Private Credit Concerns, OpenAI's Record Round, and Paramount Wins Warner Bros. 2/27/26

Summary

Podcast Summary: The Exchange (CNBC)

Episode: Private Credit Concerns, OpenAI's Record Round, and Paramount Wins Warner Bros.
Air Date: February 27, 2026
Host: Kelly Evans

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Overview

This episode of "The Exchange" dives into a turbulent day on Wall Street, focusing on the ripple effects of growing private credit concerns, a record-shattering fundraising round for OpenAI, and a major shakeup in the media landscape as Paramount secures Warner Bros. Discovery in a bidding war that leaves Netflix to dominate the streaming race. Key guests offer expert insights into the evolving risks in private equity and the implications of AI's rapid growth for investors, tech, and national security.

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Major Market Movers & Themes

(01:00 – 02:49)

• Markets experienced a significant sell-off, with the Dow down over 600 points due to hotter-than-expected PPI data and geopolitical jitters linked to Iran.
• Financials and tech led declines; software stocks gave up previous gains; major names like Zscaler, Workday, and Unity Software were notable losers.
• The episode’s recurring theme: As software and tech stocks falter, attention shifts to the health and stability of private credit lenders and the broader financial system.

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[Main Segment 1] The Private Credit Fallout

(02:49 – 09:19)

Guest: Dan Rasmussen, Founder & Portfolio Manager, Verdad Capital

Key Points:

• Growing concern around private credit, as opacity and risk-taking from small, less-established lenders ramp up.
• Issues are anticipated, especially around software firms, which comprise ~40% of recent private equity activity and have little tangible collateral.
• Private credit’s reliance on "recurring revenue" is being tested as equity cushions erode in the software sell-off.

Notable Quotes:

• “Chickens are finally coming home to roost here.” — Dan Rasmussen [04:28]
• “This went from being a small backwater to being about equal size to the entire high yield industry.” — Dan Rasmussen [06:06]
• “If I could short my college endowment, I certainly would because they're stuffed to the gills with this type of stuff.” — Dan Rasmussen [09:13]

Context & Figures:

• Private equity: $4 trillion industry; Private credit: ~$1.5 trillion [04:49]
• Elevated risk as private credit now equals high-yield market in scale, mainly fueled by years of cheap borrowing.

Rasmussen’s Warnings:

• Risks are greatest among non-public, less-experienced credit shops—these have seen “a race to the bottom” on standards.
• Life insurers and pension funds are heavily exposed.
• While major banks like Goldman Sachs will see little material impact, the fallout for smaller institutions and non-bank lenders could be substantial.

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[Main Segment 2] OpenAI’s Record Fundraise & AI Arms Race

(09:19 – 14:18)

Coverage: OpenAI’s historic $110B fundraising round (valuing company pre-money at $730B, post-money at ~$840B+).

Guest: Dan Primack, Business Editor, Axios

Key Points:

• OpenAI's latest round sets a private fundraising record, with major backers including Amazon, Nvidia, and SoftBank—and more capital anticipated from sovereign wealth funds.
• There’s mounting curiosity (and some frustration) about AI giants postponing IPOs despite enormous scale ("almost a $1 trillion company now").
• The robust secondary market and ample private funding reduce the urgency to go public.

Notable Quotes:

• “If you had an IPO that raised $110 billion, you guys would be wall to wall that today. OpenAI can just do that in the private market.” — Dan Primack [11:18]
• “OpenAI reminds me a little bit of when Google went public ... it could have gone public probably the day after Lehman collapsed. I think the same thing is going to be true for OpenAI.” — Dan Primack [14:04]

AI Competition:

• Google’s Gemini has emerged as a fierce rival, leveraging its own tech stack and infrastructure.
• The sector increasingly looks like a duopoly (OpenAI vs. Google), though enterprise-oriented players like Anthropic are rising.
• IPOs for companies like Databricks and potentially OpenAI may come, regardless of broader IPO market health.

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[Main Segment 3] Are Big Banks Safe from Private Credit Turmoil?

(14:18 – 19:57)

Guest: Mike Mayo, Bank Analyst, Wells Fargo

Key Points:

• Differentiates risks in regulated banks (de-risked since GFC) vs. non-bank "shadow" lenders, where risk has shifted post-crisis.
• Large banks have stronger capital and liquidity than at any point in decades; their earning power is relatively insulated barring major spillover.
• Regional and less-diversified banks face comparatively higher risks if exposed to troubled credits.

Notable Quotes:

• “Better lucky than smart—or in this case, banking regulators...” — Mike Mayo [16:44]
• “The business of banking is not to have zero losses and zero fraud and zero everything else. You accept losses for a certain amount of return.” — Mike Mayo [17:41]

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[Segment 4] Paramount Wins Warner Bros. – Netflix Still Wins

(22:18 – 25:44)

Guest: Peter Cipino, Wolf Research

Outcome:

• Paramount secures Warner Bros. Discovery over Netflix after an intense bidding war.
• Netflix’s withdrawal pleases investors, letting the company avoid overpaying and letting Paramount build a larger content portfolio ($30B content budget, surpassing Disney).

Notable Quotes:

• “If Netflix continued to bid these assets up... they’d look pretty desperate.” — Peter Cipino [24:03]
• “This outcome produces a behemoth at Paramount Skydance... more importantly, its content budget.” — Peter Cipino [24:12]

Industry Impact:

• Anticipated horizontal consolidation will mean significant synergies but also job and cost cuts in overlapping studio operations.

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[Segment 5] Bitcoin Miners Pivot to AI Data Centers

(27:06 – 33:21)

Guest: Fred Thiel, CEO of Mara Holdings

Key Points:

• Mara (formerly focused on bitcoin mining) partners with Starwood Capital to convert existing mining sites into AI data centers—a growing trend as crypto struggles and AI infrastructure demand soars.
• Mara’s operations are diversified across renewables and grid arrangements; deal allows them to keep mining alongside AI operations.

Notable Quotes:

• “One of the very attractive things about this deal is... we can continue mining at the site while the conversion process is happening.” — Fred Thiel [30:54]
• Discussion of energy usage: mining remains marginally profitable for most at current bitcoin prices, but firm’s flexibility allows adaptation.

