D (3:19)

I think I would, I think. Well, first of all, thanks for having me, Kelly, good to see you. And I think it's a win clearly based on the idea that it puts AMD on a path to generate roughly $20 in non GAAP earnings per share in the next three to five years. And this is a key element to that. It's the deal even though they're issuing warrants is part of the structure of the deal is still earnings accretive for amd, which is maybe the ultimate determinant of shareholder value and whether it's adding value. So, so yes, I clearly think it's a win win for both AMD and, and Meta.

B (3:56)

Do you or do you think any shareholders should have issue with 10% of the company potentially being owned by Meta, 10% by OpenAI?

D (4:04)

Giving away your market cap to generate revenue from an optics standpoint is never good. But again, at the end of the day, I think the ultimate question that has to be answered is is it adding shareholder value to AMD holders? And I think the answer to that is is a clear yes. You know, this is such a transformative deal for amd. If you combine the value in terms of annual reven for OpenAI and today's media deal, it potentially doubles the company's revenue from where we're at just in fiscal year 25. So it's the cost of doing business in many respects.

B (4:39)

Wow. So Daniel, turn to you because speaking of transformative, how should we think about Metta being in the semiconductor business to some extent?

E (4:47)

Well, I think first of all this is what amd needs to do. Lisa Su needs to make these kinds of deals. When you're going up against JENSEN Huang and Nvidia, you're talking about a company that has 95% or so of this AI accelerated compute market. Lisa knew what she was doing with OpenAI, and she knows what she's doing here with Meta. And by the way, Meta is not OpenAI. Meta is one of the best in terms of the implementation and application of AI into their business, generating tens of billions of dollars because of AI. And of course, this is a proof point for AMD to be able to show that its technology. You know, it's often criticized maybe for not having the same level of software support as an Nvidia, but in this case for inference and for agents, both EPIC, which is their compute, their data center CPUs, and of course Helios, their data center or GPO. Rack Scale Solutions, which will largely be used here, will be applied to these workloads that META utilize every single day in their business to generate meaningful revenue. This is the proof point that AMD needs. And furthermore, all the people that have complained, earnings after earnings with amd, that they didn't show enough growth, it was their MI business, now it's going to be their Helios business. These are receipts, Kelly. So these are the receipts that the investors want to see the dilution or the potential ownership by meta. I think it's a good partner to have, knowing what's about to happen.

B (6:07)

Yeah, you say, and I think this is a good line too, that this kind of puts to rest the narrative that AMD is just for training. But can I ask you, Because I don't want to ask Gary, it's not really his space, but. Daniel, can I ask you about META specifically here? I'm just going to repeat the question. Do we want, do investors want Metta to be in the semiconductor business?

E (6:27)

I think that investors probably. So there's the two sides. A great question, by the way. There's the two sides of this. One is owning fabs and foundries versus maybe being in the processor development business. I mean, Meta is already in the chip business. They have their custom accelerator, they're building a custom cpu, they work closely with arm, they are going to continue to develop their own chips. This gives the compute capacity. Mark has been very clear that he wants to win the compute race. And to get to superintelligence, AGI, whatever we're calling it today, you need to have the most compute, that volume of compute between Nvidia, between amd, between all The COMPUTE that META will build on its own gives it the ultimate amount of flexibility to continue to innovate and build on future products. And he knows that's what he needs.

B (7:11)

I'll frame the narrative in alternate way and you know, this is the beginning of very, very long discussion. But instead of the way you're framing it is probably what Metta is saying or pitching, which is this is investments that's going to get us to AGI or whatever. There's going to be a clear payoff for investors at the end of the road. What if Jeff Curry's right and the only output that we're going to end up with here is a compute and the value of that compute goes down as it all becomes commoditized and therefore all of these companies are putting steel in the ground, transforming themselves into effectively commodity producers and getting into a business that is cyclical and where the end product rarely holds its value over time.

