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Nvidia After the Bell, Crypto Relief, and the State of The Union 2/25/26
00:44:12
Wedbush calls Nvidia the leader in the AI revolution ahead of earnings. Circle surges on strong results, but Mizuho says it's facing two major headwinds. Plus, what President Trump said, and didn't say, in his State of The Union address.
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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.
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Need assistance?
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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 not every sale happens
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at the register before AT&T business Wire. Checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time.
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Sometimes AT&T business Wireless Connecting changes everything.
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You're listening to the Exchange. Here's today's show. Thank you very much, Scott. We've got some huge earnings on tap. A big sigh of relief in the crypto space. And a few things that weren't said at the State of the Union last night might give the crypto world and a few other folks some pause today. We'll get into all of that. Welcome to the Exchange. I'm Kelly Evans. Let's start with stocks broadly here, which you can see we're higher across the board. The NASDAQ is clearly leading the way. It's up 1.2%. That's about double the Dow's gain. Half a percent percent for the small caps, three quarters of a percent for the Russell 2000 for the S&P 500, I should say. And Nvidia is up 2% ahead of its report tonight. Software is also rebounding for a second straight session, even with a 10% drop in workday. And here's the crazy thing. Look on your screen right now. Not only are workday shares off the worst levels, they have turned positive again. If that doesn't capture what's going on in software right now. Workday from down 10% to up 1.2% right now. Salesforce and Snowflake are also both rising and will hear from both of them this afternoon. We also mentioned crypto. Some huge movers here today. Circles up 29% now after a massive earnings beat. It's driving up shares of Coinbase 13%. Robinhood is up about 5. It's also getting some help. On a bullish note from B of A. Bitcoin is up 6 and a half percent to almost 67,000, 69,000 now let's start though with Nvidia's after earnings after the bell will circle back to a lot of those other topics. The shares are up two and a quarter percent or so and they're on pace. Their first four day win streak since December and and the P E is still only around 27. It's lower than Broadcom or AMD. Our next guest is expecting big things from tonight's results. Get out the popcorn. He says Wall street estimates are being significantly underestimated over the next few years. Dan Ives from Wedbush securities is here with us. He's the global head of technology research. What are the numbers Dan that you're looking for? Welcome.
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Great to be here. Look, I mean obviously you know in terms of overall growth and you know called street looking for you know I ultimately believe we mid 60% type growth but I think it's all about 2027 growth. I mean street right now has 30%. Look, I think when you look at overall data center and you look at CapEx, the 500 billion from Blackwell and Rubin, I mean that could be estimated by 500 bips. A thousand bips when it's all said and done. Look there's no one that has a better perch in the air revolution than obviously the godfather of Jensen. And in what's really been a ghost. This is a very important print. I'm expecting gold medal performance from Nvidia.
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And how important do you think it is for the rest of the market Dan, which has been happy to find leadership in the semis broadly even when Nvidia is not participating, has been happy to look at the hardware names, has been happy to be in memory has you know what I mean like it, it feels like less is at stake now than it might have been a year, a year and a half ago.
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I think, look, I think to some extent, yeah I mean everyone's been piling into obviously hardware and semis. Software right now is almost a do not enter a zone and I think that continues to be the most disconnected trade out there. But it all speaks to what does demand look like. What is in video seeing especially China is going to be a big question mark. That's essentially really nothing right now. You know as the H200 ultimately come in that's going to be key. And then what does it look like in terms of Blackwell Rubin pipeline and then you know when you look at the timing of everything this continues to be massively underestimated. There's One chip in the world fueling the revolution and sovereigns in the rest of the world haven't even started to come in. And I think that to us is why this is just a pivotal report. Especially what Jensen seeing from a demand perspective.
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Okay, you mentioned the software names Dan. Look at workday, right? I remember you said yesterday morning as Anthropic was unveiling its, its big event that ended up being more about partnerships and you know, disruption. You were saying this is the most oversold this sector has been maybe ever. What do you make of the reversal in workday now and, and is this a space you think investors should load up on or do we have to wait to the points we were hearing last hour from kind of big name investors who are saying maybe it's better to kind of step aside here and let the dust settle?
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Kelly I think it's the most disconnected trade that I've ever seen in my career going back to late 90s in terms of what's happened Software especially when I look at Salesforce Service now look at IBM when it was down 13% on the worries about quad and ultimately what these tools are going to look. I'm not saying there's not some software companies are going to be on the wrong side of this and they will be. But the reality is is that structurally software is going to be key to actually the success of AI in the use cases. I think right now it's an AI ghost trade that you're fighting. And I think software this is going to be viewed as I think generation. We've talked about generational opportunity on names on big tech. When you look at some of the core software names and Salesforce ServiceNow, IBM, you look at Palantir, you look at Microsoft right now, the way that that's trading, I think this is really, you know, the rubber meets the road. It all starts the video.
