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“Dude, You’re Getting a Dell,” A Hiccup for the Space Race & A Dot-Com Moment without the Bubble 5/29/26
00:43:33
Dell shares are on pace for their best day ever as AI server revenue soars. A setback for SpaceX competitor Blue Origin puts the IPO back in the spotlight. Semiconductor stocks are on a historic run and Nvidia is no longer leading the charge.
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- [00:00]
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- [00:57]
Kelly Evans
Leslie, thank you very much. I'm Kelly Evans and dude, you're getting a Dell is space, the new AI and a dot com moment without the bubble. All of that's coming up here on the Exchange. But we have more market highs. We'll begin with here on the markets on the final trading day of May. Nice 610 of a percent gain for the Dow which has actually been the laggard this month. Memory semis and software are rallying again. Speaking of those month to date gains, the NASDAQ up 8%, the S&P up 5, the Dow a little bit less than 3. And what better poster child of this market momentum than shares of Dell which are soaring 28% today? The company reporting its fastest revenue growth since returning to the public markets back in 2018. Remember Dell went private back in 2013 and re emerged five years later. You can see this kind of long term chart here. For those first several years this stock did nothing. It's essentially a straight line across until I emerge. You could practically circle the moment here of chat GPT. Then Dell decided to reposition itself with what it already owned, which is tons of infrastructure. Rather than chase AI models or try to launch a chip they served them. And that has paid off with gains of 740% over the past three years. Brings us to last night. Its impressive quarter across the board now has analysts scrambling to catch up. More than seven price target hikes today. Susquehanna the standout going to 700. The shares are at 408 and outperform from 138 and hold. Even the President we know has expressed his love for Dell. Take a listen.
- [02:31]
President Joe Biden
I want to thank the Dell family. It's a great family. He is amazing. She is amazing. They, they've done such a job, such a job on that. They put up a lot of money too. Put up 6 billion, 250 million. That's somebody. And he started making computers on his bed in college and selling them because they were better than other computers. And he just, I said, how did you do that? He said, well, I did it and I just never stopped. It just kept going. So go out and buy a Dell. They're great.
- [03:02]
Kelly Evans
Well, the president practicing what he was preaching there. Joining me now is Wamsi Mohan, senior IT Hardware analyst at B of A securities. Wamsey, you were bullish going into these earnings. Are you as impressed as everybody else by them?
- [03:16]
Wamsi Mohan
Yeah, thanks for having me, Kelly. Absolutely. Look, we were out in Asia meeting the supply chain back in March and we came back with a very high conviction that indeed the demand is very strong, the build plans are extremely robust. And we took our numbers up on air servers to $60 billion, which is where they've guided today or yesterday. And, you know, so we were reflecting that in our numbers. What surprised us was to strengthen the rest of the business outside of AI servers, which I think was very, very impressive. Their total revenue numbers went up like 27 billion. 10 billion of that was the servers. 17 billion of that was the rest of the portfolio. And this is what I think is super important to understand is that this company is just an execution machine. Management has done an incredible job in the face of extremely tough supply chain conditions to procure memory, to procure chips, and their server portfolio and their storage portfolio, which is much higher margin by business for Dell is now thriving. And as that kicks in, that just enables Dell to do extremely well. And they're super well positioned into the future.
- [04:19]
Kelly Evans
To quote Morgan Stanley on this, after seeing the quarter, they said this was across the board one of the most impressive quarters we've seen in our time covering hardware, especially in the context of what's happening across the component universe. Wamsey, what does it mean for the rest of the hardware space today?
- [04:34]
Wamsi Mohan
Yeah, it's a really interesting point that, you know, the rest of the hardware space is also rallying along with Dell and we've had other companies report as well over the last two weeks within the hardware supply chain. What it tells you really is that enterprise demand remains very, very robust. So hyperscale demand obviously has been very strong. We've seen that in the capex numbers. Tier 2 CSB numbers have also been strong. Now enterprise is finally Catching up to the air play. And this is happening because agentic is starting to take hold. And as you see that the enterprise spending is not only strong, but they are absorbing these price increases that are unprecedented. We haven't seen something like this in very long period of time where pricing could be up 50, 60, 70%, and yet the demand destruction that people thought might happen is just not visible today. Right. So as we think about the demand for the rest of 2026, it looks very robust. Some of that might be getting pulled in from 27, but given that we're in such an inflationary environment, we might actually go through parts of 27 with very strong demand as well. And that's what Dell's results tell us. So we think the backdrop for spending is extremely resilient. Enterprises are willing to spend to secure supply. There is fear of continued price escalation given what's happening in the memory complex. And all of this put together tells you that the backdrop in the near term is extremely strong.
- [05:56]
Kelly Evans
It'd be fun to go back and look at the charts and say, okay, the when in video first had those blowout quarters, you know, the incredible growth, the Beats and raise. Then you go back to the last couple of quarters here with the memory names, incredible growth, the Beats and all of that. Right now it's the hardware names, incredible growth. We're starting to see who else do you think could be the. We all want to catch the next wave. Wamsey, Is it Dell? Who else in your space?
