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Dotcom Do-Over?, Nadella Takes the Stand, and The Sleeper in Semis 5/11/26
00:44:20
The run-up in tech has Dan Niles remembering like it’s 1999, but he says the rally “has at least one more great year.” Microsoft’s Satya Nadella takes the stand in the Musk vs. Altman trial. Plus, the under-the-radar chip company UBS says is “the fastest grower” in the space.
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Kelly Evans
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Vahan Janjigian
Whoa.
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- [00:07]
Dan Niles
I did it.
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Kelly Evans
You're listening to the Exchange. Here's today's show. Leslie, thank you very much and welcome to the Exchange. I'm Kelly Evans. A China meeting, a Fed chair confirmation vote and inflation data. It's a big week for the markets, but it's tech as you can see, that continues to dominate as we hit fresh highs, new highs, its highs every day. The S and P, the Nasdaq up about 210 of a percent today. Chip stocks have been leading the gains with intel the poster child up today and up 103% in just a month. The semi ETF is up 50% since the March lows. Some on the street say it's starting to feel like the dot com bubble. And our first guest agrees. Joining us at our opening exchange is Dan Niles, the founder and portfolio manager at Niles Investment Management. Dan, come on. The earnings alone, this is not pets.com when everything, you know had a couple dollars of cash flow and was tripling overnight. Do you really see the similarities between the behavior of these stocks now and then?
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Dan Niles
Absolutely. But it doesn't mean this can't continue. And that's the analogy I'd like to make because if you go back to the Internet build out. So you had the Netscape Navigator come out at the end of 1994 and the NASDAQ over the next three years was up 109%. You get to year four though, and NASDAQ was up 40%. And then in year five in 1999 it was up 86. So you look at when ChatGPT came out at the end of 2022 and you're three years into this, NASDAQ is up 122%. So first three years of the Internet was up 109. And I think this is going to be a great year as well. And the point is that you had two more great years back during that period of the Internet build out. And I think you at least have one more great year this year. So you can be in a bubble but still have it inflate a lot more before you get to the end of that.
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Kelly Evans
What caused it. And I, I will add as well, I mean I have only vague memories of it, but they were enough to know. I mean back in the era of magazines, right, you'd get these magazines and you'd have these cover stories of all these high flying companies and everybody was day trading. It was a total phenomenon. I'm not sure we're there yet with the public right now.
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Dan Niles
Oh, absolutely not. But more important than that is what's going on fundamentally. Back then it was just Internet traffic doubling every quarter or so and that kind of kept it going. This time you had a very major event happen at the beginning of this year. And that's basically Openclaw got finalized on January 30th. And so that kind of ushered in this whole agentic AI thing where before Kelly, right. You would ask your ChatGPT or Gemini question and it would give you an answer. So that's just chat based AI with agentic you may say, hey, go to the SEC website, pull this down, go to cnbc, pull this down, go to whatever website, pull down some stock information and then put it all in a spreadsheet. And I want you to conform it this way. That takes 10 to 100 times more compute power to have that happen. And you can see it in the token generation data where the two months prior to OpenClaw being finalized, token growth was about 20% over the prior two months. In the two months after OpenClaw was finalized, the growth was over 120%. And so you should see at least strong growth in my opinion through the beginning of next year. And then you're going to lap those harder comparisons and then we'll see what happens. But that's one major difference, at least between now and I think year four and five of the Internet is you have this major step change in token generation that you need right now.
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Kelly Evans
Remind me, what was it that kind of pulled the rug out from under the tech trade back it was what, March of 2000 that things peaked. Do you remember if there was a story or a data point?
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Dan Niles
Oh, yeah, no, there, there's a hundred percent, like, well, you got to remember what's. What kicked the bubble off. Believe it or not, in 1998, the Fed was cutting rates. So easy money kind of kept going. And then in 1999, even though the Fed ostensibly started to raise rates starting in June, remember there was this thing called the Y2K scare, right? You were going to get to 2000, computers were going to crash around the world. So the Fed was flooding the markets with money underneath this. And so M2 money supply was up over 10%. And so that kept lifting that. Then you got into 2000. Oil prices, by the way, spiked. And then the Fed started withdrawing that liquidity because computer systems did not crash on January 1st of 2000. And so you take away those two things, Internet traffic went from doubling every three months to doubling every year, which isn't bad. But that slowdown was not what was built into the valuations. And the NASDAQ went back down to where it was in the middle of 1996, declining 86% over two and a half years.
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Kelly Evans
And then we.
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Dan Niles
That's the other side of it.
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Kelly Evans
Let's put maybe back up on the screen the market caps of Nvidia, all the major ones. I mean, Apple's market cap would have been way higher if it weren't for all the buybacks. It's eating itself. I like to joke. It's an Apple reference anyway. We are talking about 5.3 trillion. So there's two ways to look at this for a company like Nvidia, Dan. One is, you know, the earnings, the revenue. I mean, these numbers are astronomical. It justifies those valuations. But the other way to the other question I always wonder about is, is it going to be a $10 trillion company? Is it going to be a $6 trillion? At what point does it start to level out here?