E (7:49)

I'm not sure I'll take that one. But you know, I think that ultimately that's the wrong thesis. There is a reason that you have seven of the Mag 7 leaders, all investing, barring Apple, which knows it needs to make these investments. This spend is a, is a race to secure the moats of their, of their operations. Does the COMPUTE depreciation create some concern if you don't have the cash flows, if you're raising debt or you're doing complicated financial instrumentation to get there to afford this? But these companies know that their multi year moat, their position is mag7leaders and many of the companies down the S and P know they need to make these big bets on. I saying that COMPUTE is going to depreciate to zero and therefore not invest. I think those are the companies we're going to see go the way of the dodo burn.

B (8:30)

Right. And the way you put it is very important. If they're right, if it does kind of enhance or secure their moat, then for sure that's, that's an important way to kind of secure their market position. Gary? Sure, go ahead.

D (8:43)

I was just going to add, I don't cover matter, but we do have an analyst here who does. And you know, based on the conversations that we've had, you know, it sounds like Meta is getting its return on invested, you know, return on investment primarily from the, you know, simple fact from ad revenue is evident in the ad revenue. And so you're starting to see, you know, $200 billion in revenue base accelerating to 30% year over year growth driven by these recommendation engines that are largely driven by this hardware infrastructure that we're talking about.

B (9:17)

So the only thing Gary and we got to bring your colleague on, but that I would ask. You're absolutely right. And they're incredible with monetizing ads right now, but it's not that big of a business ultimately. And look at what's already happening with their cash flow and how much they're spending potentially beyond that and these investments. And Lisa Su herself this morning said that Mark Zuckerberg's vision is bigger than that. So I just wonder if the question investors should be asking is how much bigger is the vision? Would it be better if the vision was actually smaller? You know, just invest in order to make your ads the most optimal. They're happy with that. But if it's something more than that, if it's competing against Gemini for instance, I would just like to know what that vision is.

D (9:52)

Yeah, I can't speak to all met his plans because again, I don't follow the company but clearly they've got something, you know, visualized well beyond just the ad revenue they're generating today. And yeah, that's really all I can add from Meta's perspective.

B (10:06)

Daniel, a quick last word.

E (10:08)

Yeah, I mean Mark's been very clear. He spent billions hiring on the right talent. He's going for it. You know, I think it was great they pulled back from Reality Labs. We know that trend line doesn't have the same upside capacity capabilities and therefore he's investing big where he needs to invest big. And I think these are the right partnerships and he's getting the compute he needs and that will not be trivial as both as power, memory, compute all become less accessible. He's securing the future and the future

B (10:34)

position of matter is a great way to kind of debate it is, you know, are they protecting moats or are they competing against one another for for what kind of ultimate product? I love it. Gentlemen, thank you so much. Really appreciate your time. Gary Mobley joining us from Luke Capital along with Futurum's Daniel Newman. Let's talk about the rest of the market. Stocks are rebounding after selling off on renewed years yesterday. And let's not forget the tariff confusion today is helping sentiment. Global tariffs are going into effect at 10%, not 15 yet. And our next guest predicted these issues would be short lived. And the rotation is here to stay. Paul Christopher is head of global market strategy at Wells Fargo. Paul, you want to jump into the debate we were just having? Welcome.

F (11:12)

Well, I don't cover individual companies, but yeah, it does make sense to us that the hyperscaler concerns about sustainability are just not, not realistic. Yet you're going to still see $650 billion in spending this year alone. Those companies have to compete with each other. That does mean putting the metal in the ground.

B (11:29)

Yeah. I wonder if it means market caps will inflect once that Exxon is about 600 billion today and met as 1.6 trillion. And you wonder if you spin the story forward five or ten years, does that flip flop? I don't know. But how strongly do you feel about the materials and energy and supply chain companies right now?

F (11:48)

Well, you know, we do like industrials right now. We also like utilities. We also like financials. So what we're trying to do here is two things. First of all, play an economic recovery or stronger growth theme, let's call it that we think is well entrenched for this year and has not been paid enough attention to so far this year. That's the first thing. And the second thing is that you put your finger on it a moment ago. No one really knows what the adoption rates, the monetization rates are going to be like going forward. So there's no point in taking excessive investment risk in these companies. But you do want to play the trend because AI is here to stay. And so if you're taking industrials, you're taking utilities, you're buying into the whole, let's call it an adjunct theme of data centers, which is still a theme that needs to be developed. And those PEs, those valuations on those companies, they're not that strong. So they're not overpriced, in other words. So we think there's good opportunities there, industrials and utilities. And if you think financials too, that's a good way to play if you want to hedge against the theme, hedge by taking on a stronger economy. For this year, we're seeing regional banks do really well here. We think the tax refunds, the deregulation and that spending by the hyperscale is going to be important going forward. Financials should benefit.