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[Segment 6] US-China Standoff on Military AI: Anthropic Resists Pentagon Pressure

(38:48 – 41:22)

Guest Reporter: Deirdre Bosa

Key Points:

• Anthropic faces Pentagon threats to cancel contracts unless it loosens model safeguards for military use; company refuses, citing its foundational commitment to safety.
• Highlights a stark contrast with China, where tech firms have no say over military deployment—raising concerns about a widening national security gap.
• American AI’s trustworthiness for consumers comes at the cost of slower military integration compared to “feature, not a bug” military use in China.

Notable Quotes:

• “The fact that an American CEO can say no to the Pentagon—that is what separates us from China. That is a good thing. Debate is healthy. But the fallout... could be expensive and for national security, potentially dangerous.” — Deirdre Bosa [40:03]

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[Segment 7] Hardware Is the Hot Trade: Lumentum’s AI Networking Boom

(41:22 – 47:20)

Guest: Michael Hurrelson, CEO of Lumentum

Key Points:

• Lumentum, which manufactures networking hardware for cloud and data centers, is experiencing unprecedented order backlogs (sold out through 2027) as AI-related capital expenditures explode.
• Company is hiring aggressively—including in the US and Canada—to keep pace with demand.
• Hardware, notably fiber optics (light transmission), is overtaking software as the main industry growth focus.

Notable Quotes:

• “We're completely sold out... for the next eight quarters. It's just incredible demand we're seeing.” — Michael Hurrelson [45:13]
• “The death of the American tech worker seems to be somewhat overstated.” — Michael Hurrelson [43:27]
• “The fastest way to move data is with light... and more and more [companies] are pushing away from electrical cables to fiber.” — Michael Hurrelson [45:58]

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[Segment 8] Contrarian Software Buys & Opportunities in Financials

(35:33 – 37:56)

Guest: Surat Sethi, Portfolio Manager, DCLA

Key Points:

• Despite sell-off, sees opportunity in quality software names (e.g., Workday, Salesforce, Intuit) trading at reasonable valuations and positioned to benefit from the next AI-driven rebound.
• Likes diversified giants like Amazon for similar reasons—robust earnings and AI integration.
• High-quality banks such as Morgan Stanley and JP Morgan seen as oversold amid indiscriminate credit panic.

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Memorable Moments & Quotes

• “People are going to throw the baby out with the bathwater.” — Dan Rasmussen [07:20]
• *“A liar with a God complex”—how a Pentagon official described Anthropic’s CEO, highlighting the tension around AI ethics and national security. [37:56]
• “Horizontal consolidation... will be costly for Hollywood, but you'll end up with a strong player on the other end.” — Peter Cipino [25:04]

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Timestamps for Key Segments

• 01:00 – Market sell-off overview
• 03:30 – Dan Rasmussen on private credit risk
• 09:19 – OpenAI fundraising and IPO discussion
• 14:18 – Mike Mayo on bank resilience vs. non-bank risk
• 22:18 – Paramount’s Warner Bros win & Netflix analysis
• 27:06 – Mara Holdings’ AI data center pivot
• 38:48 – Anthropic, Pentagon, and US-China military AI divide
• 41:22 – Lumentum CEO on hardware boom
• 35:33/37:56 – Software bargains & financials insight (Surat Sethi)

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Takeaways

• There’s a growing and systemic set of risks in the private credit and equity markets, potentially impacting everything from non-bank lenders to pension funds.
• AI’s explosive financing is transforming public vs. private capital markets—giants like OpenAI are shaping up to be trillion-dollar companies without needing IPOs.
• The AI arms race not only disrupts software, it is fundamentally shifting the investment focus to hardware and real infrastructure.
• Hollywood consolidation and the streaming wars are intensifying, but Netflix remains strategically strong by exercising financial discipline.
• National security debates over AI ethics and readiness expose a widening policy gap between the US and China.
• Despite risk-off markets, opportunities are emerging for disciplined investors—in select tech, AI-exposed hardware, and well-capitalized banks.

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For listeners: This episode provides a brisk, frank look at the economic and strategic tremors shaking business, policy, and tech as AI, credit, and media undergo seismic change. Insightful guests provide both cause for caution and signals for where smart money might look next.

Transcript

[Kelly Cavagnaro]

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[Kelly Evans]

You're listening to the Exchange. Here's today's show. Thank you very much, Scott. Credit concerns are spreading. The software bounce is over today and if you can't beat them, join them as another company pivots from Bitcoin to AI. Welcome to the Exchange. I'm Kelly Evans and we have quite a market to talk about today. Pretty big sell off in stocks at this hour. Dow is off the lows, but it's down 637, 1.3% decline, hotter than expected. PPI print didn't help this morning. That gave us the kind of last leg lower now. The S and P is only down about 7, 10. That's something to keep in mind. But the NASDAQ's down 1% and the small cap Russells are down about 2. We've got credit concerns. We're going to talk a lot about that. Again, don't sleep on the jitters about Iran heading into the weekend, especially if you're looking at why bond yields are down today after that hot PPI report. Financials and tech are the laggards today and they are in many ways flip sides of the same story. Software stocks are slumping after a three day bounce. The sector ETF, the IGV is lower by almost 2%. Zscaler down Workday down 4%. Unity Software down 5 and a half. And a lot of declines to talk about elsewhere. Focus big time on the private equity space once again with big moves lower and the likes of blue owl down 6%. Jefferies not immune down 10. Apollo down 8%. Ares down 7%. And that's where we begin today. As losses pile up in the software space, attention is shifting to the fallout that could have on private equity and credit lenders and even on the whole Broader financial landscape. Adding to concerns overnight, UK based lender MFS failed due to loan fraud and double pledging while two other private credit funds reported increases in troubled loans. This follows Blue Owl returning capital and restricting access to one of its funds last week. My next guest has been warning about the problems piling up in the private equity space actually for the last couple of years. Let's bring in Dan Rasmussen. He's the founder and portfolio manager at Verdad Capital. Dan, really appreciate it and it's important to set the stage here because in some ways there were going to be problems or the sort of problems were going to come home to roost in private equity one way or the other. And we thought it was going to be from higher interest rates, you know, that, that in many ways was going to be there. No one really saw oh, by the way, the thing they invested in private equity and credit over the past 15 years overwhelmingly is now at somewhat of a replacement risk due to AI. What do we know today about how many losses there are so far throughout the private equity and private credit spaces right now?