- [06:22]
Wamsi Mohan
Yeah, our space has seen massive, massive inflows. And this is happening for a variety of different reasons. Right. Semis have done extremely well. And a lot of portfolio managers are hitting thresholds of how much concentration of semis they can hold. So at that point, you got to diversify into other spaces. And hardware is one of those where you can play the same memory team. This is getting illustrated when you look at Deli, HP and that app. You can look at Pure Storage. You can look Everpure now. You can look at Seagate, you can look at Western Digital. So the entire hardware space is really seeing a resurgence. And you've seen these in the reaction of these stock price moves, which have been quite astounding. In the. In the 23 years that we've covered these stocks, there hasn't been a similar time like this.
- [07:07]
Kelly Evans
While in the 23 years you've been covering these stocks, there isn't a similar time. Could we get a couple more quarters that look like this or no?
- [07:16]
Wamsi Mohan
Oh, absolutely. We're going to see very strong positive estimate revisions in you or here the magnitude and rate and pace is going to depend on how tight the conditions are. So when we look at the memory side, pricing is still extremely robust and the, the leverage in those models is so high that you get very big EPS revisions when you, when you of move down the stack to where there is incrementally not as much pricing, not that they couldn't do it, but like in hard disk drives like Seagate Investor Digital, what you would see is more moderate price increases but gross margins still continuing to move up. So we do expect net positive estimate revisions not to the same magnitude as what a NAND player would see. And then as you look at the rest of hardware, if Agentic really takes a foothold over here in the enterprise, you could see really strong estimate revisions where you could see 20, 30% type of estimate revisions in these stocks. So yeah, very much so. We think that for the next several quarters. This is a very interesting theme to watch.
- [08:12]
Kelly Evans
The rotation is fascinating. You also cover Apple and there was a note from New street out today where they think we're going to look at double digit percentage declines in iPhone sales volumes. They're actually cautious on the semi names because of that. They think this is not fully appreciated. So I know you also, you know, you still have a buy on Apple, obviously it's a great company, but is that telling us something where, you know, memory pricing is now a constraint on iPhone sales? The semi trade is going to kind of run out of steam. Hardware is starting to perk up and those of you who are looking at the results are saying, you know, this perk is justified, this isn't an overreact. These are not getting meme stocked.
- [08:54]
Wamsi Mohan
Yeah, look, I mean on Apple, right? Like we're extremely bullish on Apple for a variety of different reasons. First of all, we think that we're ahead of a really strong iPhone cycle. Like the 17 cycle is strong, the 18 cycle is going to be very strong too. And I'm not just talking units, I'm talking revenues. Right. When you think about the mix shift that's going to happen this year, we're going to have a staggered launch of iPhones where the first half of the launch cycle is going to see the pro, the pro max and the foldable phone. And the foldable is going to have north of a $2,000 ASP. So if you just look at the ASP alone of these, they are going to go up partly in response to memory, but partly because of the value that they Provide. Right. So when you put that all together you're going to get double digitized by Google revenue growth on iPhones as a portfolio on top of a very strong 17 quarter, 17 cycle. So net net we actually think that we're very well positioned for Apple to continue to benefit. And the agentic point that I was making on hardware before that is going to be the next real valuation driver for Apple because we're still very, very early in agentic smartphone adoption. And as that really picks up we think that there is still really significant opportunity for Apple to expand both its presence market share as well as capture that incremental like TAM that is built on top of the value chain that today they don't have access to. They capture only digital goods and services. A little bit of take rate on that. Today when you open the market up to entire physical goods and services that TAM really starts to explode about 10 times larger. So it's a trillion dollar plus Tam that Apple is going to get exposure to in agent and we're very bullish about that.
- [10:31]
Kelly Evans
Well I'm glad I asked because that is a stronger take and maybe justifies the 10 week win streak they've been on with a 25% gain in that time in the face of what on paper would look like a tough environment with memory pricing and all the rest of it. I'm excited for the foldable phone. I hope you're right about that. Wamsey, thanks very much. Really appreciate it. Wamsey Mohan joining us from bank of America there today. Let's broaden it out to the broader markets which despite these records, our next guest is finding himself less bullish due to monetary and fiscal policy which he says are becoming a little bit less favorable here. Let's bring in Barry Knapp, he's director of research at Ironsides Macroeconomics. You're not excited about the foldable iPhone, Barry?
- [11:11]
Barry Knapp
I don't know. My son's got a photo foldable, foldable Samsung. But yeah, doesn't really appeal to me. But you know the tech stories, pretty amazing. Best quote I've seen recently was from a friend of mine this morning who's an ex tech banker who rode the wave in the 90s and on and said, you know, the story in 1999 was companies with a PowerPoint and a dream. Right. This isn't that, you know, these are companies making serious amounts of money. So maybe it's going to be a one time shock in terms of the amount of money they can make through this part of the cycle. But it's, it's pretty amazing. I've heard people describe it as an earnings bubble. Not so much just the stock price bubble.