B (13:05)

If I were a financials investor, I'd go, wait a minute, that's what I was doing. What happened? They just had their worst day since April yesterday. Really big declines across the board. Is that just some kind of reset for what's been a strong trade or the a sign of more trouble to come?

F (13:20)

No, we don't think it is a sign of more trouble to come. Whether it's a reset or a kind of a repositioning. Again, the regional banks doing really well Here if there's wonders about or questions still about that 10% cap on interest rates proposed by the administration, that's probably lingering in the background there still. But we still like the sector very much. And if I had a dollar to put in the market right now, put it in financials.

B (13:43)

What do you make of this preference for consumer staples over consumer discretionary? Should we read this as something that a preference or something that can't be Gen AI'd to use the Peter Boockvard term? Or should we read this as a market rotating into a more cautious and defensive position?

F (14:00)

Yeah, I mean, look, we've seen the market. The big rotation here is the one from services to goods. And so goods are going to do better here and that's the real fear about the economy. And so if Staples are going to do a little bit better than discretionary. Yeah, that might be kind of a continuation of that theme that we better stay with Staples because AI is going to destroy a lot of jobs and put the economy in recession. We don't believe any of that. We're unfavorable on Staples. But we would definitely be thinking that, you know, this is what markets are thinking. Just look also at sort of the options. If you look at the S and P, the options and the VIX have really skewed towards a big, big pullback, a big correction that was probably related to fears about the economy. We think all of that is overdone.

B (14:46)

All right, Paul, thanks so much for joining us. Appreciate it today.

F (14:48)

Thanks, Kelly.

B (14:49)

Paul Christopher, Wells Fargo Investment Institute. Coming up, you just heard the case for financials, but our next guest says you should short them. It's the worst sector so far this year, tracking for its worst month in three years. And we'll talk about why he thinks there could be more pain ahead. Plus, Sentinel One shares coming off an all time low after the recent sell off tied to AI agent fears. Is the cybersecurity space ripe for disruption? We'll ask the CEO straight ahead on the Exchange. This is the Exchange on cnbc.

A (15:27)

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 thy ticket lady Jennifer of Coolidge.

B (15:58)

Well, many thanks, good sir. Here is my Discover card. They accept Discover at Renaissance fairs? Yeah, they do here. Discover is accepted at the places I love to shop. Get it with the times. With the times. You're playing the loot. Yeah, and it sounds pretty good, right? Discover is accepted at 99% of places that take credit cards nationwide, based on

E (16:23)

the February 2025 Nielsen report.

B (16:25)

What do the steam engine, electricity and AI have in common? They don't just change how we work, they transform entire economies. Where the Internet Lives is an award winning podcast from Google about the unseen world of data centers. This season we're going inside the AI revolution. From farmers using AI to analyze soil data to researchers discovering new medicines, a new era of AI innovation is here. Listen to where the Internet lives wherever you get your podcasts. Welcome back. The financial sector had been rocketing with J.P. morgan, B of A, Wells Fargo, Goldman and Morgan Stanley all hitting all time highs just last month. But now the tide has turned with the sector posting its worst day since April yesterday. And it's now the worst performer this year, down 7%. My next guest says this poor performance shows no signs of abating and he remains a seller here. Let's bring in Carter Worth, the founder and CEO of Worth Charting. Carter, it's great to see you again. Welcome.