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Dan Niles
Well, you started this, I think, by saying, wow, Intel's had a great month, et cetera. And intel at one point in 2000 was the second most valuable company in the world behind ExxonMobil. I think at that time it just got back to those levels this year. So it took you, what's that, 26 years to get back to those prior levels. So the thing is that the valuations right now are not as crazy as they were in 2000. Right. Cisco traded at 150 times PE, which was the most valuable company in the world at one point at its peak, Nvidia is in the 20s. So it's very different valuation set up right now. Which is why I think you can see because of agentic AI, I mean that's real. So step back from this for a second. If you look at Anthropic and OpenAI at the beginning of last year their combined revenues on an annualized run rate basis was 7 billion. If you look at the most recent disclosures by both of them, that's at closer to 70 billion. So you've seen this massive step up and especially this year where OpenAI went from, I think it was 9 billion, sorry, anthropic went from 9 billion at the end of 2025 to 45 billion in like four months. You're seeing this big uptake in Agentic and that's why I think you're going to see this continuing to be a strong year. Now if you're moving from CPUs from GPUs to CPUs which is what's happening with the Gentex, then the big stock performers may not be GPUs which Nvidia has, but CPUs and we wrote about this at the end of March that an AMD or an intel or you pick your favorite, those guys provide those, right? Because you're going from eight GPUs to one CPU to now some people thinking get to parity or better because you are doing all of those different things versus just asking a question.
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Kelly Evans
It's fascinating and I love the there's no better story of 2026 than intel taking chips. It was going to completely chunk and repurposing them. Now to kind of catch up with this last question, what's the portfolio look like right now then? I think the last time we checked in maybe Apple was, I'm sorry, Alphabet was still your biggest, your favorite of the Mag 7. Don't know if that's still true. What's the state of play for the Dan Niles portfolio right now?
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Dan Niles
Well, the way I look at things is cash should be a big part of portfolio. On March 31st we were like history may not repeat itself but it often rhymes, saying it was time to get aggressive. If you look at things now to your point Kelly, would it surprise me to see the semiconductor index down 10 to 15% in short order? Absolutely not. But I think through year end stocks will be higher. Google continues to be my favorite with the full stack there. But I'm also looking at areas outside of tech to put more money to work given the Big ramp up in a lot of these names. And so yeah, we've been less bullish as you've gotten to these levels where people are saying things like, oh, semiconductors aren't cyclical anymore, which is gonna prove to be a very bad statement in a few years. So that's kind of how I'm thinking about the world right now. But why such a semis are higher by year end? Absolutely.
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Kelly Evans
Why such a big part in cash? Why not? I mean, is that because you want, in anticipation of a correction to have a pile with which to buy in or is that because you, why not just stay fully invested in the S and P as its own kind of hedge?
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Dan Niles
Well, because I'm looking for good risk adjusted returns. And the thing that bothers the heck out of me right now is oil's sitting in the mid-90s, so it's near its highs or it got to a high point about a month ago. You got treasury yields at a year to date high, roughly, or close to that. And then you got the stock market at an all time record high. One of those things is wrong. Either the stock market's wrong or bond yields and oil prices are wrong. And that's what concerns me. And. Right, and you can look at today, right, the stock market's hitting another all time record high, but bond yields are going up, confirming the move higher in oil prices. And so the risk reward here is a lot different than at the end of March when I thought, hey, we're in pretty good shape to think things are going to improve. So that's really more what it is. And short term corrections can be absolutely vicious. Right. We saw that when DEEPSEA came out, we saw that earlier this year with the Iran war, et cetera. And so it's just risk versus reward and it's not the same as it was back at the end of March.
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Kelly Evans
Well, point well made, Dan, thanks very much. Really appreciate you joining us again. Good to see you, Dan. Our next guest has been trimming his semi stocks, including intel along with Apple. He says inflation is becoming a bigger problem and that will make it harder for the Fed to do a rate cut. Let's continue the discussion with Vahan Janjigian now. He's the Chief Investment Officer at Greenwich Wealth Management. Don't know if you caught much of that, Vahan, or where you would differ with Dan Niles.
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Vahan Janjigian
No, I did catch that and I thought that was a very good interview. And I think I'm actually thinking along the same lines. I do think the rally could continue and as he pointed out, as we saw in the 1990s, many people felt that the stock market was overvalued and it kept going higher and higher. And I think the same thing could happen here. I have been doing some trimming. It's not because I've turned negative on these stocks. But you know, when you're running a portfolio, when certain names start becoming, you know, too big in that portfolio because they're running up so much, then it makes sense to take some profits and trim that a little bit.
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Kelly Evans
And you do have a lot of position. Tell me where else you're exposed to the whole AI build out because it sounds like you still have a number of semi names and perhaps other areas of the AI infrastructure that you're holding onto.