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Kelly Evans
I love that I haven't heard that before. That's really good an earnings bubble.
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Barry Knapp
I think I stole that from someone on CNBC somewhere. But listen, nevertheless we try to provide
- [12:04]
Kelly Evans
value but that kind of captures what I was saying earlier with this. When you go back and look at the charts, you look at this Nvidia, let's call it an earnings bubble. The only problem with bubble is it implies it's going to pop. You know the earnings bubble starts there, then it goes to the chips in memory. Now we're seeing it in hardware. And the reason why I find it fascinating to dwell on all of this is this, this feels like the business cycle right now. So I just wanted to note your caution about a lot of this because this has really powered us forward.
- [12:30]
Barry Knapp
Yeah, I just actually finished up a note in my editing of it for this week where I'm really trying to make the point that this is going to be a CapEx, CapEx driven cycle like the 90s. And you've got, I've got cyclical reasons to believe that consumer facing companies are going to continue to struggle for the next couple of quarters. Things like earnings revisions, the adverse aggregate demand shocks that have put so much pressure on profit margins. But there's an argument that this is going to continue, continue through the entire business cycle and it brings up some pretty fascinating implications. I mean you hear all the time well the consumer is resilient. Well not really. Goods consumption was over 4% when President Trump was inaugurated. It's now 1, 2. Last quarter we got a 1.4% contribution from CapEx and only a 90 basis point contribution from consumption. That's 2 GDP even though consumption is four and a half times as big as CapEx. And I don't see any reason why this momentum is going to slow anytime soon. I've got a number of metrics I've been thinking about capex to cash flow. Whether you start to see strains in the credit markets the price of compute starts to come off. There's questions about monetization. None of those are showing any signs that we are, you know, in 1999 or 2000. So, so why, you know I would have to assume that it's going to continue my caution Cal, that's where I'm going.
- [14:07]
Kelly Evans
We've got, we got CapEx going gangbusters. We've got, you know, it's not 99 by those who have lived through and remember that was a very different phenomenon. So where does the caution come in? Because I know you still expect a rate cut, maybe one or two, that could come later this year. It sounds like off the back of a slowing economy.
- [14:25]
Barry Knapp
Yeah, that'll, that'll ease some of that pressure on margins for the consumer companies. Maybe. We get, you know, we keep hearing about the healthy broadening out. I see no evidence that's going to happen. So my caution is really about the only effective diversification hedge for equity investors right now. Assuming you're long, the theme, which you certainly should be, is cash. You know, you don't diversify by buying overpriced consumer staples stocks. You don't diversify by buying consumer discretionary companies or health care companies where revisions are going down, margins are going down, and it's just not an effective diversifier. So with that in mind, given the volatility of the tech sector, just the fact that, you know, this could always have a drawdown, the only real hedge against it is cash. And so that's really the caution.
- [15:17]
Kelly Evans
Right. So, I mean, it's tough to sit out a market environment like this. I remember we were talking with a friend a couple of years back, maybe a year or two back, and, and he had been pretty bullish on the S and P, and he's been in the market a long time and he said, no, I think 5,000 is next. And you know us younger, really, I don't know. We're at 7,500, Barry. We're talking about people are taking their year 7,800, 8,000. And this is built on the back of earnings numbers that we haven't seen ever, except for coming out of a recession or basically in the late 90s.
- [15:49]
Barry Knapp
Yeah, but the divergence is, is really sharp. Like I looked at next quarter's earnings, contributions to growth. Right. So earnings are expected to be up $125 billion or so next quarter. 60% of that is tech, 80% of it is energy. The staples and discretionary sectors are adding 2% each and health care is going to subtract 5. Right. So, you know, this is, is a market where, again in my earlier point, you can't diversify by being buying these out of favor sectors because they've got no fundamental momentum story behind them whatsoever. And they're struggling with the Fed's unbalanced monetary policy, tight rate policy, easy balance sheet policy. They're struggling with those adverse aggregate demand shocks, energy prices, raising cost of goods sold, tariffs, raising cost of goods sold that stuff's not going away until September at the earliest from a cyclical perspective. And maybe that's going to be the trend for the whole cycle.
- [16:48]
Kelly Evans
Yeah.
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Barry Knapp
So, you know, here we are. You know that theme is tough, right? People ask, you know, your producer asked me, are you overweight Tech and you know, I've got some investors that are bench to the S and P and others that aren't. I've got a big position in tech and comm services, but it's an underweight because being market weight is almost reckless. It's so big right now. I looked at it this morning. The tech sector is over 38% of the S and P. It's, you know, tech.