[Dan Rasmussen]

The losses are limited, Kelly. It's everyone anticipating that the losses are going to be much worse. And the reason that people are really pricing that in right now is that the big pitch, right? You got to remember that private credit is fundamentally lending to leverage buyouts. They're lending to private equity deals. And in the past few years probably about 40% of private equity went into software or software related businesses. And so as the, and the pitch of private credit, because remember, if you're lending to a software company, software companies don't have assets, right? Factories or trucks or something that you can lend against. In fact, many of them didn't have profits. They were investing their profits for growth. So broadly, what private credit was lending against was recurring revenue. And so what's happening now is that as software stocks have fallen, people are saying, well gee, you know, I don't know if that revenue is going to be recurring anymore. And you always told me, gee, we're lending this private credit, it's a risky business. But you know, there's a huge amount of private equity money in front of us. So the equity valuation is what supports the credit. Well, with software equities collapsing, people are saying, well gee, I don't trust that equity story. I don't think that there's an equity cushion here. I think in fact there's going to be real losses here and we're seeing a rise in pick interest rate. So these firms aren't even paying off their loans. So I think the chickens are finally coming home to roost here.

[Kelly Evans]

Can we put some big numbers on it? Private equity is what, a $4 trillion industry, roughly speaking, Private credit is maybe a trillion and a half. Am I in the ballpark here?

[Dan Rasmussen]

That's right.

[Kelly Evans]

Okay, so also we have to keep in mind both of these industries rose during the 2000 and tens when interest rates were very low. It made borrowing very attractive. And to invest in software as a service, business models gave you the golden egg was recurring revenue. Like you're saying software as a service delivered that. So they've all kind of risen together. And now we have to go through the process of figure and I don't know if your firm is among now people have to go really company by company, line by line and, and figure this out. And it's not going to be, it's going to take a long time to figure out where the biggest problems are.

[Dan Rasmussen]

Yeah, I think you've got to understand just the most simple elements of this. Private credit emerged after the financial crisis because one of the lessons that the Federal Reserve and the regulators learned from the financial crisis and the banks learned is that this type of risky lending, lending to LBOs, lending to really risky small businesses, doesn't pay off because in a recession you get huge default rates on this type of credit. So the regulator said to the banks, Morgan Stanley, Goldman Sachs, you've got to move this off balance sheet. You can't have this on your balance sheet anymore. And private credit arose. They said, well, gee, the banks are missing this golden opportunity. The regulators are forcing them out of a great business. We're going to launch private credit to do exactly what blew up in 2008. We're going to lend all these small risky companies and we're going to do it better. This went from being a small little backwater to being about equal size to the entire high yield industry. So they've massively expanded. Right. And predictably, when you lend at high rates, the only reason that you can lend at high interest rates is if the default risk is high. And if you're seeing this type of lending at the type of loan levels that private credit has been lending at imply that this is like low single B type credit and low single B type credit in a recession, about 30% of that defaults. So you could be looking at very significant losses across these portfolios in any type of credit stress environment.

[Kelly Evans]

You know, and we talk about and show the biggest publicly traded ones. My guess is it's going to be the small, the players that aren't even publicly traded, the ones that, you know, wouldn't even make, where you're going to see even more problems because at least at the big guys, there's higher underwriting. They've been in it for longer. They probably have a lot of the better stuff before the last couple of years. What do you. What goes through your mind, Dan, when you hear people saying, you know, our portfolio is only 6% in this or our portfolio is only 7% in that?

[Dan Rasmussen]

Yeah, well, the problem with private credit, right, they marketed illiquidity and opacity and they said, gee, you know, we're experts. We can trade these private market things and they're better than the stuff you can access in public markets. Well, when things go wrong, people say, well, what do you own? And they've never heard any of these companies they're lending to. And so it's too opaque. People are going to throw the baby out of the bathwater. And for a large number of these, they're right to do right. You know, for everyone like Aries maybe, or hps that are sort of the gold standard lenders. Right. You go down and there's a million of these guys that have grown up in the last few years that really don't have great lending standards that are basically lending to anyone who wants to do an LBO deal. And it was a race to the bottom.

[Kelly Evans]

Absolutely.

[Dan Rasmussen]

And so I think you're going to see hell to pay for those lenders. And by the way, the two other people that you can't forget are really problematic here. Private equity, which is the equity that's in front of this debt. Right. So for you to lose money on the loans, private equity has to lose a lot more. And then secondly, a lot of life insurers have put huge amounts of private credit on their books and it's not going to end well for them.

[Kelly Evans]

Yeah, I was going to mention the life insurers, the pension. So then you have to kind of connect the dots back to. Okay, and I'm glad you mentioned, look, some of the names that are down 40%, those in the industry consider to be in much better position to the stuff that maybe we don't even see or talk about. So as these declines continue and we ask about the life insurers, obviously they've been trading off, there's pressure across the financials, pension funds, those kinds of institutional players that have really been invested. Think about college endowments, investing in private equity over the past 15 years. Final question on the financials we're going to talk to Mike Mayo. More about this in a minute. Dan. But for the big kind of financial names, even like a Goldman Sachs trading down 5% today, do you think some kind of reset or discount is appropriate or are we now kind of taking the line too far from the software slump back to some of the biggest investment banks?

[Dan Rasmussen]

Yeah, I don't see a case for how this affects Goldman in a material way. I think you're in much firmer ground. The BDC is the life insurers, the private equity firms and by the way, if I could short my college endowment, I certainly would because they're stuffed to the gills with this type of stuff.

[Kelly Evans]

Yeah, exactly. Dan, really appreciate you making the time. We'll check back in as the story continues. As you say, I believe there's many, many chapters still to come. Appreciate it, Dan, thanks. Dan Rasmussen joining us there from Verdad Capital. I want to quickly turn to some of the other big news of the day. Everything that's killing off software OpenAI closing a massive fundraising round, $110 billion. That is a record in private fundraising and it more than doubles their last record breaking deal. It values the company at 3,730 billion dollars, which if it were public would make it the 13th biggest company in the S&P 500. The company and its backers are taking on Google's Gemini. Investors in its new round include Amazon, Nvidia and SoftBank. And some question whether this is all just circular deal making. Here's how CEO Sam Altman addressed those concerns today on Squawk Box.