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Vahan Janjigian
Well, you know, most of my exposure is through, through ETFs. You know, like for example, I do have the SMH and that's another name I recently trimming a little bit again because, you know, the smh, the biggest component or the biggest stock in The SMH is Nvidia, which is about 20% of that ETF. But Nvidia is also the biggest component in the spy and it's the biggest component in the QQQ and it's even in the DIA, the ETF that tracks the DAO. So, you know, I need to make sure I'm not getting too much exposure to these AI names. I do own some of them individually as well, so I have to make sure that I trim when they run up so much.
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Kelly Evans
Now totally away from all of that. And maybe before I ask about, you know, buying shares of a Chinese solar company and whether maybe that's just a one off, but so broadly speaking, do you think that these inflation concerns you talked about when, when Dan Niles was saying you've got oil in the mid-90s, treasuries at a year to day high, stocks at all time highs. Do you agree with him that that pattern isn't sustainable? Because I'm starting to wonder if it is. If the market's telling you that yeah, it can handle oil in the mid-90s and yeah, it can handle these treasury levels. To talk about the 90s, the 10 years and the sixes.
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Vahan Janjigian
Well, it's not just oil being in the 90s that's a problem. It's the fact that oil is not getting out of the Strait of Hormuz. And it's not just oil, it's also, you know, fertilizer and other products as well. And you know, many economists believe that, you know, we can't really sustain this for a prolonged period of time, so eventually it'll start affecting economic growth. Whether it affects the big AI names or not is a different question. I mean, right now they seem to be pretty immune to what's going on in the global economy as far as geopolitics or energy prices go. But yeah, in the long run I would say it would be inconsistent to have a stock market at all time highs when interest rates are going up, when energy prices are going up. I mean, that's a concern, especially now. One of my major concerns is the amount of debt the US government has in how it's costing more and more to service that debt at a time when foreign governments seem to be diversifying away from U.S. debt. So the question comes who will step in and buy that debt if these governments are not buying as much as they used to? Individual investors, perhaps, Institutional investors, perhaps. But I think you'd have to see interest rates go much higher for that to happen. When the 10 year gets above 5%, I think that's a level where investors might say, okay, now it makes sense to add some bonds to my portfolio. But remember, there's always a trade off between stocks and bonds, so they might have to sell some equities in order to buy bonds. And higher interest rates in general are not good for stocks because they reduce the present value of a discounted cash flow analysis. So I could see interest rates going higher because we do have inflation and because there are fewer buyers of the debt right now.
- [15:41]
Kelly Evans
Right. Although again, we saw that pattern in the late 90s. Long end rows, stocks rows quickly. You bought Xovr, which is an ETF that has big tech names, even though as you mentioned, you don't want too much overlap there. It also has, you say some exposure to SpaceX. So it sounds like you're positive on that IPO that's coming.
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Vahan Janjigian
Well, yes, I want to have some exposure to that ipo. A lot of my clients have actually expressed interest in that. So I wanted to use an ETF that gets me some exposure to a SpaceX IPO right now. But as you pointed out, it does have those big, big tech names in it as well, which is another reason why I did some trimming in the
- [16:15]
Kelly Evans
other areas, although it's down year to date. That doesn't bother you?
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Vahan Janjigian
No, it doesn't bother me. I think, you know, it'll do perfectly fine from here on out.
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Kelly Evans
All right, Vahan, we'll circle back in a little while. Thanks so much for this afternoon. We appreciate it Vahan Jen Jigian from Greenwich Wealth Management. We'll take a short break and then we're counting down to this week's high stakes summit between President Trump and Chinese President Xi. A look at what's on the agenda, who's attending and why now. Plus, here's your first look at today's mystery chart. A company trying to corner one area of the chip market and coming off its best week on record after a blowout earnings report. We'll speak with the CEO coming up on the Exchange.
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Kelly Evans
It's tough timing for Washington as hopes of a ceasefire in Iran are on, quote, life support. So what is on the agenda and what is the administration hoping to achieve? Megan Casella is in Washington with the details and the growing guest list.
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Megan Casella
Megan Kelly, that's right, two of the most consequential challenges of Trump's presidency moving forward. Simultaneously this week, US Iran negotiations hitting a stalemate as the president gears up to head to China. So President Trump is set to arrive in Beijing Wednesday morning, Washington time. He'll have two full days of events with President Xi, and the agenda is broad. It's expected to cover trade, AI, export controls, Taiwan, and the Iran war. So the President this morning saying he would be talking with President Xi about whether the US should still be supplementing weapons to Taiwan. But a senior administration official has said not to expect any changes in US Policy on that front. Iran, though, is likely to dominate the discussions. The President is expected to pressure President Xi to put pressure on Iran, potentially to try to get them to agree to some sort of a deal. Now, that's according to the same senior administration official who also said that China's support for the Iranian regime, including through weapons exports, will be addressed as well. And then, Kelly, as for that guest list, a White House official shared with me this morning A list of 17 CEOs and top business executives who they say will be traveling to China as part of the US Delegation. Big names there include Apple's Tim Cook, Tesla's Elon Musk, David Solomon of Goldman Sachs, Larry Culp of GE Aerospace, Meta, MasterCard, Micron, and Qualcomm, among others, all on the White House's list as well.