- [17:19]
Kelly Evans
I'm going to write tech is the S and P. That's. It's either that or we're going to look back in six months and go, well, that reversion to the mean made more sense. Barry. Believe it there. I appreciate it very much. A different perspective amidst the bullishness we've seen all week and all month long. Barry Knapp with Ironsides Macroeconomics. Coming up, demand for data centers. I should say, putting commercial real estate back in the spotlight. We'll talk to billionaire developer Ross Perot Jr. About that and where the next boom could come from. Plus, last night's blue origin rocket explosion in Cape Canaveral shaking up the space and satellite race. How big of a boost will it give Elon Musk's Space X ahead of that ipo? We'll ask the man who wrote the book on the billionaire. Walter Isaacson joins us ahead on the Exchange.
- [18:06]
Walter Isaacson
This is the exchange on cnbc.
- [18:12]
Schwab Representative
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading you're great at protecting
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Kelly Evans
I thought it was safe.
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Kelly Evans
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Kelly Evans
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- [19:27]
Kelly Evans
Welcome back. For years after interest rates spiked, we heard about the wave of defaults that could hit the commercial real estate story space. Well, as we sit here today, with rates still stubbornly high, were those concerns overblown? For more, let's bring in Hillwood chairman Ross Perot Jr. Who's joined by our very own Morgan Brennan. Morgan,
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Morgan Brennan
hi Kelly. It's great to see you. We're here at the Reagan National Economic Forum and I am joined by Ross Perot, Jr. It's great to be with you today.
- [19:55]
Ross Perot Jr.
Thank you.
- [19:55]
Morgan Brennan
Welcome to the show. Welcome to cnbc. A lot to talk to you about. Kelly just mentioned real estate. So given the fact you are one of the biggest real estate developers in the world, your take on what we're seeing in the real estate market?
- [20:05]
Ross Perot Jr.
No, but basically we're industrial real estate developers and that's our core. And so within the industrial world in the United States and in Europe, you're seeing a real resurgence in the industrial market. We had a big Covid boom and massive amount of data warehouses being built during COVID Then we had to slow down. Rates went up. The market really slowed down a lot. Well, now the market's coming back strong. The tax code had a huge impact on the market. The air boom has been huge. The supply chain for AI is very important. But E Commerce is coming back, back. A lot of our E Commerce clients now need another million square foot building. So if you analyze the number of million square foot buildings in the country that are open, we're down to about 20 for the United States. So we broke the construction pipeline for two years. So we are actively building big million square foot buildings across this nation to keep up with the demand. We've never seen so many million square footers go this quickly. Dallas Fort Worth had the best 30 months of real estate in the history of the United States. It's stunning the facts and figures that are going on out there.
- [21:06]
Morgan Brennan
Yeah.
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Ross Perot Jr.
And so this manufacturing boom is real.
- [21:08]
Morgan Brennan
Yeah. And we're seeing in some of the economic data. And so you're in a very key position to speak to that. So you're saying the industrial side of the economy is, is Having a renaissance.
- [21:17]
Ross Perot Jr.
We've in the past nine months, just at alliance alone, our big project, we've had 6 million square feet of leasing, $4 billion of investment. 9,000 manufacturing jobs were created, and that's in nine months in one part of Texas. But that's what's going on across the whole state and across the country now. We're very pro growth in Texas. We have a governor. Our tone at the top is really good. And our governor picks up the phone and he'll work a deal himself to get things done. We, even if we have to bring in President Bush, the greatest deal closer ever is you get President Bush in the room to help you close the deal.
- [21:50]
Morgan Brennan
I was just going to ask you that. How much of this is a Texas specific story versus what we're seeing across the rest of the country?
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Ross Perot Jr.
Texas is pro growth. Texas is low tax, low regulation. We did. We're now building the MP materials factory. This is the 10x magnet facility that's so critical for the defense of the United States. MP was stunned. We got air quality permits in three weeks. They said in California it would take two years. So it's not just taxes, it's the environment, it's regulation. Our ability to get things done.
- [22:22]
Morgan Brennan
AI data centers, you play in that space as well.
- [22:25]
Ross Perot Jr.
We're right in the middle. Okay, sure.
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Morgan Brennan
What are you seeing? What would you say in terms of this build out, especially as there has been a lot of focus on surging costs to build out?
- [22:33]
Ross Perot Jr.
Well, it's a very expensive business to get into. We've seen. Now, if you're an AI data center developer, you must be very responsible and you must take great care of the local community. And as real estate developers, that's what we've been doing for decades. And so we're getting land zone, we're getting power committed, and we have very large data center programs going on. We've got about five big data center programs in the pipeline right now. We're working on and all we're going very well. But it's that local touch that a developer brings that helps the datacenter crowd get the approval.
- [23:05]
Morgan Brennan
Hmm. We're seeing this play out in the stock market too. I think even just today, shares of Dell are spiking something like 30% last I checked. I believe you used to be on the board for Dell.
- [23:13]
Ross Perot Jr.
Right.
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Morgan Brennan
But just want to get your thoughts on that. Whether it's that company specifically or even just again, what we're seeing in terms of the AI infrastructure build out in real time on the ground versus how the market's reacting to it.
- [23:27]
Ross Perot Jr.