G (17:22)

Hi, Kelly. Yeah, I mean, the thing is this is not something that came out of nowhere. Often strength, the precursor to strength is strength and it's the opposite. The precursor for weakness is weakness. The financial sector has been under pressure for the past 12 months and what's happening of late is just, I think a continuation of the same. And it's broad based, right? It's recent names like JP Morgan are joining, but the property casualty insurers, Life health insurers have been problematic. We know the private equity Now, Visa and MasterCard, American Express, some of the exchanges. It's broad based. I don't see it ending.

B (18:02)

I'm glad you brought that up because now it is, for instance, the life insurers where you've got Moody saying, no, no, no, they're not, they're going to be okay. They're not overexposed to losses in the private markets, for instance, which we all know is the first part of the discovery about to what extent they are going to be on the hook for those losses. Does this. So if you're JP Morgan and you get swept up in this, is this a buying opportunity for investors of a couple of franchises that might be much less affected by all of these crosswinds

G (18:29)

well, that's always right. An opportunity in any marketplace if someone is fallen badly to be scooped up by another if their franchise is still a good one. But I think the important thing is it's obviously the second biggest sector by weight at about 12 and a half percent. And it's the lifeblood of the economy. Right. The banks, the transmission mechanism of the economy. And weakness here is not something that's welcomed. And again, it's broad based. In fact, if you were to look at the equal weight S&P 500 financial sector compared to the actual weight where Berkshire and JP Morgan are about a third, it's equally dodgy at the equal weight level. So I think it's a theme that is real. And while there are, you know, certain regional banks are performing well and certain insurers like Travelers and Hague doing very well or Chubb the in its totality, this very important sector, the weakness yesterday was weakness. That's been going on for a while, it's just accelerating.

B (19:24)

Right. And our last guest, we asked him about financials, he continues to like them. He mentioned the regional banks as one example of areas where he expects to see more strength. You know, again, he's more constructive and upbeat about the economy. But it's striking to have you're both looking at the same companies, you're both looking at the same charts and coming up with two completely different conclusions.

G (19:44)

Yeah, I mean, that's what makes buyers and sellers. It is fascinating. Whoever's selling a share of Apple today versus Buying, they obviously have very different opinions. Same for shares of J.P. morgan, Goldman Sachs, Morgan Stanley. But what's going on in the private equity stocks KKR and Apollo can't be ignored. Again, the serious rollover in Visa and MasterCard, American Express, and then the slippage in idiosyncratic names including, you know, insurance brokers like AJG or, or Marshmak, Brown and Brown. It's not good action.

B (20:15)

So we'll put up the chart and to your point, it's been basically flat now, unchanged over the past year, which is not great. You know, that already means investors in this sector are falling behind and now they have a myriad of concerns which you just outlined kind of subgroup by subgroup. How much more weakness do you anticipate on kind of the. For the etf, broadly speaking.

G (20:34)

Right. So one thing to note is obviously, as you point out, unchanged over the past 12 months versus the S&P up 15. But what that gives you on a relative performance chart, we're making five year lows right now. I suspect and you see that there on the screen, the bottom panel, a relative performance. We're going up since the lows of the tariff kerfuffle over the past 12 months. Financials on top, but we're going down relative to. So it's the opposite of alpha. Commitments here have not generated returns worthy of the risk associated with the commitment. I think it goes lower and I think we all know that while these are better operators, listen, JP Morgan trades at a record price to book, if you want to speak about a little bit of fundamentals. And these are not just perfect businesses, they're very cyclical.

B (21:19)

Right. Well, and we know we've had a strong run for some of the investment banks in particular. Really, really strong run coming into this. So the caution is worth noting and we'll see. I hope it's not a broader tell, you know, that's why we wanted to talk about that.

G (21:31)

So that's always the question mark.

B (21:33)

Yeah, Carter, thanks for now. We'll check back in soon. Appreciate it, Carter. Worth with, worth charting. Still to come next, taking the Trump administration to court, demanding a full refund of the tariff money they paid. Can they deliver refunds for their shareholders? We'll dig into that. The stock actually on pace for its best month in five and a half years. It's up 34% year to date. Much more after this.

A (22:00)

Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desktop. 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 before we had AT&T

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business Wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business Wireless, routes are

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updating on the fly and deliveries are on time.

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And the influencer did get us 53 new followers though.