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Yeah. And one of your colleagues on the street over at Rothschild had a fun open letter to. Did you. I don't know if you saw this. It was kind of making the rounds. An open letter to Jensen Huang where he asks about some specific issues that he said, you know, he wants, he wants to hear him address market concerns and begin to reverse this derating. You know, he points out that the multiple is trading at less than McDonald's. There are three broad categories of issues, he says the outlook for AI training and inference, customers, technology requirements and their roadmaps and then the fit between customers, future workloads and Nvidia's product roadmap versus that of your rivals. I mean look at what AMD and Metta are doing today. So how would, how would maybe Dan Ives bullish on Nvidia respond to some of those concerns?
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Yeah, look, I think those are great points. I think, look, first off it's really trying to give some sort of roadmap to what this is going to look like in 2027 because fiscal 27 is what this is all about from Nvidia. Is it 30% or it's 40% growth, it's 75% margins. You could argue then the stocks 230, 250 or even much higher then it's addressing I think the software components as well. Jensen's a big huge supporter of the ecosystem and I think what's happening right now, it is a dislocated, really a disconnected trade relative to how Claude and Anthony, philanthropic, they're not going to structurally break software names. But it all comes down to the CapEx. CapEx is accelerating and we've said for every dollar spent on Nvidia chip, it's an 8 to $10 multiplier across the rest of tech. And that to us is instrumental in what I believe is going to be the bull thesis playing out for tech.
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Yeah, you know another point here he says while these deals, you know, for instance between Meta and AMD illustrate the strength of Nvidia, they demonstrate the degree to which rivals are determined to, or desperate to compete. You know, and if Nvidia is up against kind of some very big pocketed other players who don't want to have, they don't want, they want this to be a shakedown, you know, that they just have to keep playing, paying, paying for these, for these chips for years on out.
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Look, and the reality is the new gold, new oil in this world, it's in video chips. I mean, and that's why there's no one, I don't think there's, when you look there, years ahead of competition. That's why even a third rate chip in China will I think be higher demand than Huawei. But it all comes down to why this is such an important night within video with of course Salesforce and some of the software because it's an AI ghost trade. And it all starts with Jensen putting on the black leather jacket. And that's the first step to defeating the ghost trade.
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I love the importance of the theatrics. Putting on the black leather jacket. Dan, thank you very much and thank you. Be an exciting afternoon for sure. Dan Ives from Wedbush. We appreciate it. Sticking with the Theme My next guest also owns Nvidia and has been a longtime holder of amd. But she's also looking at a few other names as the story and the build out evolve. Let's bring in Kim Forrest now. She's the Chief Investment Officer at Boca Capital Partners. Kim, it's good to check in with you. Do you want to jump? I mean, are you as bullish on Nvidia and on the industry broadly as we just heard from Dan Ives there?
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I don't think anyone could be. I mean, I think Dan shows you who he is by how he dresses and he loves, he's a happy guy. The glass is 3/4 full, not just half full. Right. And I think he has lots of good points. But I also have to, you know, be the word of caution here that maybe, you know, there's a lot of fear out there that AI isn't going to roll out how everybody thinks and especially owners of Nvidia, how they think it's going to roll out. So I guess I'm bit more cautious on the whole ecosystem. Although in the long run I do think AI is the thing that gives us productivity. So it comes to fruition. It's just a longer timeline and not the way you originally think it's going to play out.
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It might not matter because you still own Nvidia, you own amd, you own Micron, you own synapse. I mean, so I'm looking, it's not like you're sitting over here saying, I'm sticking with, you know, consumer staples and utilities. I mean you're, you're right in the thick of this trade.
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I am, but I'm also very cautious because I see these sell off waves go through when we get information. Like tonight, I think it's already baked in. Nvidia had a great quarter ts Taiwan Semi kind of gives the nod to that because they're a big provider of their actual chips. So that's really not what we're concerned about. It's the future and the future is really up for debate. Are we going to have to have as many data centers as we think and thus have as many of the higher end training chips? The inference, inference chips, all of those chips. And in a relatively short period of time, I don't think it's going to play out that way. But you know, you're right, I do own them and I just am not betting on a timeline, let's put it that way.
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So you still think Nvidia is going to set the tone? Again, you've Been covering Semis for a long, long, long, long time. So do you still think they are going to set the tone? Are they still one of the most important, if not the most important stocks in the market?
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Absolutely. And it's because of their incredible ability to create the hot chip and maintain that performance, right? They are. Every iteration of these AI focused chips are more powerful than the last version and that's exactly what the AI developers need and want and are willing to pay for. However, you know it's interesting watching this all play out. AMD has always had GPU chip and guess what, that's what all this stuff is based off of. And you know yesterday's announcement was pretty exciting and I love whenever there's competition in an area and I think AMD will be a competent and a good competitor for Nvidia to push them higher but people will prefer a lower cost chip at some point and AMD is ready to step up and you know, take their money.