[Dan Rasmussen]

I get where the concern comes from,

[Kelly Evans]

but I don't think it matches my,

[Dan Rasmussen]

my understanding of how this all works. This only makes sense if new revenue

[Kelly Evans]

flows into the whole ecos system. If people are not willing to pay

[Dan Rasmussen]

for the services that we and others

[Kelly Evans]

offer, if there's not new economic value being committed, then the whole thing doesn't

[Dan Rasmussen]

work and it would just, it would be circular. But revenue for us, for other companies in the industry is growing extremely quickly.

[Kelly Evans]

Let's bring in Dan Primack. He's the business editor at Axios. Dan, I wish they'd go public. What do you think? Welcome.

[Dan Primack]

I think they may. And by the way, that 730, that's pre money, that doesn't include the 110 they just put on the balance sheet today. Plus I'm told there's probably going to be about another 10 that comes on. All of that investment comes from just those three Amazon and Video and SoftBank. They're still talking to sovereign wealth funds. They're existing financial investors. So more money is coming maybe within the next few weeks.

[Kelly Evans]

So they're basically almost $1 trillion company. And you know, I don't mean to go on about this, but it'd be nice if we could get more of these, them and Anthropic and everybody else to go public. And I know that, you know, the SEC is working on some reforms here and there, but I don't think changing, you know, the risk factors is going to make that much of a difference. What would it take to get these companies to go public while the growth is still there for the getting instead of look at what's happening. All these companies that were raising money in 2021 are trading down like 90%. So you hate to see the public markets become the kind of the last vestige.

[Dan Primack]

You know, I mean, I don't think there's a regulatory reason why these companies aren't going public. They've got plenty of revenue, they're large enough, they can afford a pretty robust financial team in the back office. This is about want. It's a little bit about want to, but it's also about capital available in the private market. Right. You know, if you had 100, an IPO that raised $110 billion, you guys would be wall to wall that today. OpenAI can just do that in the private market. As they said, they're going to raise another 10 billion soon. Just a couple of years ago, that would have been the largest private deal ever. And it's kind of like a throwaway, like a tag online at the end. When there's so much money in the private market, there's not really a great incentive for a company like OpenAI to go public. Particularly when some of these deals, although not this one per se, provide or can provide liquidity for early employees. And there's a pretty robust secondary market for any shareholders who want out, although most of them are very happy to be sitting on the rocket ship.

[Kelly Evans]

So let's say they're at $840 billion post money company today. What's the business model going to look like? Here you have Gemini. You know, we are messing around with this in the house earlier today. Once again, Gemini giving faster answers, more complete answers because it can pull from YouTube to a certain query that we are working on relative to chat, GPT and Gemini, guess what, It's a Google product built on TPU's that Google makes none of it. On the other side, against them, you have this entire ecosystem. They're raising so much money to try to compete. I hope they win.

[Dan Primack]

I mean, look, Google, Google's the fascinating one, right? Because just a couple of years ago everyone's, you know, how could Google have lost the race here? And suddenly Google is very much in the race and it is probably the biggest rival to Open Air. Anthropic is a little bit of a different case. Much more of a B2B company than a B2C, even though obviously usage has gone way up over the last couple of weeks amongst consumers. Look, it's a duopoly, but you're talking about this massive underlying technology. You can easily have two players. There's no particular reason why this has to be winner take all.

[Kelly Evans]

Yeah. And I don't mean that I hope they win. I mean the investors are going to need that to happen to some extent to justify these valuations. Quick last word then, as we look at the massive fundraising rounds that are going on here and kind of the arms race that is taking place, is it just going to be an IPO market for. For who? For what's on going space X for the rest of the year? Dan, with how many IPOs have been pulled in the meantime? This is carnage for all the names that were supposed to be going public.

[Dan Primack]

It has been lately. Look, I do think you're going to see some names and whether that be anthropic or open, I think for sure databricks is going to go out this year, which is the one people don't talk about as much. But that's a company, you know, worth an enormous amount of money. I think they probably go and look if Open, Open AI reminds me a little bit of when Google went public and it went public in a really bad IPO year because it didn't matter because it was Google. It could have gone public probably the day after Lehman collapsed. I think the same thing is going to be true for Open Air.

[Kelly Evans]

Okay. And maybe be nice if that were this year or anyway, it's so big now. Dan, thank you. Appreciate it today. Dan joining us from Axios. Let's circle back to some of the chaos that we're seeing across the financial markets. We showed the private equity names. A lot of Those are down 40% from their recent highs. But it's not just there now. It's the biggie financials that are also getting hit on these mounting credit concerns. You heard our last guest say he doesn't draw the line to Goldman Sachs per se. That stock's down 7% today. My next guess, though, is Warning there could be some pain in the bank stocks. Maybe it'll have a silver lining. Let's bring in Mike Mayo, he's a bank analyst at Wells Fargo. Mike, it's good to see you and talk us through this.

[Mike Mayo]

Well, I'd say what's happening is in sync with the direction of Treasury Secretary Scott Bessant and he would like to have more lending to the regulated banking system then through the the unregulated shadow banks. Because the shadow banking industry does not come under the purview of the regulators, they tend to have more risk. So I would make a distinction between the banks and the non banks. Since the global financial crisis, the banking industry has de risked for the last decade and a half. And so now you're seeing less loan growth at the banks this decade compared to the non banks, less risk at banks compared to the non banks. In fact, a lot of that risk that went out of the banking street went into the non banks. And if you look at today, the $8 trillion investment grade bond market, they are saying that the largest banks are less risky than the average corporate. But that's in contrast to again the non banks where the $8 trillion investment grade bond market sees a lot more risk. I would make that important distinction. I do think that earnings six weeks from now will be decent for the largest banks which are also much diversified. It's not just one credit. Having said that, it could be a long six weeks. It does raise questions about revenues and monetizing those capital markets backlog. So it raises some additional risk. Absolutely.

[Kelly Evans]

But I hear you saying today's trading lower notwithstanding that this, maybe this is exactly how the system is supposed to work. That post financial crisis they made sure that the banks are much more regulated. Because think about how much worse this would be right now if it was our major banks and regional banks who had made all of these loans to these software names that are now going belly up. Imagine if that were running through the heart of the financial system instead of being over here in the private markets.