C (22:53)

AT&T business Wireless Connecting changes everything.

B (22:59)

Shipping, billing, admin, payroll, marketing. You're managing all the things, so why waste time sending important documents the old fashioned way. Mail and ship when you want, how you want with stamps.com print postage on demand 24. 7 and schedule pickups from your office or home. Save up to 90% with automated rate shopping. That's why over 1 million small businesses trust stamps.com go to stamps.com and use code podcast to try stamps.com risk free for 60 days. Welcome back. We'll check on this rally. We still see the Russell up a percent. Same for the NASDAQ. Dow just shy of that, up for 14. Here are some of the movers this hour. Klaviyo popping after announcing a new partnership with Google. They make software for retailers to target their marketing. And this deal with Google would allow advertisers to use Klaviyo's tech for more precise targeting. Those shares are coming off an all time low and despite today's move are still 60% below their recent high. So clearly Google sees some value there. That's with a seven and a half percent pop. And the battle for WBD continues. Warner Brothers Discovery says it's received a higher takeover offer from Paramount Skydance. The board will review it and if it decides Paramount's new bid is better, then Netflix will have four days to improve its bid. You can see Netflix shares are actually up about 2% on this news. Coinbase is launching 24 hour trading for stocks and ETFs, but only five days a week. They're still giving you your weekends. The company says they've seen start. They're starting with the market's leading equities with plans to expand to thousands more stocks over the coming months. They offer also plan to offer tokenized stocks, which we've heard a lot about from Robinhood before. Unclear on the regulatory front right now. And Coinbase shares are still down 30% to start the year. Different story for FedEx. It's up about the same amount. Those shares are on pace for their seventh straight month of gains and their best month in six years. And now the company is suing the US Government seeking a quote, full refund of the money they paid for President Trump's tariffs. Frank Holland is here with the details. Frank, what do we know?

C (24:56)

Kelly, good afternoon. Well, no specific dollar amount for this FedEx suit for when they're looking for a refund. But we do know the company wants their refund plus interest and reimbursement of the legal fees. Also, FedEx forecasted trade policy would be a $1 billion headwind this fiscal year. Now, FedEx is notably the first major US company to file for a refund under the Supreme Court or after the Supreme Court decision. But others, including Costco, Kohl's and Goodyear, they've already filed with Some essentially describing their suits as procedural. FedEx issuing a statement saying in part, FedEx has taken necessary action to protect the company's rights as an importer of record to seek duty refunds from U.S. customs and Border Protection. Now, this is similar language to the language the company used in 2019 when it sued the Trump administration over a push for deeper inspection of packages from China. Trade attorneys and litigators I'm speaking with say they expect to see many more suits in coming days. But Dennis Ranitsky of Quinn Emanuel, a major corporate law firm that counts Elon Musk as a client, says procedural or not, there's going to be hesitation by many companies.

E (25:54)

We are talking to some clients who have concerns about bringing these suits now, particularly if they they're in a highly regulated industry or if they're dependent on the government for their livelihood.

C (26:09)

So some may hesitate, but lawyers expect a flurry of large companies to file in coming days. The motivation is the potential for the judge to create a steering committee to help sort the thousands of potential claims, with early filers potentially having a better chance to be part of that committee. And the process to refund about $175 billion in tariffs.

B (26:26)

What a mess. But the Supreme Court did not speak explicitly about whether refunds were due, which I guess then just leaves the door open for this litigation to take place.

C (26:36)

Well, I think that's what we're seeing in the Truth Social Post and a lot of questions by a lot of these companies. Here's the thing. While the Supreme Court didn't answer that question, this trade court can answer that question. They can also say whether or not they'll be retroactive or if just the tariffs will stop. Right now, they can actually implement some of this policy. Now the real question here is will they want to set precedent? Every lawyer I talk to says the question is about precedent because in court cases like these, if the decision is made, then other cases can be are filed using this as a precedent. One other thing, we're going to get an interesting read on how companies are seeing all this. We have expediters reporting their earnings this week. Now, they generally don't have a call, but they do put out their press release. So it'll be interesting if there's any commentary about this decision in there.