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I was thinking of you yesterday and the shares performance year today. I said Kim for us with her, AMD is happy right now. That said, can we talk some Google? I don't see them on your list here but given how much you know about semis when they came out with Gemini, which as far as I'm concerned is superior and it's powered by their proprietary TPU's which as I understand it are more energy efficient and they don't have to use Nvidia. I mean why isn't this game set match for them?
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Well because there's a lot of other people developing these chips and they will develop them for different applications. I do think Nvidia should pay attention to that little phrase lower energy use. That is very big and that's something that you know one of those companies that I also liked intel was able to do in their higher end chips was every iteration of their server chips. They were targeting lower power consumption while not affecting performance. And I think Nvidia should take a page out of it, you know, Google's Playbook and investigate that and that may cement, you know, their leadership.
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The other thing that I wanted to ask you about and if we still have this chart is a great chart from our Deirdre Bosa yesterday showing the top 10 models that people are using. Number one was Minimax. You had several Chinese models on that list and the reason simply is they're cheap and they're in many cases good enough. They might be using older version of Nvidia chips. What would that mean? If could they do to AI the Chinese with their technology, lower cost production, what they've done to other global exports and industries which is to come in as the lower cost option and kind of set the price and disintermediate the market leaders.
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Sure. I mean that is really the problem here, isn't it? And that is a lot of the intellectual property fights that the, we'll just call them the western models are under undertaking, you know, legal fights because a lot of their data and a lot of their results are getting, you know, kind of scraped off for free again to be used in Chinese models. I think in any situation there is always going to be a low cost provider everywhere. But what you have to do, like your preference for Gemini, you have to make it more, you know, just better and people will pay up for it. And I think that really is the key to all kind of innovation, not just technology is you have to have that product marketing understand what your consumers want, go to where you don't even know that they want to go and make that product for them. That and that's what Apple's done forever. Right. We didn't even know we needed iPads and here we have them, you know, whenever that was a new product. So I think these models have to be the same way. They have to be able to figure out problems that people want to solve and make them worth the money and
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if nothing else, own synopsis. I see that's a favorite of yours, Kim. Thanks. We'll see what happens this afternoon. It's great to get your view here. Good to you again Kim Forest with Boca Capital Partners. Coming up, let's go back to crypto. Circle shares are soaring on strong results. But do stablecoins have long term earnings power? We'll debate that next with the shares having their best day since last summer. Plus the top takeaways from last night's nearly two hour State of the Union address. The president mostly focusing on domestic issues like the economy and government backed for one case. But our policy analysts don't overlook his key line about Iran, what it means for the future of nuclear negotiations. Coming up on the exchange.
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This is the exchange on cnbc. 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 oh, could this vintage
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store be any cuter? Right? And the best part? They accept Discover. Except Discover in a little place like this? I don't think so. Jennifer.
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Oh yeah, huh?
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Discover's accepted where I like to shop. Come on, baby, get with the time.
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Right.
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So we shouldn't get the parachute pants. These are making a comeback, I think. Discover is accepted at 99% of places
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that take credit cards nationwide, based on
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the February 2025 Nielsen report. Strayer University, we help students like you go from will I to why not? For over 130 years, we've been innovating higher education to make it more affordable, accessible and attainable so you can reach your goals. Go from thinking can I? To Yes, I can and keep striving. Visit strayer. Edu to learn more. Strayer University is certified to operate in Virginia by Chevinus. Many campuses, including at 2121 15th Street north in Arlington, Virginia. Finally, some excitement returns to the crypto space. Today it feels very 2021 or something. Take a look at Stablecoin issuer Circle. The shares are up 29% after fourth quarter earnings were much higher than expected. Some analysts saying it could have benefited as a safe haven play as bitcoin continues to struggle. Here to discuss now, Dan Dalive of Mizuho, who upgraded Circle last month, and our own Mackenzie Sagalos. Welcome to you both. Mackenzie, I'll start with you. Here's, here's my question. At a time when we're kind of calling into question the whole crypto ecosystem and maybe bitcoin, who knows what price it should trade at? But what does the strong demand for selling stablecoins tell us about the potential durability of this whole system? I mean, it really suggests that the crypto market is starting to mature because even in a broad sell off, which is the mode that we've been in since October, there's now this clear defensive pocket within the ecosystem. So while bitcoin and then the miners and crypto linked equities are all under pressure, investors aren't necessarily exiting the space altogether. They're just rotating into stablecoins assets like usdc, which is what Circle issues. And that's increasingly acting as the cash equivalent of the digital asset world. And it was just amazing to see that show up in the Q4 print. Quarterly profit surged nearly 3,000% from a year ago. Dan, remind me why you upgraded them last month. What positive trends were you seeing?