[Mike Mayo]

Well, better lucky than smart or in this case banking regulators for requiring the banks to de risk. And the highest levered loans went out of the banking industry. So I feel really good about the de risking playing out for stronger for longer credit. Having said that, I am highly attuned to spillover effects from the non banks to the banks. And that's something we've been monitoring, that's something the industry certainly monitoring and that can reduce activity for everybody. So there's additional tail risks out there that I'M certainly attuned to.

[Kelly Evans]

Would you highlight any kinds of financial institutions in particular? Whether they're smaller investment banks, I don't know why Jefferies is down 10% today. Whether they're, you know, regional players that might have made. Is there anyone who you do think is worth taking a closer look at because of these credit concerns or do you just think the whole space is going to trade down until we get more clarity that they're not involved?

[Mike Mayo]

Look, our price targets are set for one year and I'm fine with the one year horizon but I think it's, you know, everyone's guilty until proven innocent. And what you have here is concerns about credit not just at some the non bank players. But does that spill over a lot of. I don't think so. You're not seeing the early warning signs. Having said that, this is a reminder that the credit cycle has not been eradicated. That normalization of loan loss. This is a natural consequence of a business cycle and that a very kind of hypersensitive market right now. But the business of banking is not to have zero losses and zero fraud and zero everything else. You accept losses for a certain amount of, of return. And I think a lot of these loans outside the banking industry weren't necessarily properly priced from what we hear from the banks which have been squeezed out of the business.

[Kelly Evans]

Well, and I hope as you say, whether it's, you know, Treasury Secretary or some of the Fed officials talking about, you know, maybe now wouldn't be the time to loosen up, if that's the word to use. What's going on in the traditional banking sector?

[Mike Mayo]

Well now the banking industry is the foundation. The balance sheets are about as strong as they've been in decades. When you look at the capital and liquidity and the oversight and the boards are attuned to this and the de risking capital is about double. Since before the global financial crisis, liquid assets are about double. They de risk the leverage loans, they de risk the subprime consumer. But the question does become the less diversified firms. Look, three decades ago you had national banking passed for the first time in the history of America. And one reason for that is you had rolling recessions that wiped out banks in Texas and California and the Northeast. Now you have these national diversified banks that are better protected. But the smaller regional banks, when you get smaller in size, one bad loan, it can have a much more negative impact than for the diversified firms.

[Kelly Evans]

Absolutely. And I'm glad you said subprime. In some ways this is going to be like subprime but you hope because it's not in the core banking system that it's not like a domino effect. Obviously, Mike, we'll leave it there and appreciate your time today. Thanks.

[Mike Mayo]

With pleasure.

[Kelly Evans]

Mike Mayo joining us there from Wells Fargo. Quick programming note, we'll speak with JP Morgan chair and CEO Jamie Dimon in a first on CNBC interview come Monday to get his latest thoughts on AI financial services. The problems in these private markets. Really looking forward to that. At 1:30pm Eastern on Monday afternoon. And coming up, a contrarian take on software. Our market guest is buying some names in the group at these levels. We'll tell you which one's ahead. But first, first, in a saga for the ages, Paramount Skydance winds up winning Warner Bros. Discovery setting PSK up 22% on that news. And Netflix investors are also thrilled. Those shares jumping 12%. They're back up to almost 95 today after they didn't win the bidding war. What should Netflix do now? That's next.

[Dan Rasmussen]

This is the exchange on cnbc.

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[Kelly Evans]

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[Kelly Evans]

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[Kelly Evans]

style, every home, home. Warner Brothers Discovery will now belong to Paramount. Skydance. Netflix walking away from the deal after refusing to raise its bid, calling it no longer financially attractive, investors seem to like the outcome with both Netflix and Paramount up. And my next guest says, while Paramount wins Warner Brothers, Netflix wins anyway and is back to, quote, simply dominating. Joining me now is Wolf Research is Peter Cipino. Was this all just an elaborate scheme to make Paramount pay more? Peter, welcome.

[Peter Cipino]

Thank you. I don't think it was an elaborate scheme. I think that Netflix saw multiple ways to win in this, in this drama. At a minimum, Netflix knew that it could drive up the price that Paramount would ultimately pay and eat up some clock to put it in sports terms. I also believe Netflix was genuine when they communicated over and over again and eventually in some depth about their enthusiasm for what they could do as the owner of Warner Brothers Dollars.

[Kelly Evans]

And what about that enthusiasm now? Now that they have to say, well, never mind.

[Peter Cipino]

Well, this is a business and it's about earning returns on your money that exceeds the cost of that money. And we think Netflix is very financially rational entity and there's a price at which a given project isn't attractive. The strategic benefits are effectively priced in. And so we do think that Warner Brothers at 31 is priced really close to, if not above, Warner Netflix point of economic indifference. But stepping away from the numbers and all the analyst talk, strategically, Netflix would have looked pretty desperate if they continued to bid these assets up to multiples that were in excess of anything we've seen mature media companies trade for.

[Kelly Evans]

Right. And so how does the media landscape now continue to evolve, do you think? What happens next?

[Mike Mayo]

Next?

[Peter Cipino]

Well, this outcome is fun for media analysts because it produces a behemoth at Paramount, Skydance, in terms of its enterprise value, but more importantly, its content budget, which will be close to $30 billion. It'll be a bigger buyer of content than Disney. It's really an extraordinary number. And it spans films, premium scripted television, mass market, CBS scripted television and sports. CBS Sports and CBS News are very important live assets. And so this company cannot be ignored. And we're cautious on the stock itself simply because of the degree of difficulty and the leverage involved here. But the competitive dynamics in the industry are going to be more interesting now that there's a company that has the scale from the programming perspective to go head to head with Netflix.

[Kelly Evans]

Maybe it's good news then for writers, for actors, for everyone up and down the value chain.

[Peter Cipino]

Well, the problem with that hope is the number that you just flashed up on the screen. $6 billion of synergies. It's such a massive number. And unfortunately, a lot of the overlap between Paramount and Warner Brothers today is in the studio business. And so they'll be taking costs out of both the linear TV businesses and the studio businesses. This is a horizontal consolidation more than a vertical consolidation. And so some of that, that overlap is going to be costly for Hollywood, but you'll end up with a strong player on the other end of it.

[Kelly Evans]

All right. And to me, a somewhat surprising end actually to this whole thing when it seemed like Netflix had it locked down weeks ago. Peter, thanks for now. We appreciate it.