B (27:14)

Yeah, no, great point, Frank. Thank you. And again, FedEx on such a nice run lately. What is that about?

C (27:19)

What the stocks of 30, their turnaround plan. So if you talk to analysts, a lot of people are excited about their turnaround plan. Not only is it cost cutting, but they like the idea of combining their businesses, the ground and the express. Also the spin off of the freight business. A lot of excitement about that. If you put up a chart of some LTL companies like as Old Dominion, you can see they've had very strong starts to the year. A lot of people think that's going to unlock a lot of value for FedEx to have its freight company be its own standalone company. And it'll still have a partnership with the rest of FedEx.

B (27:45)

And it's the sexiest space out there right now. It's not SaaS. It's any, it's, it's delivering stuff. Frank, thank you very much. Frank Holland. Let's get to Courtney Reagan now for the CNBC news update. Hi, Courtney. Hi, Kelly. The U.S. attorney's office in Washington, D.C. has reportedly dropped the effort to indict six Democratic lawmakers who posted a video urging military personnel not to follow illegal orders. That's according to multiple reports. The decision comes after a grand jury refused to return an indictment earlier this month. The U.S. attorney's office has yet to comment. The Trump Family backed crypto stablecoin. USD1 fell below its $1 benchmark yesterday. Parent company World Liberty Financial says its engineering and security team successfully repelled a coordinated cyber attack. The stablecoin coin quickly recovered from the dip, according to industry tracker CoinGecko. USDI is the largest Stablecoin by market cap. And Novo Nordisk announced today that next year it will cut the price by up to half for its weight loss and diabetes drugs Wegovy and Ozempic. The cuts will apply to injections and their pill versions. It escalates a GOP one price war with rival Eli Lee's, Lilly's, Zip Bound and Manjaro. Kelly, back over to you. Courtney, thank you very much. Coming up, AI disruption fears are hitting cybersecurity stocks over the past few days, but Wall street staying bullish. Piper Sandler writing that I represents more of an opportunity than a threat. We'll ask Sentinel One CEO directly how they plan to defend against any disruption with the shares coming off in all time low.

F (29:15)

As America celebrates its 250th anniversary, senior CNBC spotlights the companies that rose with

B (29:22)

the nation and continue to shape its future.

H (29:28)

My name is Jamie Hyneman. I'm the chief technology officer for John Deere, an American manufacturing company that's been around for nearly two centuries. The company was founded in 1837 by John Deere and it was founded on an innovation, the self scouring steel plow that was solving a problem of how to do tillage in the sticky Midwestern soils of the day. The plows of the day were either a wood or a cast iron material. And the soil stuck to those plows, it caused the farmer to have to stop frequently in order to finish the plowing operation. The steel plow solved that problem, allowed for continuous plowing because it was a polished steel surface and enabled the farmer to plow continuously without having to clean the plow. I think fundamentally John Deere was about solving a problem for the farmer. He was about creating value for the farmer. That attention to customer is one of these things that still permeates the company today. We think about how can we go create value for our customer base so that they can do the jobs that they do better. Trying to understand how we can take major technology trends that are happening, things like artificial intelligence and how can you enable a farmer to benefit from that on the farm or the job site? Can we provide them better insights as to what happening with the data that they're collecting from their farm? What would make John Deere the most proud of the company today is sort of the enduring legacy of quality and I think connection to the customer. This insatiable desire to understand how can you make the customers work better, easier, more profitable and more sustainable. That was the core of his ethos and he would still see that very much alive today in the company. I think the future is incredibly bright. Technology is making possible things today that were never possible or thought to be possible even five years ago. And that's creating opportunities for the farmers and the ecosystem of agriculture.

B (31:26)

Cybersecurity stocks are getting a little bit of relief today after Anthropic's Claude cowork announcement proved a little underwhelming. That was this morning. Shares of Sentinel 1 are up about 4%, but they're still down about 6% since the debut of Anthropic's new security tool late last week. That was the real mover here. And here now to discuss AI's impact on the sector, maybe on society, humanity is Tomer Weingarten. He is the CEO of Sentinel 1 along with our very own Seema Modi. Welcome to you both. Seema Kelly. Thank you, Tomer. It's good to have you on at a time where the market is trying to understand the role of large language models in cybersecurity security. I know you've had a chance to review Anthropic latest security tool which can identify and patch software vulnerabilities. What's your take and reaction?

