relationships with the suppliers, which is a rarity in the category it actually is allowing us to compete. And so there's definitely a sense of resilience that we're seeing across our brand.
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Welcome back to the Exchange. Mortgage applications jumping to a two year high just this last week as interest rates held largely steady. But at the same time, sellers are pulling the homes off the market at the fastest pace in nearly a decade. So what's going on in housing right now? Joining me now to make sense of all of it is Redfin CEO Glenn Kelman. This is a ridiculously interesting story right now because if you didn't really know what those metrics were, you would have no real idea that people are just not happy about keeping their house on the market for that long. What exactly is driving the staleness in the housing market right now?
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Well, we've just had a massive shift from a seller's market to a buyer's market, the first shift in at least a decade. And everyone is just taking a moment to adjust. There are some sellers who sell and pay off their mortgage. That also is something we haven't heard in 10 or 15 years. And so the whole market is going through a massive transition.
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The transition that's happening right now, does it have any, do you have any kind of visibility on how long that transition lasts? When can we expect maybe, I guess it's all relative, quote, unquote, normal behavior for say, a spring selling season?
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H
Well, I think it will come in the spring when the market changes over the winter, many people decide just to pack it in, celebrate at home, put up the tree and then try again in January, February or March. So around the time of the super bowl we'll see what direction the housing market is going to take. But until then, I think we're going to be in a limbo. There's macro uncertainty just around the whole economy. We've seen some high end demand take a hit just because the stock market has been volatile. So people have really been worried. And when people get worried, they sometimes don't take that 30 year bet on a new home.
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B
No, of course they would not. It makes perfect sense, I guess, at this point. Glenn, what exactly would you need to see in the coming months that would get you saying that maybe buyers and sellers can get more comfortable? It's easy to say interest rates have to be lower, but it maybe isn't that simple.
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H
Well, lower interest rates will always help, especially if rates drop below 6, which is always possible. But I think the other factor is just home prices. So we have had a correction, without a correction where sales Volume is down as much as 50% in some markets, but prices are about the same. And so sellers are looking for some kind of indication that they aren't going to be able to get the price that they want. That is the only reason that they will invest more in repairs or drop the list price. And meanwhile, buyers think that time is on their side, that if we wait until the spring, these buyers will get a better deal. So that's why there's a standoff right now. If there's no change in home prices but the economy remains uncertain, I think we're going to see low sales volume because sellers are going to hope for the best and buyers are going to.
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B
Wait for a better deal. Glenn, you've also got a very interesting bird's eye view. The data that you collect across home listings gives you a unique view into what's happening with individual pockets of the housing market. So where exactly are the cold spots right now? Where are people pulling the most listings and where exactly are we still seeing a lot more activity on that relative basis? Geographically speaking, the cold spots are the hotspots.
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H
So in places like Florida, where the weather is nice and people were moving like crazy during the pandemic, we now see that more than 70% of listings are stale. Where there has been the sharpest increase has been in the Washington D.C. area, probably because of doge and uncertainty over federal jobs. Many people there are trying to figure out what to do because they can't sell their house and they can't lower the price. If they lower the price, they're not going to be able to pay back the mortgage. So couple of spots where people are really in a jam. But I'd say Texas and Florida are where we saw the biggest run up and now we see the most stale listings.
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B
And then Glenn, before we let you go, how about the people in certain areas that can expect to see maybe a very decent or heating up market? Where would we expect to see some of those places start to pop up in that spring selling season?
- [28:52]
H
Well, the Midwest is still where it's at just because that's where homes are the most affordable. So buyers just literally can't buy the house even if they wanted to in many parts of the country. So in the Midwest, Detroit, Pittsburgh, if you want to count that as the Midwest, Chicago, the housing market is much better just because incomes allow people to be able to afford the mortgage. So that's the one spot where people are stepping up and still making offers. But we'll see how long that lasts. Right now I think that home prices still, you really have to have some kind of change or the economy has to get better. Otherwise this standoff will continue.
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All right. A lot of variables at play. Glenn Kelman, thank you very much, sir. And happy Thanksgiving to you and yours. Take care. You got it. All right. Coming up on the show, AI is changing the way people do homework or plan their trips. It's also now changing how they shop at home or elsewhere. AI's impact on retail and the company seeing some of the biggest payoffs coming up next. And speaking of retail, consumer discretionary is one of the best performing sectors so far this week. We're talking Ralph Lauren, Best Buy, Lululemon and Chipotle among the big leaders so far week to date. The Exchange is back after this. Welcome back to the exchange. The Black Friday deals are already rolling out. Arguably they have been for months now. And this year, an increasing number of people are turning to AI for their gifts to giving help. Julia Borson joins us now with the numbers and the state of play for AI in retail. Julia?