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Everpure Announcer
Kelly?
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Kelly Evans
All right, Megan, thank you for now. We appreciate it. And our next guest says while the meeting could ease tensions between the US And China, there are major barriers to reaching a more ambitious deal. Tobin Marcus is head of policy and politics at Wolff Research. What. What is a near term win look like? Tobin, welcome.
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Tobin Marcus
Thanks for having me. So I think that, for the most part, this deal is going to serve to reinforce and extend the detente that's been in place since the Busan truce last October, where stabilizing the relationship, I think emerged as a really important priority. Once it became clear that there was a strong mutually assured destruction dynamic, that the Chinese really did have some ability to threaten the U.S. economy through export controls on rare earths, despite the administration's early bravado that China had no real way to retaliate against us. So I think extending that truce is most of what's going to come out of this. There will be some incremental deliverables, some purchase commitments. They'll talk about some of these thornier issues like Iran and AI, but my expectations are quite low for actual breakthroughs and deliverables on some of those more challenging issues.
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Kelly Evans
Let's go back to the Busan truce and what exactly that truce entailed.
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Tobin Marcus
Yeah, it, we got some tariff easing, we got a reduction of the, the, what were then the IEBA tariffs from 20% to 10%, on top of the tariffs in place from Trump's first term. And I think most importantly, we got a reciprocal de escalation of export controls. The Chinese agreed to roll back or pause the rare earth export restrictions that they had put in place. And in return, the US paused this, what was called the 50% rule, a rule that expanded dramatically the scope of entities that were subject to US Entity level restrictions on Chinese entities of concern, as well as our restrictions on our fees on Chinese ships and so forth. So it was sort of a show of both sides saying we each have some leverage and we're going to agree not to use that for now to stabilize things.
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Kelly Evans
So then what would a bigger. You see on some level, basically an extension of that status quo. What would a bigger win look like?
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Tobin Marcus
The most commonly speculated version of a bigger, more positive sum deal has been something that's centered on Chinese investment pledges into the US so going back to at least the 2024 campaign, there was a view that, well, you know, maybe Trump, given his tough positioning on China, is uniquely able to cut a deal that no one else could sell politically in the US where we invite a bunch of Chinese investment into the U.S. and so you imagine, you know, China setting up EV factories in the U.S. for instance, that could simultaneously reduce the trade deficit, create US jobs. The idea would be that that's kind of a win, win, win. I've always been skeptical of that notion. I think there are real security concerns about allowing Chinese investment, even in industries like autos, much less, you know, genuinely sensitive areas that tie to our military supply chains. And politically, it's not clear how big of a win that would be. It's nice to create jobs, but it's not clear to me that the people of Michigan and Wisconsin would welcome their new BYD overlords in that kind of configuration. So we've never seen something like that to date, and I don't think that we will at this summit either.
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Kelly Evans
I definitely think you've put your finger right on the issue, which ultimately is going to be over Chinese EVs, whether it's this year or some year in the future, it's coming. Totally separate from all of this, then, is what do you expect with Warsh's kind of glide path, as you call it, towards becoming Fed Chair?
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Tobin Marcus
Yeah, it's always been clear that once they clear out the, the procedural objections from Senator Tillis related to that investigation into outgoing Chair Powell, he would have no trouble getting confirmed on the merits. He has plenty of support among Republicans that no one's ever raised any questions about his qualifications on the Republican side, we'll see if he gets Democratic votes, but that's kind of a curiosity. He doesn't need them to get there. So he will be confirmed by the end of this week and then he'll be facing a divided FOMC with some really tough questions about how to approach a situation defined by years of above trend inflation or above target inflation, an energy price shock. And in all likelihood, I think that they're going to just remain on pause and those internal disagreements that we saw in the descents of the last meeting are going to be challenging to resolve.
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Kelly Evans
And he's got his next meeting coming up in about a month, I think. June 17th, something like that. So we'll see him then at the podium. Unless he changes that between now and then. But I don't think he would.
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Tobin Marcus
Yes, exactly. Probably his very first press conference will go forward as usual and then we'll see after that whether his indication that press conferences may not need to be quite so frequent actually gets.
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Kelly Evans
By the way, I thought it was interesting what Powell said on his way out, that the reason why they started doing a press conference every time was because they had started only changing policy when there was also going to be, you know, a press conference and the dot plot and all that. And so it almost sounded like without intending to, the Fed was depriving themselves of the opportunity to act at every meeting. And I thought that was a fascinating piece of insight.
- [24:53]
Tobin Marcus
Yeah, yeah. There's certainly reasons to want more communication rather than less historically, but I think Warsh's view on this makes some sense also.
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Kelly Evans
All right, Tobin, thanks for now. Appreciate it. Tobin Marcus with Wolf Research. Coming up, Alphabet CEO Satya Nadella taking the stand in the Elon Musk versus Sam Altman trial. We'll tell you what he's saying and what it means for the rest of the trial. Coming up.