[Peter Cipino]

Thank you.

[Kelly Evans]

Peter Sapino from Wolf Research. Coming up, Mara holdings soaring on news. It's teaming up with Barry Sternlich Starwood Capital. Why? To develop AI data centers. The shares are still down 60% from their October high and we'll speak with the CEO about the pivot from Bitcoin mining to AI right after the break.

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[Kelly Evans]

style, every Home At Strayer University, we help students like you go from is it possible? To anything is possible by offering access to up to 10 no cost gen ed courses so you can reach your goals affordably and fast. Visit Strayer. Edu to learn more. No cost gen EDS provided by Strayer University affiliate Sophia. Eligibility rules apply. Connect with us for details. Strayer University is certified to operate in Virginia by Chev and has many campuses, including at 2121 15th Street north in Arlington, Virginia. Bitcoin miner Mara holdings up as much as 16% earlier today after announcing a partnership with with Starwood Capital to build AI data centers across its existing sites. That's a trend we're starting to see across the broader market miners as the crypto market continues to struggle pivoting into this space. And it's a big move for Mara, whose shares have fallen nearly 40% in the past six months. Here to discuss the strategy changes. Fred. Is it Thiel or Thiel? Fred, CEO of Mara Holdings. Welcome.

[Fred Thiel]

Thank you. It's Thiel.

[Kelly Evans]

Okay, so like. But no relation to Peter, I imagine.

[Fred Thiel]

I can tell you a funny story, but I won't.

[Kelly Evans]

Maybe. Maybe for the after show. So I find this interesting for two reasons. Not just going into AI data centers, which obviously is. There's enormous demand for. But tell me what's going on in the crypto space with mining bitcoin right now as the price stays where it is. I'm just curious about both that piece of the story and what you're going into.

[Fred Thiel]

Yeah. So if you look at, go back to last year and you think a little bit about what happened last year, bitcoin price ramped up. The bitcoin market. Typically miners add more capacity as price goes up because they can make more money. Bitcoin is. Mining is a zero sum game. So more capacity that comes on. Everybody's fighting over the same number of bitcoin to be awarded every day. And so it becomes a market share war. And when bitcoin price goes down, all of a sudden that difficulty makes it hard for people to make profit, especially when the price drops at this level. So a lot of miners have been looking at their infrastructure availability today and how much power do they have for the hyperscalers. Key thing today is how much power do you have turned on? Because the big risk for a hyperscaler is I'm going to go buy land. I talk to an energy company, they tell me I'll be able to connect in two, three, maybe four years. And then I have to be certain it'll connect. And bitcoin miners have energy available today. It's an easy pivot. The key is being able to do it with the right partner. And choosing Starwood for us reduces a huge amount of risk, both for the potential hyperscaler tenant in that they're used to dealing with Starwood on the other side and for us from an execution

[Kelly Evans]

perspective, how many, how many properties, how many mining properties do you own and what is their power source?

[Fred Thiel]

So we operate 16 data centers on four continents. So it's a big mix of energy. We are over 50% renewable energy today. We actually own our own wind farm in West Texas. We also use flare gas from oil fields and convert that methane into energy. So we're mitigating methane in some cases. We actually doubled our flare gas capacity for generating energy this year. But we also sit on the grid and Sit behind the meter at large wind farms, like we do in Texas, for example. So there's a good mix of energy. We have about 1.1 gigawatts of power already connected and about 1.8 gigawatts of power in the available at the sites that we control or the sites that we're at. And we're continually adding more power to that mix.

[Kelly Evans]

So if bitcoin goes back to 200,000, are you going to be kicking yourself or can you pivot again?

[Fred Thiel]

No, actually, one of the very attractive things about this deal is that we have the ability to continue mining, mining at the site while the conversion process is happening, and if there is excess power available, even to continue mining if the tenant allows it side by side. So it's a very attractive deal in that while this process of conversion happens, we're going to continue doing what we've always done very well, which is mine bitcoin at a very low cost to mine, and then hopefully have the ability to balance the load for the hyperscaler, such that we're able to consume every last electron and make sure we maximize

[Kelly Evans]

the profit per megawatt on bitcoin. Is it economic? What's the word? Is it profitable to mine it right now? I mean, do you literally still engage? I thought the break even was around 80,000. Maybe. Correct me if I'm wrong, but. So what do you do if. If you're spending more money to try to mine bitcoin than you'd receive by actually mining one?

[Fred Thiel]

Yeah, sometimes it's a bit like when you operate a factory. Idling the factory may cost you more than operating it at a loss. It depends on the energy, the agreements you have with energy companies. In some cases, bitcoin miners have what are called take or pay agreements with the power companies. So you either take it and use it, or you just have to pay for it if you're not using it. And so at these levels, it's on a cash basis, not profitable for most miners. But they will keep mining with the expectation that either price is going to change or they'll be able to kind of decrease their cost exposure.

[Kelly Evans]

And we have to go. But quickly, Fred, for the question on all Americans minds, this doesn't raise their power bills.

[Fred Thiel]

No, actually we use dispatchable load, so we're a Dispatchable baseload. Only 2% of the day. Do Americans use 100% of the generation capacity in the grid? Duke University did a great study on this. We have over 73 gigawatts of power in the US grids today that if the load were dispatchable, meaning it could be shut off 2% of the day or less, there's more than enough energy for the data centers, which are about a 40 gigawatt demand. So that study's available online. Anybody can look at it and it's very educational.

[Kelly Evans]

You'll be dispatchable even if you go into the AI business.

[Fred Thiel]

So for most AI data centers, there's typically battery backup systems or backup generation which can provide that dispatchability, if you would.

[Kelly Evans]

I see. Well, that makes I've learned so much, Fred. I really appreciate it. I guess congratulations on the deal and we'd love to talk more about it. Thanks for your time.

[Fred Thiel]

Look forward to it. Thank you.