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Well, that's right. AI is taking over gift research and shopping. More than three quarters of shoppers say they plan to use AI for assistance with holiday shopping. That's up from 40% last year. And Adobe forecast that traffic directed to retail sites from AI platforms will increase 520% from the last holiday season. Now, just in time for the holidays, the chat bots are competing by rolling out new tools to enable purchases within their platform so users never have to click away. OpenAI just struck partnerships with PayPal, Walmart, Etsy, Shopify, Target to make it easier for users to buy products within its app. And OpenAI says it will take a small fee from purchases. Meanwhile, Google's Gemini has new tools to make it easier to find and purchase gifts, including AI powered virtual. Try on the ability to track prices and then even let Google complete a purchase for you. And then for people who want to shop in person, Gemini can actually call stores to see if certain items are in stock. AI search tool Perplexity is also getting into this battle, announcing a free Agentix shopping tool in partnership with PayPal so users can purchase items from more than 5,000 merchants directly through Perplexity. Now, these AI searches aren't just driving traffic. Salesforce projects that and AI agents could account for 21% of all global holiday orders this year. That would be worth $263 billion in sales. So we'll have to wait and see how this all adds up.
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B
All right. So this is very, I mean, predictably maybe the early stages and the early evidence that we are seeing for this kind of a gentic AI revolution that's happening. So what exactly, Julie, does this mean for the brands and their relationships with customers, whether they be DTC through wholesale channels, retail channels, what exactly is that dynamic look like going forward?
- [32:20]
F
Well, as you know, Dom, brands love it when their customers have loyalty and go directly to their website to buy something because year after year they know they're going to find that gift on J. Crew.com or they're going to go to Nordstrom.com and they want that brand loyalty. Now, what's interesting here is if you're dealing with an AI agent, it kind of gets rid of brand loyalty. So we're seeing brands want to own that relationship with customers and want to whether it's text you and tell you they're having a sale or invite you to log in so they can have all of your information, brands really want to make sure that this agentic shopping trend does not mean that they lose that direct relationship with customers and all that data and all of those purchases that come with it. So it's something that brands are watching with concern and skepticism.
- [33:08]
B
All right, Julia Borson with AI and Retail. Thank you very much for that. Happy Thanksgiving. Our next guest has also recently published a report on that topic and found that while AI is indeed going mainstream, many shoppers preferred that more personal approach, as Julia alluded to when it comes to things like shopping and gifting. So joining me now to discuss this is Shika Jain. She's the lead partner for consumer and retail over at Simon Kucher. This is interesting. Again, the whole idea of agentic AI changing the paradigm by which we shop and spend money, is it going to be revolutionary this holiday season? And if not this holiday season, when does it become really full steam?
- [33:51]
G
Thanks for having me on the show, dom. So Simon Kutcher's seventh annual holiday shopping report that surveyed 3,000 consumers found that 54%, so slightly lower number than the one we just saw of consumers will be using AI for this holiday, for this upcoming holiday shopping season, similar use cases will be looking for product reviews and comparisons, searching for the best prices, tracking deals and so on, and also generating gift ideas for others. So among the 46% that said they won't be using it, it is because of that human touch element. They want to be responsible for the personalization aspect of gifting, which is meant to be more of a connection and relationship thing. The other reasons why consumers may not be using AI is because they don't trust it. The recommendations or they don't know how to use AI. But 2025 is the year where AI has gone mainstream and tied to the Q4 holiday shopping season.
- [34:54]
B
Shikha, just how much are demographic shifts and demographic nuances responsible for some of those statistics that you just cited? The people who trust it don't trust it. The people who know how to use it don't know how to use it. How does it break down by, say, age group or by generation or by cultural background? Are there any details about how that plays out?
- [35:15]
G
So, similar to all technology, younger people tend to be more adopting and have affinity towards newer tech. So we do find that Gen Z and Millennials are the ones who will be more open to using AI this season, whereas Gen X and Baby Boomers are a little less likely to be using AI this upcoming season. So that tends to be a trend that holds no matter what what it is. But again, a lot of even younger people we are finding are saying that that loss of that human touch, that human element, is what's preventing them from using AI so frequently and for almost every use case for this upcoming holiday.
- [35:57]
B
All right, Shikha, let's go a little bit more macro on this right now. AI aside, let's talk a little bit about the shopping trends that we might expect to see. Do you expect that people will spend more or less money this holiday season? Deloitte had a report earlier this week that looked at maybe a 10% drop in consumer spending over the same period last year for the holiday season. What's your expectation?