The build out is real. And you know, Michael Dell is one of the great entrepreneurs in the country. And Dell's is a phenomenal company because you still have the owner there mining the store. You know, Michael will make sure Dell Computers works very well. It's a real. The demand is overwhelming. All of our clients need space and they've got real backup behind the space. This is not spec data center. I mean, these data centers open and they're full. And then the other big driver that I don't think the world's focused on yet is quantum computing. So you've got AI and Quantum both about to hit at the same time. And they say Q day is going to happen in 28. That's when quantum is so powerful that all encryption in the world will no longer be encrypted. And so you've got amazing opportunities coming now. You'll build quantum defenses so you'll be able to protect your systems. But the world is changing very quickly in the America right now is positioned to dominate AI and Quantum. That's why we have to keep it up. We've got to keep building these data centers.
- [24:28]
Morgan Brennan
Yeah, physical AI as well, autonomous mobility and next gen mobility. These are other areas that you're very focused on too.
- [24:35]
Ross Perot Jr.
Right. We're doing, we're doing a lot of mobility, autonomous trucking. So alliance is a big industrial hub. And so a lot of the truckers will come and practice with us. We're running autonomous trucks from alliance down to Houston every day. And it's going to be a critical. Trucking is where it's really going to hit first. We see Wamo and the cars, but the trucks are where you're going to get great efficiency. Imagine when a Truck can drive 724. No human factors. It's going to change the distribution patterns of America. And so it's up to us to figure out what those patterns are going to be and where we're going to go for the next big logistics hubs.
- [25:09]
Morgan Brennan
Yeah. And I'm about to send it back to the studio. But also, you're an avid aviator. You're about to break another world record here tonight.
- [25:15]
Ross Perot Jr.
Well, what we're going to do, we'll do LAX to Dulles tonight.
- [25:18]
Morgan Brennan
Okay. And so we'll look forward to that. Ross Perot Jr. Thank you so much, Morgan. Thank you, Kelly. I'll send it back to you. We've got another interview coming up here in the next hour with Arjun Sethi.
- [25:30]
Kelly Evans
What is he flying faster than other People can fly. Is it the plane?
- [25:34]
Wamsi Mohan
How.
- [25:35]
Ross Perot Jr.
No, people don't. People, no, they really don't do it. I mean that's the issue and I've been doing it for a long time and I think it's really great to focus on American products and how great we are in aviation and setting these records. You kind of put a milestone out and you hope other aviators will try to break the record.
- [25:53]
Morgan Brennan
Well, you'll be flying just under Mach 1, right?
- [25:55]
Ross Perot Jr.
We're, we'll be 92% the speed of sound. Okay, 92. But I'm not going to break the record because the record sell by the SR71 and it so I don't think will be SR71 speeds but we'll get the commercial record. How about that?
- [26:07]
Kelly Evans
I love it.
- [26:08]
Morgan Brennan
We'll see. Flight.
- [26:09]
Ross Perot Jr.
Thank you.
- [26:10]
Kelly Evans
Who knew? Morgan, thank you very much for that. Ross Perot Jr. A pleasure as well. Thanks for coming on the show with our Morgan Brennan out and see me coming up. Oil prices falling to their lowest level in over a month on optimism over the US Iran cease fire talks. Now this drop won't immediately translate to lower prices at the pump. Will tell you why the ripple effects could still be felt across the landscape. Next,
- [26:36]
Schwab Representative
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading you're great at protecting
- [27:05]
Lifelock Advertiser
your data, but lots of places could still expose you to identity theft.
- [27:09]
Kelly Evans
I thought it was safe.
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Lifelock Advertiser
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- [27:34]
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- [28:07]
Kelly Evans
Brent crude oil prices falling by their most this month since March of 2020. They're down basically 20%. WTI down 17%. That's its worst month in over a year, snapping a four month win streak on the back of the Iran war. It's translating these prices right now to a bit of relief at the pump for 39. We'll take it. Still near a four year high but I think 455 was about the highest I saw in recent weeks. It is forcing consumers to make some tough choices as their tax refunds are spent. Steve Liesman is here with a closer look. Steve?
- [28:38]
Steve Liesman
Yeah, and the two work together. Kelly. The gas spill from the surge in oil prices starting to add up for consumers month after month, week after week here. And it raises concerns about whether the resilient consumer can keep it up and how much longer they can keep it up. Mark Zandi@moody's.com calculating the total bill so far through CNBC and finds it's equal to $59 billion over the three months made up mostly of gasoline, followed by diesel and then of course jet fuels playing a part in all of that. That amounts to about $450 per household, a cost that's been manageable in part because of those bigger tax refunds. But in mid May, the extra fuel costs outstrip the refunds and that's they've averaged about $380 so that fuel is running out. And Zandi warns unless the war ends soon, financially pressed consumers will have no option but to turn more cautious in their spending, threatening to the already soft economy. Goldman Sachs came to a similar conclusion. They wrote, quote, we believe that the recent resilience in spending largely reflects an outsized boost from OBBA related tax cuts and expected spending headwinds from higher inflation will weigh on spending growth for the rest of the year. The potential offsets could come from better job and wage growth and also expanded production, perhaps in the oil fields and and reinvestment of those petrodollars. But who knows exactly where that's going to happen for consumers right now. Real incomes, we reported this yesterday just for inflation, they've fallen 5 of the past 7 months. Now they're negative year over year and have been for the past two months and including being down in three months in a row as inflation takes a bite from real from nominal incomes. Zandi estimates if gas prices stay at current levels, It'll cost around $2,000 per household by the one year anniversary of
- [30:31]
Wamsi Mohan
the start of the war.