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I agree with everything Mackenzie says, it's basically all about use cases. And if you think about this, really the only good use case right now is actually for stablecoin and USDC is a winner here. We upgraded because polymarket prediction market lets you only settle with usdc. So as Polymarket explodes this year. Right. Think about how many events we have this year that should be very, very good for USDC and then in turn very good for Circle. And that's the main reason we upgraded last month.
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We've talked about the headwinds for Circle, namely that as the Fed lowers, rates are going to make a little less on spread income. Dan. But how much is simple adoption or usage of its stablecoin going to drive earnings power? Is it going to continue to drive earnings power?
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That's a great question. And that's the reason we actually we upgraded from, you know, a sell to a neutral and not to an outperform because there's still some concern. Right. So you have to outrun Fed rates, which we'll see in May how much they come down, you know, when there's a new Fed chair. The positives is Poly Markets. It's a gent commerce. So agents are actually talking to each other, making purchases using tokens like usdc. So that's kind of the sort of the tug of war between the positives and the negatives.
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It's ironic, Mackenzie, because at the very moment, again, that the poster child for crypto in many ways is still bitcoin and it's been struggling. So I think this would surprise a lot of people. But we've been kind of talking about this going back to last summer. The moment that stablecoins were kind of given the blessing they were enshrined into the US regulatory system meant that, you know, the ecosystem can flourish, people can hold this thing without too much fear about doing business with it again, it's kind of matured. It feels like it's matured past Bitcoin into the stablecoin activity. I don't know what you're hearing in terms of competition there. It seems like every time you turn around, someone's launching a new stablecoin. And what that means for a company like Circle in the long run? Well, in terms of the competitive landscape, you certainly see different players stepping in, including the Trump family with USD 1, which is part of their World Liberty Financial project. But I mean, ultimately, the genius act, that stablecoin bill was helpful to the stablecoin ecosystem, but now the major overhang is the next bill. So the clarity act and that's basically a fight over Stablecoin. Rewards have names like Circle and Coinbase. Coinbase going head to head with the bank lobby over the rewards that they're offering on USDC. So you can earn around 4% interest on idle US dollar holdings, which is great for a crypto investor who's parking their cash in a safe place during a bear market. But the banks, JP Morgan, bank of America are very unhappy about that. They say that they're not subject to the same kind of rules and regulations that guide bank savings deposits, that these are unregistered and unregulated US dollar deposits.
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Right.
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And so that's a big fight right now. And you know, Dan, obviously it has echoes of 2008 Money market funds to some extent, having to understand where that yield is coming from. But what would you say about those concerns that Mackenzie raises? And look, frankly, the President did not mention that act last night in the State of the Union. I think a lot of people in the crypto world were expecting him to as kind of galvanizing support to get it passed and he did not bring it up.
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That's a right, that's a huge issue. And I think just specifically for, for Coinbase, just give you like a fun fact. If it actually passes, the way it's structured right now, it, in the short term, it might actually be like a really good thing for Coinbase's profits because they still get all the revenue from the tokens from usdc, but they don't have to pay rewards. So even though they're going there, they're against it, or Brian Armstrong is against it right now, in the, in the short term, it's actually a boon to their profits. So, you know, it'll be really interesting to see, you know, how it actually ends up. But, but that's just a fun fact on that one.
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The link to Poly Market, the fact that you said you're neutral, you didn't go to a buy in, both of those things are interesting. Mac, thanks for bringing us all the detail about the quarter as well. We'll leave it there. We appreciate it. Dan Dalive and our Mackenzie Seagallos. We've got a news alert on the AI build out. Pippa Stevens has the story. Pippa.
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Hey, Kelly.
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So we're getting more details on President Trump's announcement last night of the ratepayer protection pledge, specifically focusing on big tech bringing their own generation. So Amazon, Google, Matta, Microsoft X, Oracle and OpenAI are all set to head to the White House next week to sign agreements to build their own electricity supply for AI data centers. Fox did first report this news and of course comes as affordability is a major issue ahead of the midterm elections and a bigger push for tech companies to bring their own power generation. Unclear at this point how binding this will be and what the specifics will look like, but we've already seen companies including Microsoft pledge to bring their own electricity. So clearly part of a growing trend here with Big Tech heading to the White House next week. Kelly, Pippa, they need to show your names here, like on the screen. Constellation up three and a half percent. Not necessarily on this announcement, but who else would you say in the energy space are kind of the obvious partners here for Big Tech? I think one area to watch is certainly the regulated utilities because when you are talking about bringing your own generation, it's a lot easier in those vertically integrated, fully regulated markets. In restructured areas, including pgm, it's a little bit more convoluted since the utility doesn't own all of the wires and the generation. So those agreements are a little bit less straightforward. And of course, we saw PJM earlier this year call for their own, you know, reformation of the grid and asking tech to either bring their own generation or to pare back at times of peak demand. So I think looking forward, Kelly, areas to watch include the Midwest and the south and then just focusing on those regulated areas where it is a little bit more straightforward. All right, Pippa, thank you for bringing that to us. Pippa Stevens. Coming up, drama at the Pentagon giving Anthropic until Friday to agree to broad military access for its AI models or it'll invoke the Defense Production Act. What that tells us about the position the company and the Defense Department are in after the break.