[Kelly Evans]

Fred Thiel joining me from Mara Holdings. Let's get to Christina Parts the nevelis now for the CNBC news update. Christina? Hi, Kelly. President Trump just moments ago said that he'd not or he'd love not to use the US Military to attack Iran, but quote, sometimes you have to. But the president also said no final decision has been made on whether to actually attack. Mr. Trump went on to say he's not thrilled with the way Iran is negotiating over its nuclear program, saying they can't have nuclear weapons. Federal prosecutors said Friday they're planning to drop two charges against luxury real estate brokers Oren and Tal Alexander, as well as their brother. The men are accused of raping and sexually assaulting dozens of women just over the course of more than 20 years. They have pleaded not guilty of and this according to the New York Times. The two charges being dropped relate to sex trafficking and the FBI command post set up to search for Nancy Guthrie and is actually moving from Tuscan to Phoenix now. CBS News reports the transition is being made because the larger Phoenix office will be able to operate more efficiently over time and that many of the agents are actually based over there. The 84 year old mother of the Today show, Samantha Guthrie, has been missing since February 1st. Kelly worse by the day. Every day that goes by, they don't find her. Christina, thanks, Christina. Parts and Evolis coming up, shares of Nvidia down 5% since Monday, on pace for its worst week in three months. Is it back in the hot seat? Seems to be. We'll discuss more about that next. To the exchange. Stocks and yields are falling on the last trading day of February as private credit concerns hotter than expected. PPI and Iran tensions. Everything's weighing on sentiment. The S and P is on pace for its worst month in nearly a year. So will March be Any better? Let's bring in Surat, seti portfolio manager at dcla. And Surat you're looking at, we've talked about some of the software names before. Are you still looking through them to find some, some names to pick up here?

[Surat Sethi]

Here I am. You know we still like Workday, Salesforce into it. These stocks are now trading. I'll take Workday and Salesforce three or ten times cash flow. And they just had their calls this week and if you listen to them, they're using AI, they're going to be enablers of AI and their cash flow is going to be increasing. They're going to buy back shares. So right now you're in this scenario as cell phones ask questions later and it's really going to have to be execution. They're going to have to show that they're growing 10 plus percent like they said they were going to. I mean one of them said 13% and I think that's the case. So right now with the market the way it is, the risk off day we're having really weak. These are stocks that most investors don't want to touch right now.

[Kelly Evans]

You also like Amazon stocks gone nowhere in a year, big partnership with OpenAI. Obviously they have a rooting interest in making sure that Google doesn't win and run away with, you know, with Gemini.

[Surat Sethi]

Yeah. And Amazon's got so many different moving parts to it as well. I mean if you look at just the retail side, you look at, you know, the cloud side and they're going to be using robotics, it's. And they're trading at, you know, 20 plus times earnings. So it's a cheap stock. It's another one of these stocks that people are using for source of funds. So I do think there's opportunity there as well. And again these are. Now it used to be you buy these stocks based on any time they mention AI or something like that. Now it's execution and cash flow. And all these companies that we just talked about have that.

[Kelly Evans]

And finally, and maybe the hardest one is what's going on in the private credit space. So I don't know if you'd pick up any of the private equity names down 40% here, there. They're pretty indiscriminate selling. Look at the banks today. Goldman down 7%. You know, that might be an overreaction. Some of the other major names down 3, 4, 5. So either in the epicenter, are you looking at doing anything or even with some of the financials.

[Surat Sethi]

Well, I do think. And you've had A couple of guests talk about this. I don't see how tangentially these are getting affected other than maybe people are thinking these are going to affect the wealth management businesses, some of the products they're selling. But that's, you know, that's a huge amount to take off some of these companies. So I would, you know, we still like Morgan Stanley, JP Morgan at these levels. These are very well diversified companies. They're not really in this space. And I think, you know, the sell off that started with Citrine, now, you know, today when you're getting the risk off on the credit side. So there are going to be opportunities. I don't think it's, you know, catching a falling knife, but it's definitely kind of every day it feels worse and that's when you get to pick up some of these very high quality companies, especially in the financial space.

[Kelly Evans]

Yeah. All right, Surat, thanks. Appreciate checking in with you. Sarat Sethi with DCLA Coming up, a liar with a God complex. That's how a top Pentagon official referred to Anthropic CEO Dario Amadei earlier today. Anthropic has less than four hours to loosen its safety guardrails as requested or face the DOD canceling its contract. We'll bring you the latest and the potential impact of losing that relationship as Iran tensions heat up. That's next. Anthropic rejecting the Pentagon's ultimatum to loosen military safeguards around its AI models or face the cancellation of government contracts. The clash is putting the AI safety debate directly in the spotlight. And over in China, that tech is already being used by the military. Deirdre Bosa has more in today's tech check. Deirdre.

[Kelly Cavagnaro]

Hey, Kelly. So this is the part of the story that may not be getting enough attention. This isn't just a contract dispute. It's exposing a real structural gap between the US and China on military AI. So there is no Chinese CEO telling the People's Liberation army what it can and can't do with its models. Deep Seek is already reportedly powering autonomous combat vehicles and coordinating drone swarms. The Pentagon itself has concluded that Alibaba and Baidu aid the Chinese military. So the same safety principles that make American AI trustworthy for consumers, why Fortune 500 companies trust them with their data. It's the same one slowing it down for national security in China. Meanwhile, AI military integration, it is a feature here in the US that fight, it plays out publicly. Now, of course, Kelly, the fact that an American CEO can say no to the Pentagon, that is what separates us from China. That is a good thing. Debate is healthy. But the fallout for investors, it could be expensive and for national security, potentially dangerous, which is of course, the government's argument. And you make them hear that. But while we're arguing about guardrails, China is deploying every day and every day that the gap widens, it could be harder to close. Kelly.

[Kelly Evans]

Yeah, And I think that, you know, these, the we must be learning something about how fractious this is when we have this name calling by the Pentagon about Anthropic.

[Surat Sethi]

And

[Kelly Evans]

I don't know if they're ultimately going to come to the table and say that the national security need is more urgent, but the bad blood is pretty striking.

[Kelly Cavagnaro]

Yeah. And it's so public. Right. We talked about this a few days ago as well. I mean, Anthropic has made sort of its whole founding principle safety, and this is really an important thing for it to stand up to. Also think about it works for its enterprise customers. It's saying essentially that it would be walking away from a $200 million contract if that compromises its values. And the argument that the government is making is saying we're not going to be doing anything illegally, but we need to be able to access and do what we need to do because there's another country, China, that is moving forward. And it's interesting because AI changes this, right? We have the frontier models, but China, we always talk about this. Kelly is catching up very, very quickly. So it's not like, like we have all of this proprietary stuff we do. But that lead is shrinking and China's military is going to be able to access, you know, if not the best, very close to the best model.