- [30:32]
Kelly Evans
Kelly all the more reason to watch these markets day by day, see if we can continue to drop so that doesn't happen. Steve, thanks very much. Appreciate it. Steve liesman, sure. Let's get to Julia Boorstin now for the CNBC news update. Julia,
- [30:46]
Julia Boorstin
thanks, Kelly. Five people were killed and dozens were hospitalized after a bus crashed into multiple vehicles on I95 in Northern Virginia. Authorities say the the crash occurred early this morning after the bus failed to slow down for work zone near Quantico. The highway southbound lanes were closed for seven hours after the crash but have since reopened. An ICE agent accused of shooting a man in the leg in Minneapolis in January was arrested today. In Texas, Christian Castro was charged earlier this month with four counts of second degree assault and one count of falsely reporting a crime. Prosecutors say he shot a man through a door of a home while knowing that there were people inside. And several artists who are listed as performers at an upcoming event on the National Mall to celebrate America's 250th anniversary said they won't be part of the lineup. A public private partnership backed by President Trump announced a list of performers this week that included The Commodores, Martina McBride and Bret Michaels. Michael said the event had evolved into something new, much more divisive than he agreed to be a part of. Back over to you.
- [31:51]
Kelly Evans
All right, Julia, thanks. Coming up, incredible images overnight from Blue Origin's rocket explosion down in Cape Canaveral. Fortunately, no injuries were reported, but how far will it set back America's return to the moon's surface? And what does it mean for rival SpaceX ahead of its highly anticipated IPO? Walter Isaacson joins us next. A fireball over Cape Canaveral last night after a Blue Origin rocket exploded upon takeoff. You can see the huge fireball images there. Fortunately, no one was injured. But what does this mean for rival SpaceX as it prepares to go public? Walter Isaacson is an advisory partner at Perella Weinberg, Tulane University professor and a CNBC contributor. Walter, it's great to see you again. I don't know the detail. I mean, maybe this could affect I understand there was some damage at the launch pad. It could perhaps affect NASA. I haven't seen if Musk has commented on it yet. Although you know what, I feel that when we hear from Space X, as they've had multiple issues with, he'll always Say, look, this is a tough business. And when they achieve things like landing a rocket back on a floating raft, you realize, yeah, there's going to be some, you know, corollary damage to getting this right. So maybe it's not a big deal for, for Blue Origin and maybe it is. I'm just curious what you make of it.
- [33:36]
Walter Isaacson
Well, it is a big deal for Blue Origin because they launched their launch pad and it was the only launch pad that can launch New Glenn. So that's going to set them back quite a few months as they try to rebuild the launch pad. It's not great for NASA's mission to the moon because you had both Blue Origin and Space X were both building the human landing system. Obviously Space X is now more likely to get it built first. But space is a very difficult thing. NASA administrator Jared Isaac man said it after the blow up of the Blue Origin launchpad. He said space is difficult, as you say, landing space boosters. This is something Bezos has been doing and Space X has been doing for a long time. I mean, I'm sitting here on the banks of the Mississippi river at Blaine Kearns Mardi Gras world. And this is where some of those barges are built at the Bollinger Shipyard where totally amazingly they land rockets upright. But every now and then you have something like happened yesterday.
- [34:41]
Kelly Evans
Yeah, and I called, I misspoke. It wasn't a takeoff, it was a hot fire test they were conducting on the ground when those engines ignited. So Space X has this IPO coming up in a couple of weeks and it was interesting to learn the financials of Walter. I don't know if you've looked at those in detail, but 19 billion in revenue, 25 or so of losses, it's not that spectacular.
- [35:01]
Walter Isaacson
Yeah, but they are. Now one of the things that I was down in South Texas at the Space X launch facility for the latest starship launch just last Thursday or Friday. And it's, that's the biggest rocket ever made. It's the counterpart to the New Glenn rocket that Blue Origin is doing. And it got all the way up and all the way around a few glitches, but it was enormously successful. It will be able to launch huge amounts of satellite and the cargo you need to have a landing system ready for a moon landing and a moon base. So we're seeing this is that launch last week was very good for Space X. And it puts them way ahead in the race of doing communications satellites in low Earth orbit, which is what Blue Origin is trying to do. But Space X is way ahead. And the loss of this launch pad during this test means that it's going to be harder for Blue Origin to catch up in the next two or three years with low Earth orbit communications satellites.