- [36:20]
G
So expectations, because we're in such a turbulent and volatile macro environment, are all over the place. We are actually finding that it's going to be a modest increase in terms of holiday shopping, up by roughly 6%, which translates roughly into $1,000 80 for consumers spending on average. However, again, a lot. Millennials are the ones that are boosting this number. They're planning to shop up by 14%, whereas Gen Z is going to be down to flat. Now, this isn't because that due to people are buying more, it's just that due to tariffs and price increases, they're going to be spending more. So it's only natural that they will have to shell out more money, but they might be gifting and buying a lot less. That is what I think will continue to impact the trends going forward, especially due to tariffs. Tariffs.
- [37:13]
B
All right, and then before we let you go, how much do tariffs play into this? How much are they in the kind of shopper psyche at this point. And will it have an effect on buying patterns in this holiday season?
- [37:25]
G
Yes, we saw that in the summer. So tariffs have had a continued impact on consumer shopping behavior. They in fact, have caught onto the fact that price increases are due to tariffs. And so many of them did shopping in the summer during Fourth of July sales, sales during Labor Day sales and back to school sales. In order to pull forward their spend. They're planning to participate a lot less in the upcoming Black Friday and Cyber Monday sales because of the anticipation of higher prices. Retailers are going to have to combat this by promoting deeper. So we might see bigger discounts than typical. But tariffs I think are not just for the upcoming holiday season but will continue to impact purchasing behavior. Well, until to 2026.
- [38:11]
B
All right. And she got one final point before we let you go here for the holidays. What's going to be the hot stuff in consumers shopping lists this year? Where exactly are people going to go and spend their money?
- [38:24]
G
As usual, we're seeing an increase in the trend away from goods and more into experiences. So again, younger consumers wanting to spend for outside of the home activities. Lots of travel. Gift cards will be high. Dining experiences will be big on the list. Millennials who tend to be homeowners will be looking for appliances as well as just furniture and so on. But I think some of the typical categories like toys will be big, decor will be big. Skincare and beauty will also continue to be big on the list.
- [39:00]
B
All right, Simon Kutcher, Shika Jain, thank you very much. And have a happy Thanksgiving.
- [39:05]
G
You as well. Thanks for having me, Don.
- [39:06]
B
Alright, coming up on the show, shares of the big three airlines climbing since the end of the government shutdown just two weeks ago. Delta's up more than 11% in that span. We're going to dig into what the biggest travel weekend of the year means for the carriers coming up next. Speaking of experiences and travel, the Exchange will be right back. Welcome back to the Exchange. A record number of Americans are expected to take to the skies this Thanksgiving holiday week. Phil LeBeau joins us now with the details and what it all means for the airlines, Phil?
- [39:37]
I
Well, it's critical, Dom, if they have a good Thanksgiving week that portends that the holiday season, provided we don't see a big snowstorm or something come through and really disrupt things as we get closer to Christmas, provided that doesn't happen and you have a good week this week. Q4 should be good. Take a look at what we're seeing in terms of the airports around the country. 31 million people will be flying today. That is a record, up about 1% compared to last year. Sunday is the busiest day, though, yesterday. We'll give Sunday a run for the money. And we got through yesterday in pretty good shape. That's according to Airlines for America. The misery map from FlightAware is always something that we check on a day like today when so many people are flying. Yes, we see some delays at o'.
- [40:19]
A
Hare.
- [40:19]
I
They had a ground stop earlier today, but now they're on a delayed flight schedule and that's probably the worst. You see a little bit of delays. Northeast as well, total cancellations. It's just 59 flights so far today. That is well within a normal range for this time of year for the airlines. Take a look at the airlines, the major ones, American, Delta, Southwest and United. And remember, these guys never pulled their guidance when the government shutdown was going on. And the estimated impact was about 150 to 200 million dollars. Afterwards, there are a lot of analysts wondering, will there be a change in guidance that hasn't happened. And if it's a good week this week, odds are they won't have to change their guidance as we move into early December. And also as you take a look at the airline index, keep in mind that December is expected to be relatively strong. Bottom line is this, Dom. A lot of people thought that when the government shutdown happened, perhaps people would postpone trips or cancel trips for the holidays. That hasn't happened. The leisure market has largely stayed in place for the airlines. Yes, a lot of corporate travel went away, and that's probably not going to be made up. But in terms of people who said, I'm going here with my family, they kept with their plans and they continued either to stay with those plans or they said, we're going to go ahead and book.
- [41:38]
B
Phil, what are the expectations? Given the backdrop you just laid out? What are the expectations from the industry about what travel demand from leisure and business looks like in 2026? Will it remain healthy in the wake of the government shutdown?