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- [26:52]
Kelly Evans
Soft CEO Satya Nadella taking the stand in the Musk vs Altman trial Kate Rooney has more in today's Tech chat.
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Kate Rooney
Kate hey there Kelly. So Satya Nadella is on the witness stand as we speak speak. He has been trying this morning to frame Microsoft as a neutral business partner in this entire OpenAI vs Elon Musk lawsuit. Microsoft is a co defendant and denies aiding what Musk says is OpenAI's alleged breach. But charitable trust? It all goes back Kelly, to OpenAI's founding as a nonprofit. So Nadella did talk about the decision to invest about a billion dollars in OpenAI and to compete with Google. At the time that was the biggest impetus for this, according to Nadella. The major challenge he talks about is computing power is still a topic today. Nadella says that partnership was a win win. But they did have the realization at one point that both sides had this realization. I should say that it was going to require significant capital infusion. Still, Nadella said that this was in service of the nonprofit. His understanding at the time has always been he said the nonprofit approved the creation of a for profit entity so that they could continue to pursue the mission. That has been something that Musk has pushed back on, that they abandoned the mission. He Nadella rather addresses Sam Altman's firing by the board a few years ago. Possibility of at one point having Sam Altman actually join Microsoft as well. He went on to say he was pretty surprised at the time when Sam Altman was fired by the board and then he did need to make sure that Microsoft's customers were not affected. He said that they weren't affected at the time. Nadella testified that Musk also never reached out to him at any point to express concerns about this and the Microsoft Elon Musk also has Nadella's phone number. According to the CEO. It does speak to just how Reliant, OpenAI and Microsoft were on each other in the early days. But Kelly, that has changed dramatically as we stand here today. OpenAI of course, has teamed up with Amazon. Microsoft has teamed up with rivalanthropic. Both have really diversified at this point.
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Kelly Evans
Kel, I think we just saw Greg Brockman walking in behind you there to that trial.
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Kate Rooney
There was some hustle behind me. I didn't want to look away, but I, I think that's right. Okay. We also saw Elliott Suskavar walk in, but I saw some commotion.
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Kelly Evans
I see OpenAI is also a better
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Kate Rooney
view than I do at this point.
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Kelly Evans
That is true. It's unfair. But they're on a separate note, they are launching this new deployment company to try to get clients to use AI more. Is that a sign of desperation? It's very well funded.
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Kate Rooney
Very well funded, Kelly. So it's interesting, Anthropic, I mentioned the rival has actually done something different. But it does speak to this effort by these AI giants to actually get private equity companies with all of their portfolio companies to deploy their technology. So with their portfolio companies, meaning they want their technology to be the one used in sort of the overall economy. But you mentioned it's well funded. It's a $4 billion investment buy. You've got TPG, you've got a lot of big private private equity firms. I think Bain is in this. You also had Goldman as a part of this, Walsh, Carson, Warbas, Pinkett, Robert Pincus, a ton of big PE names backing this. This was not in the release, Kelly, but it looks like according to Axios, there's also a minimum return, 17 and a half percent, almost guaranteed return. So it seems almost risk free for the PE firms to get in on this and for OpenAI strategic advantage to get ahead of Anthropic as they really try to race for enterprises here.
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Kelly Evans
That might be the most important thing about the 17% guaranteed return. Of course, the PE funds love it. But how they're going to meet those
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Kate Rooney
obligations, why not exactly for sure. Exactly. And then they can get their technology spread across the broader economy. So that seems to be the play here.
- [30:24]
Kelly Evans
All right, Kate, for now, thanks. Really appreciate it. Kate Rooney today. Let's get to Mackenzie Seagalos now for the CNBC news update. Mackenzie.
- [30:32]
Mackenzie Seagalos
Hey, Kelly. The US and China reportedly jointly arrested five suspects and seized a batch of drugs in a cross border smuggling and trafficking operation in early April. Authorities simultaneously carried out carried out the operations across two Chinese provinces in Florida and Nevada. According to Chinese state media. The US has not commented the announcement comes ahead of President Trump's high stakes summit with President XI later this week. Two Israeli soldiers will spend weeks in military prison for desecrating a Christian symbol in southern Lebanon. A photo of one of the soldiers putting a cigarette inside the mouth of a Virgin Mary statue was posted to social media and sparked widespread outrage. The soldier posing for the photo will serve a 21 day sentence while the one who photographed it will get 14 days. And Wordle is heading to primetime. NBC announced the popular Game is being made into a TV show that will air on the network next year and be hosted by today's show anchor Savannah Guthrie. The New York Times, which bought the game in 2022, will help develop the show and the Tonight shows. Jimmy Fallon will be its executive producer.