I (32:11)

Yeah, I mean, I think first and foremost you're seeing, you know, this just being a part of a wider disruption in all of software. So this is what AI is going to do systematically. We're seeing it already happening in many fields of software where the most, I would say repetitive patron oriented tasks are being replaced by AI based software. And that's important to say. Cloud code security is another product. So it raises the bar to what cybersecurity products should do and can do. It's significantly better than the state of the art currently. But at the same time, code security is about 5% of the entire cybersecurity market. So it's important to keep that in perspective.

B (32:53)

So it's a small feature of what a cybersecurity company like yours offers. There was Anthropic coming out with a new announcement today and also announcing some partnerships with software companies like an Intuit Salesforce. Are you in active discussions with Anthropic? Do you think its tool could be embedded in your workflow?

I (33:10)

I think everybody, you know, is using these models in one way, shape or form. We're actually an investor in Anthropic and we're incorporating their models in our software as well, as well as OpenAI as well as Google Gemini. I think it's really clear that every piece of software from here on out is going to have an element of some of these Frontier Labs capabilities or Open Source capabilities. You know, everybody can choose how they want to incorporate, you know, LLM based technologies into their software stack. Where that's going to come, that's going to become an imperative of any software that that's being built. I do think that, you know, we didn't have any capability in code security, so in essence we were not really impacted by this. At the same time, if you're looking at the biggest vendors in cybersecurity, these are typically, you know, very wide platforms with a lot of different micro capabilities. They're the ones that are a bit more susceptible, I would say, to what I can bring, you know, slowly but surely capability by capability. We're going to see, you know, a consolidation, a convergence of these capabilities not by more platform capabilities, just by more capable products. And I think that's what. But you know, the market is maybe a bit fearful.

B (34:20)

Tomer, it's Kelly here. If I can just, I don't want to take this off track, but do you guys do a lot of defending against ransomware attacks?

I (34:27)

Yeah, yeah, definitely. It's, I think one of the things that Everybody is very concerned about.

B (34:31)

Yes. Can you just comment on whether you think their frequency is going up or down? There's been a lot of turmoil in the crypto world where obviously the price of Bitcoin has gone down. But. But it's still. There was still a lot of concern about it being used for nefarious purposes. I don't know if I can in any way help companies defend against that, but can you just comment broadly on kind of ransomware in general and what your experience is amid the rise of AI and some of the other changes that we're seeing?

I (34:56)

Yeah, look, I mean, we've incorporated AI into our products for the past decade by definitely, definitely in the past couple of years in order to mitigate ransomware to the point that we also gave a complete warranty against ransomware attacks to our customers. So AI is very helpful in defusing some of these attacks. Now, the flip side is that attackers are now leveraging, and we're seeing a lot of experimentation by attackers right now on how they can now, you know, run ransomware attacks with more velocity, with more speed, with more scale. So that's the concerning bit. And I think that's why all of us in cybersecurity are working incredibly hard to make sure that we can evolve our defenses to meet that day when these experiments that we're seeing right now are going to turn, you know, sadly into real, live attacks. But right now, you know, ransomware has never really subsided in the past few years. It's always there. I think there's maybe less media attention around it, but it doesn't mean that it's not there. AI does bring more speed to defenders right now, but again, that equation is slowly but surely eroding, with attackers leveraging AI as well.

B (36:07)

So you're using AI to identify these risks earlier. But, Tomer, if AI is also helping you automate a lot of your cybersecurity workflow, are you expecting to need fewer employees over time? Are we going to see a headcount reduction, you think, across the industry?