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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 not every sale happens
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at the register before AT&T business Wireless. Checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes.
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At and T Business Wireless connecting changes everything.
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There's a fire inside you you can't ignore. Stand still. Not a chance. You're a lifelong learner who's come this far. Now we are here to help you. You keep going further Capella University what can't you do? Visit capella.edu to learn more. Welcome back. So many echoes of the past in the market activity today. Nasdaq's leading the way, cryptos higher. The Nasdaq is up about 1.1%, only a half percent gain for the Dow. I take a look at shares of Workday as well. This could be an important turnaround to watch. They went from dropping 10% last night on weaker than expected revenue guidance to turning positive this afternoon, up one and a half percent. Jefferies saying this reversal certainly making people wonder if it's a sign the lows for software are in. No firms downgraded the stock today, just some cutting their price targets. And again, workday is still on track for a five week losing streak and a record setting fifth straight month of month of losses down 45% coming into this. Still a reversal to keep an eye on elsewhere. Here's a name being helped by AI. It's Axon Enterprise, the maker of Tasers, body cameras and drones phones soaring almost 18% today after better than expected earnings and guidance. They say AI is accelerating demand for products like license plate recognition and voice activated companions built into body cameras. The CFO expects Axon software business will even soon outpace hardware growth due to these tailwinds. That's a story we haven't heard much about. The shares are having their best day since 2024 and are still down about 40% from their all time highs. Speaking of businesses embracing AI, remember Nvidia's own CEO Jensen Huang. His message to employees is to embed AI into everything you do. And a similar message is cropping up now amongst this year's CNBC changemakers. Today our new list is out. And joining us with the details is our very own Julia Boorstin. Julia that's right, Kelly. AI is a rising trend among this year's CNBC changemakers, innovating across industries, companies using AI in industries ranging from real estate to health care. With 16 tech executives on the list, including Takedra Malakana, co CEO of Waymo, who's been expanding autonomous driving into new cities and forging partnerships with Uber and Lyft. Former OpenAI CTO Mira Morani debuted her own AI company, Thinking Machines Lab. And to improve social services, Binti CEO Felicia Kirkuru launched AI tools for the foster system and more with Anthropic, While an Enterprise ServiceNow President and CFO Gina Masson Tuono and Cisco's EVP Francine Kastudas are leading initiatives for customers and growing their market value. Also on this year's list, Elena Gomez, whose restaurant software company Toast uses AI to analyze customer data and advise restaurants on how to order, supplies and run their business. With the data that we sit on at Toast, there's a whole host of opportunities that we can do. We can leverage to drive insight to our restaurants, but also help them take action and help them run a more efficient business. So incredibly excited, a lot of our restaurants are saying this is game changing for them. These women's accomplishments are all the more notable because women are underrepresented in tech leadership and female founded startups draw just about 2% of venture capital dollars, according to Pitchbook. For more on these and other CNBC changemakers, go to cnbc.com changemaker and you'll be able to hear from many of these women on stage at our Changemakers Summit that's coming up April 16th in New York. Back over to you. All right, Julia, great stuff. Thank you very much. Our Julia Boorstin. Let's get to Mackenzie Segalos again for the CNBC news update. Hi, Mackenzie. Hey, Cal. Vice President J.D. vance said in a Fox News interview today that President Trump still prefers a diplomatic solution ahead of a new round of nuclear talks with Iran this week. However, he warned that the Trump administration would unleash the US Military if the necessary. Washington and Tehran are set to hold negotiations tomorrow in Geneva. Bill Gates reportedly apologized to staff of the Gates foundation for his relationship with Jeffrey Epstein. According to the Wall Street Journal, Gates insisted he did not participate in Epstein's crime, saying, quote, I did nothing elicit, I saw nothing elicit. Gates also reportedly admitted having two affairs with Russian women that had nothing to do with Epstein or his victims. And a federal judge today blocked the Trump administration policy that allows rapid deportations of migrants to countries other than their own, saying that not giving them a meaningful opportunity to raise concerns of persecution or torture is unlawful. The judge paused the order from taking effect for 15 days to allow time for an appeal. It's likely to be decided by the Supreme Court. Kel, back to you. Mackenzie, thanks. Coming up, what the president didn't say at last night's State of the Union and why it might give some Investors pause and as we head to break, check out Cava having its best day ever. After strong results and guidance. It's up 25% today. Full year. Sales crossed a billion dollars. Actually. Foot traffic fell, but they were able to grow same store sales thanks to pricing. Don't let the president hear about that. And we're back with more on the State of the Union after this. President Trump delivering the longest State of the Union speech ever last night. But even so, he left a few things out. Eamonn Javors is here with those details.