[Kelly Evans]

It's a great point, Deirdre. For now, thanks. Appreciate it, Deirdre. Bosa Tech Check coming up, an upgrade to buy by B. Riley securities for this name earlier this month, writing they're already benefiting from several secular tailwinds. And there are clear catalysts that could lead to outsized growth. And these shares have nearly doubled in 2026. That means since January 1st, we're not just going to reveal it. We'll hear directly from the CEO right after this. As we have talked about, it's becoming less and less about the software trades lately and much more about hardware, especially in AI. And shares of Lumentum, which makes optical products for data center and cloud networking, have jumped 80% event this month. The company counts Google, Nvidia and Amazon among its clients. And joining us on set now is Momentum CEO Michael Hurrelson. It's great to have you here.

[Michael Hurrelson]

Welcome, Kelly. Thanks a lot. I think you had me on a month or so ago and the stock's gone up about 150 bucks since that time.

[Kelly Evans]

And at that point I was saying to you, how does this feel? And so I would re up the question and I would add at a time when the last two weeks have been dominated by it. I don't know how you feel about these when you see them making the round one missive after another, one announcement after the other about AI shrinking workforces and change. And I have to, I think to myself, but what's Lumentum doing? So anyway, I don't know if you want to respond. Kind of just talk about that.

[Michael Hurrelson]

Look, I mean the big story that you covered was about this Capex and the amount of money that these data center companies are spending and that CAPEX fuels what we do. We have to fill these data centers with the equipment. You talk so much about Nvidia and Google and the people that are driving the compute. How do you put all that together? Right. That's what we're about. We're actually networking all of these systems with fiber optics.

[Kelly Evans]

Right. And what's interesting to me, I don't mean to add, you know, are you adding workers or. And are you expanding? But are you. I mean, when your demand does what it's doing. And I'd be curious, what kinds of jobs are the these. Where are they located? I mean, this is the part of the ice we're all hearing, the white collar AI scary story. That's fine. I just want to know the rest of the story. What's happening behind the scenes for stocks like yours that were meant to mentioning.

[Michael Hurrelson]

Yeah, we're hiring like crazy. I mean, we're growing 2x almost every single quarter. So the pressure on our workforce is immense. We're hiring people in the United States. We're putting manufacturing routes actually in the United States. We're hiring software engineers. And this has been one of the areas that AI is being talked about to replace. We need a lot of software engineers. They're actually up in Canada. We have a big team up in Ottawa in Canada. So we're hiring like crazy. And sort of the death of the American tech worker seems to be somewhat overstated.

[Kelly Evans]

So are you using AI within the organization? Like for instance, do your software engineers when you hire them now? I imagine they're doing quite. A friend of mine, a very smart friend of mine who's also software engineer, mentioned that he thinks engineers are going to be evaluated by tokens. In other words, the more that people are using AI, the better they're going to be rewarded in the workplace for doing so.

[Michael Hurrelson]

Yeah, I mean, that's exactly the way I see it. I think AI is making our engineers better. We use it. We use it a ton. And that is helping our designs get to market faster. It's helping us produce more, higher quality designs, and it's helping us produce ideas that we probably wouldn't have had otherwise. So, again, sort of this idea of AI eliminating a bunch of jobs, it helps. It's a really helpful tool. I'm sure you use it on the job.

[Kelly Evans]

Absolutely.

[Michael Hurrelson]

And it's something that we use a lot and it's proving out to be very, very helpful.

[Kelly Evans]

Talk about the partners. You know, how does that dynamic work when they come to you? And we just spoke with a company who's transitioning into a data center. You might have caught that interview. We see it every day. There's more and more coming online, but there's a lot of supply constraints and there's huge demand. Look at how OpenAI's valuation today. What are those conversations like when they come to you? Are they placing massive orders?

[Michael Hurrelson]

Yeah, they are. I mean, we're completely sold out. So our products are sold out from here until the end of 27. And that's as we add capacity. So we're hiring, we're adding capacity in our factories. We're trying to build as much as we possibly can, but given the customer order book, we're actually sold out for the next eight quarters. I mean, it's just incredible demand that we're seeing. And it's across almost all the products that we make.

[Kelly Evans]

Would it ever give? So, and again, I don't pretend to understand the science of what you do. I just know that light, your ticker has replaced to some extent copper. And being a better transmitter. Is that right? Of some of the data and information here. Am I kind of getting it correct?

[Michael Hurrelson]

You have it completely right.

[Kelly Evans]

Okay.

[Michael Hurrelson]

The faster you're trying to move data and all of these companies, anthropic that you've been talking about, OpenAI, they're trying to move this data faster and faster. The faster way. Fastest way to move data is with light. It's the fastest thing that there is. And what you have now is these bandwidths and speeds are going up. You have a push away from electrical cables, copper, which is slower, naturally slower, and more and more fiber. And fiber is what carries this light. So companies like Corning are doing very, very well, because they're making that fiber. We're the engine that shoots the light along that fiber. And that's what's driving our business business and why our results have been so good.

[Kelly Evans]

And when you say that you're booked out for eight quarters, would that ever leave an opening for a rival? Maybe it's a Chinese rival. I don't know if one exists or from another country or even just, you know, within this country for someone to come in and say, hey, we'd love a piece of that business.

[Michael Hurrelson]

I think we're all sold out. As I talk to my customers, I talk to my competitors, it's a universal problem. And we're trying to keep up with the demands of the Googles, of the Microsoft offs of the matters. We just can't keep up. And so it's not just our problem. It's pretty much felt across the entire industry.

[Kelly Evans]

Yeah. Makes sense. Well, I know you're going from here right back to the airport onto the next thing. So thanks for stopping to make the time, Michael. Thanks, Kelly.

[Michael Hurrelson]

Really appreciate the time. Wonderful to see you, Michael.

[Kelly Evans]

Horst Harrelson is Lumentum CEO. She tried to say before we go, don't forget we've got a big interview coming up Monday here on the Exchange. We'll speak speak with JP Morgan chair and CEO Jamie Dimon in a first on CNBC interview around 1:30pm Eastern time. And that's it for us. Thank you for watching. I'll join Brian Sullivan for Power Lunch right after this quick break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.

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