- [36:08]
Kelly Evans
Think this might be a silly question, but do you think in a weird way, all, you know, as we have heard, there's going to be a big retail allocation at this ipo. And some say that's because incident institutions don't want. I don't know, the public certainly does. Is that in part because they find it fun to give capital to Elon Musk because he goes and changes the world with it? I mean, Tesla, he went and did it right. The auto business didn't even look good for years and years and years. And now with SpaceX and the satellites and everything else he wants to do, it almost feels to me like the retail public is saying, we just want to give you fuel to go and try to achieve these dreams. And sure, we hope you make money. And I know they don't want to lose their money. I mean, these companies have maintained their valuations, more or less. There's a lot of risk around the ipo. But can you just talk about those dynamics?
- [36:53]
Walter Isaacson
Well, first of all, I think that we'll make money. I mean, to have a recreated Internet in low Earth orbit that they have with Starlink, that's huge. And soon we'll be building data centers for AI in space. That will be huge. But you've asked a really good question, and I wouldn't just personalize it, I would actually elevate it a bit, which is, if you want to invest your money, do you want to invest in something that's truly meaningful, that makes a real difference in this world? For example, the transition to a world of electric vehicles, space exploration. These are the type of things that maybe retail investors, not just because they're sentimental, but they believe in deploying capital for good things. I don't think it's just, let's give it to Elon Musk. It's no, let's go to the moon, let's go to Mars, let's get into an era of electric vehicles. I'd love to. I don't invest in things like this because I write about them, but if I were going to invest, I'd rather do that than in some bitcoin thing that may not be adding great value to the planet.
- [37:59]
Kelly Evans
It probably helps him on the margin that crypto's lost a little bit of its excitement lately. I don't know, prediction. It's like what does he compete with? I guess crypto prediction market.
- [38:08]
Walter Isaacson
I think he competes with people who want to do big, bold and audacious things like build self driving cars like bring us to the era of electric vehicles, like have data, you know, in, in outer space or get the biggest rocket ever launched. When I was down in Boca Chica watching that rocket launch last week, it was brought me back, I'm sorry to say how old I was to those days. And when Cronkite, we'd all hold our breath and Walter Cronkite would do the 10, 9, 8, 7. So yeah, there's an emotional component to saying let's be part of this. And by the way, Blue Origin is very much a part of this. Bezos is dedicated to this. This is a setback. But what's really important is that you not only have a revitalized NASA wanting us to do these things, but you now have private companies like Blue Origin, Space X and others. That's what's going to help us get to the moon base before China does. And that's going to really reconnect with the notion that as a nation, America can build big things then from that
- [39:18]
Kelly Evans
point of view, because we've been asking if these IPOs are in competition with one another. But we know a lot of the young people, even if they use the AI, they're not, they're not super excited I think in saying, yeah, you know, you know, maybe to open AI more so than Anthropic because Claude at least is a tool you can build with. But who do you think Musk is really competing with? Who could stop him?
- [39:38]
Walter Isaacson
Well, nobody is going to stop the race to space. I think putting data centers and communication systems in low Earth orbit is going to be huge. And yes, the IPOs for anthropic, I mean Anthropic is just raised another round and it's a huge valuation open. I will probably have its ipo. This will just put more money into the process of building things and that's good for America.
- [40:07]
Kelly Evans
All right.
- [40:08]
Walter Isaacson
These are things being built here by the way. I mean, let's get that straight. You can make things in America, even
- [40:15]
Kelly Evans
the chip company Cerebras, right.
- [40:16]
Walter Isaacson
We can do things so lootly satellite companies and maybe the launch pad didn't work at Cape Canaveral that well. I mean the test. But it's inspiring to see people building things in this country and aiming high.
- [40:31]
Kelly Evans
All right, a nice note to leave it on this, you know, into the weekend. Walter. Thanks. Walter Isaacson Appreciate it very much.
- [40:37]
Wamsi Mohan
Love being here.
- [40:38]
Kelly Evans
Still ahead, this month's top performers in the semi etf, Micron. There's an American company, Astera Labs, United Micro, ARM and amd. But there is someone important missing from this list. And look at those month to date 8 gains. We'll discuss this historic run plus that notable laggard next. Welcome back. The semi stocks are on a historic run and it's no longer in video. Leading the charge, Christina Parts and Evolis has more in today's tech check. Christina.