- [31:30]
A
Eamonn Kelly, that's right. Despite the nearly two hour runtime of the speech last night, a lot of questions today about what didn't make it in to that lengthy address to the nation, including this question of AI. A lot of focus on AI on Wall street and in financial markets, but we didn't see much at all about AI. The president talked about tech companies paying for their own electricity bills, but nothing about AI itself and its potential to roil the economy. Also, the president talking a little bit about the state of the I'm sorry, talking a little bit about the Supreme Court and their decision last week. The president saying that despite that decision to shut down his the bulk of his tariff program, he is going to keep on pushing on tariffs. Here's what he said. The good news is that almost all countries and corporations want to keep the deal that they already made. Right, Scott. Knowing that the legal power that I as president have to make a new deal could be far worse for them and therefore they will continue to work along the same successful path that we had negotiated before the Supreme Court. Unfortunate involvement. So the Supreme Court members, a number of them sitting right in front of the president as he made those remarks last night, not really batting an eyelash to those comments. The president also touting a new potential retirement program for Americans who've been left out of a lot of the matching offers that companies make to their employees. Here's what he said there. My administration will give these often forgotten American workers, great people, the people that built our country, access to the same same type of retirement plan offered to every federal worker. We will match your contribution with up to $1,000 each year as we ensure that all Americans can profit from a rising stock market. One other item not mentioned yesterday, Kelly, and that is tax cuts. The president had told anchors who had lunch with him earlier in the day that he would talk about a new effort to push for tax cuts through reconciliation up on Capitol Hill this year that didn't make it into the speech. The White House hasn't responded to questions just yet as to why not and whether that effort is going to be ongoing this year, whether they just dropped it from the speech or they dropped it from the agenda. But some questions swirling around that one, too.
- [34:01]
B
Kelly, back over you indeed. Eamonn, thank you very much. Appreciate it. Eamonn Javers, As Eamonn just said, the president did make some news in that lunch with reporters just before his address where he discussed new tax cuts. But my next guest says he's also about to inject nearly a trillion dollars in shock and awe economic policy ahead of the midterms. Dan Clifton is head of policy research at Strategus. Dan, good to see you again. Is this a trillion dollars we already know about or is there new new details, new information, new things in here?
- [34:28]
A
Yeah, I thought the president's speech last night, a theme of that speech was we did a lot in 2025 and you're going to start getting the benefits of that in 2026. So, you know, he passed one big beautiful bill. The income tax rate was not cut. So people are going to get that in a tax refund as they file their taxes here in February, March and April. And it's really large. It's $150 billion of new tax cuts for American workers that they're going to feel this year. And you have 100% expensing of capital equipment nor and d and property. So you're going to get about $200 billion on the business investment side. I saw the headline coming out of that reporter's lunch about tax cuts. And my view was this isn't going to be income or corporate. They don't have the capacity or the votes to do it. But will the president put out zero capital gains taxes on inflation or zero capital gains taxes on home sales, of which he did neither of those last night and really kind of stuck to the basics. He is not a long laundry list person of policy ideas like Bill Clinton or Barack Obama. And he basically just stuck to kind of his core principles and was basically preparing people for better economic growth this year rather than saying we need to new new what is this?
- [35:46]
B
Yeah. And when he says through reconciliation, what does that I was trying to think to myself, okay, what, what does that mean? What is that telling us? And is it what you're saying in terms of the areas where he could move without that broad support?
- [35:59]
A
Correct. Right. So budget reconciliation is a way to pass legislation with just Republican only votes votes. But right now the Republicans have a one seat majority in the House. And if this congressman from Texas resigns anytime soon, given his problems, then you can wind up seeing there'll be more Democrats than Republicans. Now, they wouldn't have the majority and it wouldn't replace the speaker because of technical factors. But they're not passing anything right now and I'm not very confident of that. So it's going to be smaller measures. They'll do a housing bill that passed the House and the Senate. They'll do an extension of the infrastructure bill bill. They may do this crypto bill. But the agenda here is not for very large new tax cuts after passing such a big reconciliation.
- [36:41]
B
Let me ask you then about what you think are the two most significant things last night. Number one, talking about Iran building a missile system to attack the U.S. secondly, you said the most serious policy proposal was the rate protector payer protection pledge. So first on Iran.