- [31:39]
Kelly Evans
Kelly, back to you. See, I'm not saying this because I'm part of NBC anymore. This is, that's just objectively a great idea. And this is all part of the upfronts we're going to talk more about in a few. But look, this is so exciting for TV again. I love it. Wordle to the rescue. Mackenzie Banks Coming up, take another look at our mystery chart. Up more than 40% since earnings last week. UBS saying the company now looks, quote, less like a concept concentrated Apple and Nvidia supplier and more like a diversified dealer to the entire industry. The shares are up 350% over the past year. We'll speak to the CEO next. No secret that the semis have been on a tear this year, but there's one name still relatively under the radar and it was our mystery chart. Shares of Cytime, a chip maker whose products act as the heartbeat of electronic Systems. They're up 140% year to date and Wall is taking notice. UBS calling it the fastest growing company in the sector, pointing to surging AI demand and not just from data centers. Joining me now for more is saitime CEO Rajesh Vashist. Rajesh, it's great to have you here. Welcome.
- [32:49]
Rajesh Vashist
Thank you so much for having me.
- [32:51]
Kelly Evans
Explain again, what does your company do?
- [32:54]
Rajesh Vashist
I know I get asked that a lot, don't I? Well, as you said, we're the heartbeat of all electronics. Without us, the heartbeat, the way the signals will fire isn't done as precisely. Saitime is in the business of precision timing and we are one of the leaders in this. We actually invented this category and we provide the full complement of oscillators, clocks and software and now resonators. So we have done really well in this market and we have pioneered this
- [33:21]
Kelly Evans
market, my kids would. They're obsessed with time and they're always looking from the microwave to the something to so. So does this. Is this a coordination problem? Tell me more. I'm fascinated.
- [33:32]
Tobin Marcus
Yeah.
- [33:32]
Rajesh Vashist
So what happens is that when you have a complex system, then say a gpu, a switch and optical module, they all need to know who is on first, essentially, who's going to fire, who's going to get on first and with what degree of precision, under what conditions. The conditions are heat, temperature, shock, vibration and Saitam products do really well under all of those conditions. That's what we are good at.
- [34:01]
Kelly Evans
Is someone going to buy you? Is someone else going to come in and say, oh, we can do this too?
- [34:07]
Rajesh Vashist
Well, people have tried to do it. You know, we were one of 10 companies, three large companies at that time, Maxim at that time, Silicon Labs at that time, IDT and five other startups. And we got started. I came to the company when it was a tiny little company, 30 people, no revenue. And here we are, 22 billion market cap and a wonderful IPO. And since then we've been up and to the right. So I think, I'd say we have so much technology mode, we have so much business modes that I think it would be great for people to try and people are trying, but I think we'll still continue to be first because we're just focused on this.
- [34:44]
Kelly Evans
Well, and you would know if you're first. No. So we were having this debate at the beginning of the show about whether it's like the dot com bubble or not. I don't know if you have direct experience in technology at that time, but what would you say? Is somebody sitting inside the AI ecosystem? Is this a bubble? Is it not?
- [35:01]
Rajesh Vashist
Well, I have to date myself and say that I've been doing this since 1984. This meaning technology and chips. So I was definitely in the middle of the bubble. My previous company, which we started, almost got acquired for hundreds of millions of dollars and then of course, it turned to ashes. That's a different story. But this one feels very, very different. This one is based on revenue, it's based on profitability, it's based on a very large set of customers that continue to do it. For example, we're connected to the hyperscalers, we're connected to the GPU, CPU people, we're connected to switch companies, we have system OEMs, we have 20 of the optical modules. And that's just in AI. We are much beyond that. We are in military, aerospace, defense, we're in Industrial, we're in automotive, we're even in consumer, we are in smartwatches, we're even in one of the very well known phones. So we're a very broad company. Diversity is the nature of the business we are at.
- [36:00]
Kelly Evans
It's fascinating because it's almost like if you know what time it is, it's because of you who I'm talking to right now and your company. So what I'm hearing you say is this is a real business and there's a real need for it out there. And I guess just to press the point a little bit about the bubble, are you seeing demand grow in a kind of exponential way and for how long is your visibility at this point?
- [36:22]
Rajesh Vashist
Well, we have two businesses, right. So in our AI business, data center business, we certainly see amazing triple digit growth for now eight successive quarters and we have guided that out in the future for the company. Total, we are seeing 80% growth now. Understand Kelly, that we are typically guiding to 25 to 30%. Last year we were at 60%. This year we're guiding to 80%. So definitely it's a bit of a rocket ship. But still our other businesses, the military, aerospace, defense, industrial, the consumer, the mobile, all of those are also growing at more than double digit. So what we see right now is we can see well into 26 and we think we are very solidly positioned for 27 and perhaps for beyond that too. So this is a very different business, a very different market and we're having a lot of fun leading it.
- [37:14]
Kelly Evans
That's fascinating. 1:12 PE and you know, if you'll come back on maybe we could talk more about that and you know, everything. But Rajesh, it's a fascinating look inside what's happening across the deployment of AI. Thanks so much for joining us today.
- [37:28]
Rajesh Vashist
Thank you so much Kelly.