I (36:22)

I mean, I think that headcount reductions are going to come, and they're going to be relatively surgical, especially in cybersecurity, which has been so, you know, kind of a market with a lot of scarcity in cybersecurity analysts and talent. So AI, to me, is an amplification for cybersecurity. It's meant to augment what the cyber defender can do. We never had enough cyber defenders to begin with, so I would not expect cybersecurity to be the place where you're going to see the most kind of headcount reductions. But that's also possible, as you said,

B (36:54)

consolidation and convergence things to look for. Toomer Weingarten for CEO of Sentinel One. Thank you for your time.

I (37:00)

Thank you for having me.

B (37:01)

It was really interesting. Sima, thank you as well. Our Seema Modi coming up in video shares are up about 4% since the government gave him the green light to sell those H200 chips to China back in January and just a day ahead of Nvidia's earnings. China is in focus again, but for all the wrong reasons. That's next when the exchange comes back. Meta's new partnership with AMD is its second major AI deal in just the past week. Last Tuesday they expanded their agreement with Nvidia to use millions of their chips in the Meta's AI data centers. And all at the same time, Meta is loading up on billions of dollars in debt to pay for all of this. So should investors be worried about their balance sheet or are they poised to become the next dominant AI player along with some of their partners? Let's ask Tim Seymour, the CIO of Seymour Asset Management and a CNBC contributor and a technologist. Tim, of course, are we all.

J (37:57)

We have to be.

B (37:58)

We have to be. Exactly what are your thoughts on this?

J (38:01)

My thoughts are that matter, at least for now actually. I think their capex as they've articulated even at 135 is being funded from, from their free cash flow from operations. It's still a net cash company. Question is when they go to net debt and, and because they're going to grow 25 to 30% in 26, they're going to have possibly their best growth in the last five years. The question is what's the multiple you put on the stock? I think the deal flow with Nvidia now amd obviously they talked about this, this, you know, Meta compute, they are front loading, they are looking to invest heavily now, be ahead of competition and, and they do have the most, I think at least advances and victories that we've seen in where the large language model and inference have actually started to pay off for them. I do think the market is rewarding that. Having said that, Matt has done nothing in the last year with a lot of volatility in between. I think the jury's out on the multiple here. This is a, this is a great deal for them. It's even better for amd.

B (38:58)

I like what you said, the jury is still out on the multiple and I mean I think about A lot of the Tim Seymour businesses which were, you know, like international markets and some of the different part all of those like the market wants all of that stuff right now. Metta in a weird way is turning itself into more of like a. They're putting steel in the ground. Right. I don't know what multiple they should be trading at when they're doing that because other than their corporate headquarters, this is not something big tech has been doing a lot of over the past 15 years.

F (39:23)

Right.

J (39:23)

And the irony is that of course hardware and that part of the market has been outperforming significantly. In fact, it puts more pressure than ever on Nvidia. If the market's a team sport, they really better do what they need to do. But meanwhile MATTER is more asset heavy than they've ever been. What is the reward for that? I do feel that the part of the, you know we talked about the end the prelude in was the ecosystem around Metta. I still think that this is supporting investment in the ip, the power producers. Yeah, Constellation had great numbers this morning. I get the sense that datacenter is really. It's not why I own Constellation. It's a ton of great optionality. And they too have a deal with Matter to keep one of their reactors going for 20 years in Illinois. They have a deal with Microsoft. But they are nuclear, they are not gas. And I think that's part of where investors should stay and not be as scared off by some of this volatility.

B (40:22)

I'm glad you mentioned that you know got in front of the next question is even going to ask which is if. If you put MATTER in the too hard pile for now, what's easier? And you're saying Constellation is easier. What else to you is easier right now?

J (40:32)

Well, I think AMD is easier too. And I realize also this is a case where this is a stock that's 25% off its highs. Until this announcement that chart may have looked skittish for sure. I do think that this is a validation of the MY450. I do think this is a sign that AMD is now keeping pace with Nvidia. And I do think that there's at least if you believe that the warrant structure of this deal is something that actually means the stocks positioned to go higher. That's certainly what MATTER thinks.

B (41:02)

All right, Tim, thanks. Appreciate it as always. Tim Seymour, that's it for us. Brian is back. He and I will join you for Power Lunch right after this break. You've been listening to the exchange. Make sure you're subscribed to get each episode every day, same time, same place.

A (41:21)

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