- [36:55]
A
Yeah. So I would just say, I think a lot of the commentary this morning Mrs. What happened in that speech last week night. The president gave you a pretext to be able to attack Iran if those negotiations today don't work out. And that's the idea of building a missile system that could hit the United States. We already know that they're building one to hit Europe and of course our allies in the, in the Middle East. But the idea of going to America is a new discussion that they're having and one that starts to give that pretext. That's number one. Number two even just came on and said, look, they didn't talk about AI. AI is extremely unpopular right now with voters and there's a lot of local opposition. But the president was doing, was giving you a way around that by saying these tech companies are going to be able to build their own energy and remove that from the ratepayer themselves. So I actually think there was something in there for AI specifically about building the data centers and trying to get around some of the local opposition. I would note housing stocks are down big today because they were anticipating a plan. Defense stocks are down because they were anticipating a plan. But the banks and the cards are up because there was no talk about credit card caps or interchange fee regulation.
- [38:03]
B
I wasn't sure if there is definitely
- [38:05]
A
stuff trading on last night's speech in certain sectors.
- [38:09]
B
I thought housing might be lows, gave this kind of, you know, it wasn't very upbeat about the housing outlook. That stock's down 5%. But you're saying it's more because he didn't come out with a big plan that was going to kind of unleash this wave of building. But that's the stuff that you just said could actually make its way through Congress this year. One of the few areas.
- [38:25]
A
Yeah, manufactured housing. There will be a manufactured housing bill. It's a very specific bill. I think what the President is doing on rates through financial deregulation and what he's doing through the GSEs with the agencies purchasing mortgages are far more important for housing than any State of the Union proposal. You're seeing the mortgage to treasury spread come in as those agency retained portfolios go up. Nobody's talking about that. And that's one of the reasons why mortgage rates, rates at their lowest levels in four years and that's where their focus is. Rather than on a ten point housing plan which the market was anticipating.
- [38:58]
B
Reasons why I almost, I'm turning you into like a, like a stock picker today, Dan. But there's one more sector that I do want to ask about and maybe this is going too far, but financials. You bring this up and say one of the most important things that's going to happen is trying to bring down that mortgage rate, bring down rates. And we keep hearing that the big priority at the Fed is going to be financial deregulation. So did the stocks just buy the rumor sell the fact because the financials have now been trading very, very poorly. Maybe it's. I, I don't know if you have an additional thought about that.
- [39:25]
A
I do. I don't think that the bank stocks are related to financial deregulation. The bank stocks are trading on the yield curve. The yield curve is flattening. That's not good for bank stocks. Now at times you'll separate from that based on what Trump is proposing. And you know, if you're going to cap credit cards, you'll see, you'll see bank stocks even weaker on that. But I don't think it's about buying the bank stocks. I think it's about being able to get rates lower and what that's going to mean for the US Economy and the ability of treasury to be able to finance our deficit. I like to call it like privatizing the Fed balance sheet and being able to start taking some of the burden off the Fed if you do that financial deregulation. So the benefits are going to be more macro and less about buying the banks themselves from this financial deregulation.
- [40:09]
B
Even more if you're right that one of the few things they're going to really focus on is bringing down the long end of the corporate curve. That's a curve flattener trade that will be, you know, bad for the financial. So thank you. You always that's the answer, you know. Next category I guess for next time. Dan, thanks. Really appreciate it today. Thanks for your time. Dan Clifton with Strategic is reacting to the State of the Union as you said, has a lot of stocks on the move today. Coming up, Anthropic might be taking a do as I say, not as I do approach when it comes to security, making its internal safety framework non binance while drawing a hard line with the Pentagon. We have all those details. Next. We've got a showdown between the Pentagon and Anthropic. Defense Secretary Pete Hegseth reportedly giving the company until Friday to strip safety guardrails from its AI model or risk losing its defense contracts. Deirdre Bosa brings us the very latest in today's tech check. Dear hey Kelly, so on the surface of this Pentagon fight, Anthropic is the principled company standing up to the most powerful institution on the planet over autonomous weapons and mass surveillance. Those are legitimate concerns. But simultaneously, Anthropic has also scrapped the core safety pledge that the company was founded on. It is replacing hard safety commitments with what it calls non binding publicly declared targets because otherwise, they say competitors could race ahead. And in that sense, Anthropic safety rhetoric could look more like branding and leverage less like principle. Now fighting with the Pentagon is also very good marketing. A defense official telling Axios that they need Anthropic. And the problem for these guys is they are that good. Every enterprise CEO or CTO reading that takes away a few things. One, the US Military thinks Cloud is the best model in the world to Anthropic cares so much about safety, it'll walk away from a $200 million contract. Contract. Now Kelly, we will see what happens on Friday. But the bigger story that