- [37:29]
Kelly Evans
Really appreciate it. Thank you. Scitime CEO Rajesh Vashist. Coming up, sharesofmonday.com were initially soaring on earnings. They're only up about three and a half percent now. We'll talk about what's dampening investor enthusiasm next. Monday.com was soaring 26% pre market on strong results, a little less than 4% now. Sima Modi is here with more and seem I'm not sure if this is a story of what happened to change this move or if it's still a story about how software has been surprising to the upside.
- [38:02]
Seema Modi
Jury is still out. I think in regards to this specific move.
- [38:05]
Megan Casella
Kelly.
- [38:05]
Seema Modi
Analysts at Jefferies point to short covering as a big factor in today's move. But it's worth noting there were a lot of good nuggets. In Monday.com's quarterly report, it posted its biggest revenue beat in 15 quarters. It showed that it's moving away from a seat based pricing model which Wall street has been really focused on. It's also keeping its headcount flat for the remainder of the year. So one way to sort of keep costs trimmed for the foreseeable future. Executives were asked whether customers are purchasing cloud and how that's influenced their working with Monday.com and their response was agents and people continue to work together. In other words, human intervention is still needed. Shares were up about 25% at the start of the day. Now pairing gains up about 4%. It does follow big one day pops in other software companies that have reported earnings like Datadog Akamai last week, Fortinet Twilio, better than expected earnings from all of these companies. That surprise to the upside and we saw big one day pops. Overall, the software IGV ETF just logged its fourth consecutive week of gains, nowhere near the run in chips. But it does underscore a few things investors have been debating right now. One, software budgets haven't dried up. Companies are just being more strategic about how they're deploying capital. And while businesses are experimenting with the likes of OpenAI and Cloud, they are still holding on to their existing workflows to figure out integration. The challenge, Kelly, is understanding when companies decide to move from integration to fully working off an AI model. And that's what's keeping investors on edge I think right now.
- [39:32]
Kelly Evans
So last week I was ready to get on the software bandwagon.
- [39:35]
Seema Modi
Right.
- [39:35]
Kelly Evans
Software is going to reinvent itself as an AI leadership category. Now with what Monday said, as I understand it, they said that the compute costs were affecting gross margin. So even with those expense moves, you mentioned margin, now all of a sudden I'm off the bandwagon again because I'm like, well if they need, you know, if this compute is going to be a margin problem, what happens to the sector?
- [39:53]
Megan Casella
Sure.
- [39:54]
Seema Modi
I mean even cybersecurity companies were talking about higher memory costs. They're still not immune by any means to these, to the rising price of compute and memory. And that certainly makes them vulnerable going forward. But I think when you think about what OpenAI's Chief Revenue Officer Denise Dresser told CNBC, by the end of this year, they're expecting enterprise to make up 50% of their business. If that's the case, you, you would expect some big hits when it comes to earnings for These software companies, we're just not seeing that right now. Kelly. Yes, cost going up, but we're not seeing a huge drop in earnings.
- [40:23]
Kelly Evans
All right, great point, Seema. For now, thanks. Appreciate it. Seema Modi Coming up, what do Amazon, Disney, YouTube and DoorDash all have in common? Their execs are courting advertisers at the upfronts in New York City this week. Who could be the big winner next? Welcome back. The annual upfront ad sales period is where media giants showcase their content to billions of dollars of advertising commitments. It's kicked off today, but this year looks a little different. Julia Boorstin has more for us now. Julia?
- [41:04]
Julia Boorstin
Well, Kelly, for the first time ever, upfront ad spending on video streaming on TVs is projected to exceed primetime linear TV upfront ad spending according to eMarketer. Now this growth in streaming ad spending reflects both advertiser demand for new, more flexible formats and also the growth of streaming options. The biggest winners, Amazon and YouTube, which both have about 12% of streaming ad market share, followed by Roku than Hulu and Peacock. Netflix is a younger, smaller business but has a lot of room to grow now. Even this category though does face risk. EMarketer warns if a sustained energy shock were to take place, US connected TV ad spending growth would fall from 12% to under 10% in 2027. Now, while the TV streaming ad business is growing, linear does continue to decline. It's projected to decline 14% next year according to eMarketer. Now in this year's upfronts, a big winner across both digital and linear TV is live sports, especially the NFL. We're expected to hear Thursday evening where its new package of games will likely be streaming this season.
- [42:13]
Kelly Evans
Kelly this rise of the streamers in many ways, but also I think and we'll talk more about this with Sean in a second. Julia. But it seems to be that TV is making a little bit of a play here for its relevance as well.
- [42:24]
Julia Boorstin
Well, yeah, we're seeing the showcases this morning. NBC Universal showcased its number of shows and what they're really doing is showing that you could watch the shows on Peacock or on their traditionally linear networks. And all of these companies have always used sports as an anchor. What they're doing in these upfronts this week showcasing their original programing, both scripted and reality tv. But the bar is high. It's incredibly competitive. And now all these traditional linear players are of course competing with the streame for those sports ad rights. And sports are incredibly important for drawing those real time viewers which Then can be a launching point to get viewers to come in and watch the show that airs after the NFL game.