- [41:52]
I
That's the expectation. But remember, we have another potential shutdown at the end of January. Now, who knows what happens, Dom, if we get past that and there's no shutdown and you don't see the air traffic controllers once again in a situation where they're not being paid but expected to go to work, then I think you look at 26 as potentially a better year than 25. At least that's what the view is right now.
- [42:17]
B
All right, Phil LeBeau with the Thanksgiving travel picture thank you very much. Happy Thanksgiving, sir.
- [42:23]
I
You too.
- [42:23]
B
All right. Still ahead on the show, Nvidia is higher today, but down nearly 11% in the month of November. And it could be facing more headwinds as a new Chinese chip maker readies to go public, putting even more pressure on the tech giant. We'll dig into that story coming up next. Keep it right here. Welcome back to the Exchange. China's first ever domestic GPU maker, More Threads is readying a public debut in Shanghai. Now. It was founded by former Nvidia employees now trying to take on the chip giant itself. Deirdre Bosa has more in today's tech check. Deirdre, this is all about GPUs and just what it can do in the domestic Chinese market.
- [43:07]
E
Yeah, and it's about a story I know we're going to talk to. As well as securing China, securing its own supply for Nvidia in particular, this could also be a two front challenge. Google's TPU's at home and then China's stack abroad. It's telling that China's hottest IPO this year is a GPU startup at the center of Beijing's push to break free from in video and American technology. Now More Threads IPO, which is 4,100 times oversubscribed in Shanghai. It sits inside of this larger trend. Beijing went from hoarding Nvidia chips to blocking some of its biggest technology companies from using them in new data centers. So that means forcing them to shift budget and engineers to domestic chips. Now there's more Threads, but there's also Huawei and Camerocon and rising startups like Byron and Medax. They're building different pieces of a system all designed to make the country less dependent on American chips. Now, to be sure, there's still a long way to go. China's industry is fragmented, it is subsidy dependent and they still lag American chips by generations. Yet Nvidia itself is warning investors to pay attention, saying that export controls are pushing Chinese companies to adopt domestic accelerators. And even if those aren't as performative today, they're good enough in many cases to start replacing some US Systems inside of China and potentially at other countries that can't afford or can't get access to cutting edge GPUs. Dom.
- [44:28]
B
All right, Deirdre, just how long will it be before the supply chains are really shift? I mean, you said generations behind. So this isn't realistic and say like the next year or two?
- [44:37]
E
No, I don't think so. Depends. I mean, I think that Progress has probably surpassed what many experts thought it could do. So I think it's moving quicker than many had thought because Beijing is pouring so many resources and focus and capital into this push. We'll see. I don't know how long it takes to catch up in terms of generations, but it's not just that they need to catch up on the whole ecosystem.
- [44:59]
B
Right.
- [44:59]
E
Part of what makes Nvidia so valuable is that whole ecosystem. The Cuda software, the hardware, everything that goes along with that. Nvidia is trying to do this with different companies. So it could take five years, it could take 10 years. They may never get there, but they're certainly trying everything they can.
- [45:15]
B
All right, speaking of that kind of segmentation of US And China supply chains, domestic manufacturers. Before you go, Deirdre. Alibaba shares are on the move today following a Bloomberg report that says the Pentagon is suggesting putting the company on a list for helping the Chinese military. What do we know about that story?
- [45:35]
E
So this really follows the pattern that I have just been talking about. Chinese, the industry, Beijing, it's concerned about being restricted to US Tech, and it knows that it has to rely and build up its own AI champions like an Alibaba. So the US Is increasingly viewing China's entire tech stack as strategically aligned with the Communist Party, and that's raising concern in Washington, potentially putting the likes of Alibaba and Baidu and BYD on a list that would restrict them from selling or even operating here in the United States. Now, this is interesting because we're not just talking about Huawei anymore. Huawei is a private company. Concerns have long swirled about its connections to the Communist Party. We're talking about Alibaba and Baidu. These are publicly listed companies that have quarterly earnings and in the case of Alibaba, has American board members. So it's a really interesting development for sure. And we'll see see if they actually make that list.
- [46:31]
B
All right, Deirdre Bosa with today's tech check. Thank you very much for that. Have a happy Thanksgiving.
- [46:36]
E
You, too.
- [46:37]
B
All right, that does it for us right now. Thank you for watching. The exchange markets right now are solidly bid. Not far away from their session highs so far. It's been a good week. We'll see if it sticks around. Happy Thanksgiving, everyone. Power lunch starts right now.
- [46:49]
E
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