investors should be paying attention to is what's already happening. The one company that was supposed to be different serious about safety, told us it can't afford to be. And if that's true, the race just got faster. And for every company in the path of this technology, the disruption is only likely to accelerate from here. So there were several companies that received this contract from the Pentagon, but Anthropic was the only one that gave conditions attached to matched with that. And now the Pentagon is pressuring them to drop those conditions, Is that right? I mean the Pentagon says that they're just working with Claude Code, right? With Cloud at this moment, I think GROK has got approval, but it's not integrated yet. So this also says a lot about the product that Anthropic is offering. It is the one that the Defense Department wants to work with, but it comes with guardrails. So it's interesting to see it in this light also. So be interesting to see what Anthropic does. Right. Because if they give this up, yes, it's very possible that Open Air or another lab could get in there. And you know, Anthropic would probably argue that they may not have as much of an eye on safety, but we should take that with a grain of salt because that's changing over at Anthropic as well. Hmm. Okay. So we've got a day or so, a couple of days to see how this one evolves. Georgia, for now, thanks. Appreciate it. Dear Jabosa, Coming up, the SMH chips ETF higher again ahead of Nvidia's earnings today. The memory and design names are leading this time. Amat, Micron, KLA are all among the top performers. We'll dig into what the options market is telling us ahead of those results when we come right back. And as we head to break, take a look at Diageo, another alcohol name getting hit after its results. Down 15% for its second worst day on record after cutting its dividend and low lowering its guidance citing ongoing weakness in North America. Remember Boston Beers guidance came in light as well. Bank of America is now downgrading Molson Coors to sell to reflect the risk of another potential year of mid single digit declines in the US Beer category. Another tough day for all of these names. We'll be right back. Nvidia Options are pricing in a 5% move either direction after receiving results this afternoon. It's actually the smallest expected swing in three years. They're maturing after all. Here to discuss is Chris Murphy. He's the co head of derivative strategy at Susquehanna. I don't know, Chris. What do you want to talk about? You want to talk about the are they going to be like, are they the mood setter for the. They're the last of the Mag 7 to report. The Mag 7 have already spoiled the mood. I don't know.
- [44:37]
A
Well, hey Kelly, I think you know, to your point about the smaller move than the last couple of years, it's just because because of the broader market low correlation set up. You know, when in video was posting 15, 20% moves higher on earnings. That was when everyone thought AI was just generally helping everything. Now we have a situation where AI is mixed. You know, is it positive for Stocks. Is it negative for stocks? We don't really know. So at the end of the day, Nvidia used to not just be a blockbuster move for the semiconductor space, but it was a blockbuster event for the broader stock market in general. That's just not the case anymore. It is maturing as a company. It's moving 2, 3, 4% on earnings. There's 90 plus analysts that are heavily scrutinizing the stock going in. There's not really as many surprises as there used to be.
- [45:33]
B
I miss the good old days when they'd come in and raise their revenue by $10 billion or something. Just staggering amount. Who, who's the new in video for the market?
- [45:43]
A
Well, you know, there's, there's the memory stocks, the memory area of the market. You even have, you know. You know, I would look at South Korean stock market.
- [45:53]
B
Yeah.
- [45:53]
A
And it's just been going parabolically higher. We've actually been seeing put buying very consistently in the ew. Why near term stuff. You know, we're curious if there's less, if, you know, Nvidia makes a comment about maybe less of a memory shortage, you know, could that be negative for some of the biggest companies in Korea? You know, so, so that's one area to look. But really the new Nvidia is the other 493. You know, we're seeing lots more action in a lot of the other sectors from energy to Staples. And tech's taking a little bit of a back burner.
- [46:31]
B
What do you make of this reversal in workday day?
- [46:34]
A
Yeah, I'm not looking at workday today. I don't, you know, I don't, I don't know if there's not a big options trade or two that's going on this week. It's not on my radar. There's just too many stocks.
- [46:46]
B
Right, Exactly. No, and I love that. Like you said, it's the rise of the other 493. And I guess the last thing that I would ask you then is what does this tell us about the market broadly in the market leadership? The reason we cared so much about Nvidia in the past is because it was carrying the market and now everyone else is like happy to bear the luck code.
- [47:03]
A
It's a stock pickers market. It's great for your television show. It's great for our clients who are picking stocks. I mean, you know, you have something like the Staples sector that goes up every day. The price earnings there is, is higher than the tech sector. It's a much slower growing area. So, you know, you know, then we have on the option side, very consistent, bearish float in that Staples sector. So you're having showdowns and you're having controversy in other sectors that you didn't normally see.
- [47:30]
B
I love it. You can keep the staples down. Who would have thought that would be the mantra? Chris, thanks. Appreciate it. Chris Murphy of Susquehanna. And that's it for the Exchange. Brian Sullivan and Power Lunch are right after the break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [47:51]
A
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