- [43:06]
Kelly Evans
Oh, as it's always, you know, what the, the voice or whatever, the big, the big tent pole one is. Julia, thanks. Really appreciate it. For now, let's bring in Sean McNulty. He's a contributor at the Ankler. To quote a piece you guys just put out, John, TV broadcast is growing again and the numbers prove it. And what you're referencing there is the number of new pilots, new shows that they're effectively putting out to market this week. Is that right?
- [43:29]
Sean McNulty
Yeah, we've seen some growth. NBC just announced this morning they added four new TV shows. They shot eight pilots this year, which in 2026 is maybe not unheard of, but very surprising, certainly. But over at ABC they renewed all 10 of their scripted series they had on the air this year. So it's a bit of a contrast between networks certainly, but certainly some more livelihood this year and new scripted television on broadcast at least.
- [43:52]
Kelly Evans
I thought it was interesting as well that they're talking about how well viewed all these shows are that, you know, for instance, over at Netflix, it's harder to get a high number of programs that get a million viewers or more. Is that right?
- [44:05]
Sean McNulty
Yeah, Netflix has, obviously they have a huge breadth of programming. The amount of volume they have there is impressive. Where ABC announces their schedule in the fall and you know, the shows are largely the same but they have, you know, high potential, is a big hit. But again, a lot of this viewership is coming from Hulu or Peacock or you know, the streaming services, which isn't really talked about. It's not as sexy because, because they're seen as broadcast TV shows. But when you add in the 30 day viewing counts for these shows, they get into, you know, 12 million, 13 million, you know, they get to sometimes up to 20 million. So these are pretty big audiences over a 30 day period.
- [44:38]
Kelly Evans
We had Bryan Cranston on the show last week. He was actually out with Brian at the Milken Conference. But he was bemoaning the lack of pilots especially he was concerned about the Paramount merger. He's worried about the Los Angeles economy. We've seen the way that a lot of production has shifted to states like New Jersey and elsewhere. Is this a hopeful sign for addressing those concerns or is there more still to be done?
- [45:00]
Sean McNulty
It's the early stages. This is kind of the first full year of the new California tax credit. Jake Johnson was on stage this morning at the NBCU presentation specifically saying his show is shot in LA and making a big point of it. Again, there are more pilots shot this year. All four comedy pilots from NBC were shot in la. The dramas were shot in New York and Atlanta. So we're seeing some of it return. You know, again, it's early stages here, so it's hard to say, but there is optimism, I think, that is out there certainly that there will be some of it coming back. It will not return to anywhere near the levels that we saw sort of Pre Covid in the 2010s and before that. But there's optimism that it's going to uptake a bit. And these early signs are positive.
- [45:42]
Kelly Evans
Mayor Pratt can work on that. He's almost his own part anyway. Retail media networks explain that. Journal had a little bit of a piece on that this morning as well, and how they're growing. And we're talking about Kroger, Albertsons, Doordash, literally retail companies, food companies that are acting as media networks. Is this all happening on the app? Explain this.
- [46:03]
Sean McNulty
Everybody is becoming an advertiser these days and obviously it's probably, you can argue it's the Google or the Amazon model where, you know, what else can we add in here for people who are coming to shop here? We have a large audience. We see Walmart bought Vizio, right. Why do they buy this TV maker? Because they wanted the ad network that they could sell across their network, not just for Walmart products, for their own services, but for all the partners that they have of people who sell at Walmart. So this is a extension of just going through these ad dollars and people, you know, the upfronts is about video, obviously, and these other networks are, you know, there's pre roll, there's other. The ad units are a little bit different in that regard. But everybody's just coming for these ad dollars because they have these large audiences of people who go to the apps every day. Hey, we have all these people coming here. Why can't we get ad dollars to increase our own revenues in addition to our core businesses?
- [46:50]
Kelly Evans
Finally, Sean, are we going to have a sense and when of how much commitment the advertisers on their end are willing to put up here as a vote of confidence, really in the economy?
- [46:59]
Sean McNulty
Yeah, that's always the question, Kelly. Every year, right. Is how soon are these dollars committed? We're here in the middle of May. Sometimes these deals get closed rather quickly and we have a pretty good handle on those numbers referenced earlier from Julia. About 17 billion. How much is being committed this year? As it uppers it down. But you mentioned the oil prices. You mentioned the larger economy going on. I don't think there's a lot of certainty involved with advertisers. Will they commit a large amount in the upfront, a big upfront spend for the whole year ahead? Are they going to hold more back for scatter, which is money that they can buy during the year at potentially higher ad rates, but you have more flexibility in case the economy does go into a bigger downturn as the year goes on toward the end of the year. So that's the big question. This is the reason we play the game, Kelly. There is no answer for it, certainly, but we'll see how much is held back from these major advertising commitments as we go into the Pinterest.
- [47:49]
Kelly Evans
Buying TV scientific. It's fascinating to watch retail get into the ad business, Sean. Thanks very much, Sean McNulty. And that's it for us on the Exchange. I'll join Brian Sullivan for Power Lunch right after this quick break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [48:12]
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