- [41:15]
Christina Parts
Well Kelly, another day, another chip surge and today Dell is actually the latest reason why. So Dell CEO flagged serious shortages not only in memory chips, which you've heard about, but processors, specifically CPUs and hard drives. With lead times stretching to at least a year, investors are reading that supply imbalance as strong demand for not only Micron, sandisk and ARM all moving higher today. Sandisk for example, is up over 4,000% in just 12 months. Micron having its best day since. Best month, I should say, since 1985. The reason chips keep climbing is just pretty simple. Demand is outpacing supply at every level of the stack. Data centers need more memory, more processors, more storage. Identity needs the same and the industry just can't build fast enough to keep up. That shortage is now showing up in corporate earnings calls, in retail investor flows and of course in stock prices. And it's also showing up specifically in the numbers. The broader chip index is having its best year on record, on track right now for its fifth straight quarterly gain and potentially its best quarter ever, beating a record that goes back to the early.com era, specifically in 1995. Memory makers like Micron and SK Hynix both crossed $1 trillion in market cap this week. And according to JP Morgan retail flow data, there is little evidence of broad based profit taking. Buying has remained pretty persistent and elevated despite memory stocks more than tripling just this year alone. Nvidia, you mentioned it, the notable laggard. But let's give Nvidia credit. The stock is still up about 14% while the stock CTF, I have to say is up 89%. And it is just too large for even blowout earnings to move the needle right now. The infrastructure buildout has a new cast of leaders. The chip trade right now is bigger
- [43:05]
Kelly Evans
than any one company, bigger than any one sector too is now we're talking about hardware jumping in to do its part. Christina, thank you very much. Christina. Parts in Evolis still ahead. This was definitely not the time to sell in May and go away. Thankfully, one market strategist warned us not to do that weeks ago. He'll join us with his next predictions after this. Welcome back. At the beginning of the month, CNBC contributor Ryan Dietrich told us a May rally was likely despite the old adage to sell in May and go away. And even after the S and P had already gained 10% in April. And indeed, we're closing out with a more than 5% gain here, which would mark the best April, May period since 2020. So what's next? Let's ask him. Ryan Dietrich is chief market strategist at Carson Group. You know, this is like the COVID of the magazine Time. You got to be very careful here. To get two calls correct in a row is going to be very, very tough.
- [44:08]
Ryan Dietrich
Well, Kelly, we're gonna give it a shot here. Happy Friday, everyone. Thanks for having me back. So, yeah, we did say don't expect a big sell off in May. In fact, expect strength now, up over 5%. Probably here with a little bit time to go. June's got something for everybody, though, Kelly. June is actually the worst month on average in a midterm year. So something to think about now. June's also been higher 9 of the last 10 years. So there's something for everyone. I think the reality, like you just said before I came on here, when you're up, you know, up 15%, that's like the best two months in April, May, other than off of COVID That's it. All right. But the other times, we've gained 10% during these two months like we're going to right now. June's never been lower and the rest of the year has been higher, at least double digits every time. You could argue it's a sort of a small sample size. Yes. But, Kelly, with a lot of other things we've been looking at, we're pretty bullish. We think this summer surprise rally probably continues.
- [44:57]
Kelly Evans
Okay. So, and look, it's hardly that bold of a call to say, you know, stay long the stock market because it reaches a new high on average every 12 days. But there are some people would say we've got to watch out for the June swoon. You got to watch out for the midterms. You got to watch out for this and that. I just wonder what your response to that would be.
- [45:17]
Ryan Dietrich
No, exactly. I mean, it's a good point. You know, also, you know, in late March when a lot of people were talking about a lot of bad things, cutting their guidance, we never did. Right. Even when the S and p was down 7% for the year. We still thought the S and p could gain 15% this year and we reiterated that back then. So now we've had this kind of upward surge. And one thing I really want to point out here you have some great discussion before I came on about market breadth. How is there a lot of stocks going up or not? Our take is yes, if you look at right today, right, the Nasdaq, the Dow S and P all going to hit all time highs but equal weight. The Dow, Nasdaq, they're all hitting all NASDAQ 100 also all hitting all time highs as well. So to us it's not just this, a couple stocks going up. It's a really broad market. I think that's really, really healthy here. Kelly, for a continuation again of this bull market. We're still pretty optimistic here.
- [46:02]
Kelly Evans
What happens when the IPOs come now?
- [46:06]
Ryan Dietrich
That's the great question. I mean you could you have a near term peak. Of course, you know there's a lot of optimism. I mean Barron's had a really good coverage just over the weekend or last week that talked about maybe why there could be trouble. We all know the same data. We look at it, right. Six months after a major ipo, stocks usually underperform. So that's something to think about. But that's just from tech, right. We know a lot of these are obviously tech. A lot of excitement. I look at financials and I get it, they are lagging. I think the XLF sitting like a new all time low, relatively s and P500 like the time we're doing this. There could be some opportunity I think on the other side of cyclicals here the second half of this year, maybe that baton gets passed around. We don't see a recession with the labor markets getting better. We've said all year inflationary growth. We expected 3 1/2% inflation this year. But with an economy did pretty well. We don't, we don't see stagflation. So we'd stick with cyclicals and maybe financials do a little better here.
- [46:49]
Kelly Evans
All right, so June's usually weak, but you expect a higher one and a summer rally. Ryan, great to check back in with you. Thanks for the time.
- [46:56]
Ryan Dietrich
Thank you.
- [46:57]
Kelly Evans
Ryan Dietrich, that's it for us. Thanks for watching the exchange. I'll head over to join Brian for power lunch after this break.
- [47:07]
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