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The Exchange
The Exchange 6/4/26
00:44:00
Listen to the day's top stories, the must reads & a whole lot more for today's modern investor.
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- [00:01]
Venture Global Representative
At Venture Global, we think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
- [00:30]
Discover Card Advertiser
It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you, you listen to this show, see terms@discover.com slash credit card.
- [00:56]
Kelly Evans
You're listening to the Exchange. Here's today's show. Thank you very much, Scott. Space X hits the road. AI is eating the crypto trade and worms are eating America's cattle. Welcome to the Exchange, everybody. I'm Kelly Evans. It's the Dow's turn to hit a record high with a 900 point surge today. The S and P is also in the green, up 28 points. Interestingly though, the NASDAQ is in the red. And today's trade, broad speaking, is not at all driven by AI it might be the opposite. It's health care, it's financials, it's the consumer. UnitedHealth and Goldman are your Dow winners. The credit card names are rising today as well. Merck rounds out the top five. Even Walmart, which has been lagging, getting in on the action with a 1% gain. Now, as mentioned, what's not working is the AI trade. The semis and the memory stocks are lower. Broadcom down 14% on its lackluster guidance last night. Does today's action mean the market can hold up even if, if the AI trade isn't leading the way? And is today the big broadening that we've been waiting for? Joining me now for our opening exchange, Travis Prentice is Chief Investment Officer at the Informed Momentum Company. Travis, it's great to see you. Welcome.
- [02:06]
Travis Prentice
Yeah, thank you. Thanks, Kelly. Thanks for having me.
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Kelly Evans
This is like, this is what it used to be like covering the stock market. How did we even do it before I came along? There's nothing else, you know. Yeah, it'd be health care and it would be financials and ho hum. And here we go. What do you make of today's trading activity and price action?
- [02:24]
Travis Prentice
Yeah, obviously a very fascinating day. Obviously Some important earnings overnight and this morning. But I think it's a reflection of just a reversal trade that we're seeing on a day, on a daily basis. It seems that, you know, momentum's done extremely well and the trade's done extremely well very recently. So it's kind of natural for a little bit of a correction, a little bit of a consolidation. But there's also some, some good things happening outside of AI. And I think you see that within small cap markets that so called broadening out trade that you said. I think there's a broader market out there besides just mega cap tech. I want to be a reminder of that.
- [03:00]
Kelly Evans
Just yesterday or the day before we were talking about oil prices back on the rise. 10 year yield is moving higher. Russell hates when that happens. It's not like we've gotten an end or any major development on the Iran front. It just feels like everyone's in a better mood today. I want to point to Costco, if I'm not mistaken, they put up an 8% monthly comp. An 8% comp in the face of all of those supposed headwinds the consumer is facing. Is that a catalyst?
- [03:26]
Travis Prentice
Yeah, I think it's also a point to just look at stocks, the stock market as an opportunity set stock by stock. I think it's very hard to draw like very large conclusions from just one company's report. For example, we saw a very good result from Victoria's Secret very recently too. So it's very much, we think, a stock by stock driven market. And you see that within software as well as we saw kind of an indiscriminate sell off. So this year to date, but then we saw a very indiscriminate rebound. But I think now you're getting to the point where there's a little bit more differentiation within the software trade. And we think that's likely to happen in the market itself and actually within the trade as we see much broader and newer momentum and trend in everything leveraged to agent traffic. So I think even within the market and even within a monolithic trade like AI, which it's been, there are some, there is some dispersion, there are some differing opportunities. So I think I would suggest your audience look at the market as stock by stock opportunities.
- [04:29]
Kelly Evans
So is it time to sell out of the chips, the memory names, the Marvells and Broadcoms, and you know, everything related to AI infrastructure?
- [04:42]
Travis Prentice
Well, gosh, that's a, that's a really good question. We would say because we look at the world, obviously we're momentum investors and we look at both price trend but also fundamental trends. So fundamental momentum. And when you look at through the lens of that in terms of semiconductors and memory stocks, these trends are very well in place. And so you're going to normally see some sign of consolidation, some correction in a broader positive trend. And I think that's what you're seeing. I think it's a little too early, at least from what we look at. These trends are so powerful right now on a medium term basis that this short term movement doesn't really change that very powerful medium and long term trend. So I do think though it's time to manage your risks obviously with stock, stock specific risk and when things get a little bit parabolic or a little extended to take some gains off the table. So risk management I think is really important at this stage. But I would say broad, broadly speaking and things can change. But right now those trends are very strong, reassuring.
- [05:42]
Kelly Evans
You know, again, Broadcom has had a huge run, but it was just one of those things that makes you wonder as a sign of the times, what about. It was a crowdstrike as well. I mean that's a stock that I believe you guys own. It's up 50% in a year coming into last night's sell off.
- [05:56]
Travis Prentice
Yeah, I think Broadcom and, and Crowdstrike are an example of look, it's a near term correction but like CrowdStrike is actually acting very well off the bottoms today so far. But it's also just retracing about four days of movement. So we got to kind of zoom out a little bit from kind of those very daily trends to the medium term trend. And when you look at both those securities, at least right now, those medium term trends are very strong even though there's been a little bit of a correction on a daily trend perspective. So these kind of corrections are somewhat normal as long as they don't upset the medium term trend. I think you can kind of still say that these trends are rightly in place.
- [06:39]
Kelly Evans
Just want to mention a couple of other areas in software and this overlaps a little bit with cyber. You have a couple of specific companies again to go stock by stock here. Do you think people have to get really choosy with software even though owning the IGV broadly has been a nice trade off the bottom?
- [06:54]
Travis Prentice
Yeah, I do think it's time to get choosy. And you're right, it's been kind of indiscriminate on the sell off and indiscriminate on the way up. But now if you look at the igv, you're kind of coming into some resistance levels from a price perspective. So I do think it's the time to be a little bit more choosy. And I certainly think if you look at software and you look under the hood, I think what we're seeing is some areas of software that are really important in the age of AI agents and the traffic that it creates. So, so companies like, you know, insecurity, like a fortinet, like a crowdstrike, things of that nature, and then CPUs being more important than GPUs, at least as far as agent traffic is concerned. So I do think that you want to be choosy now and really sit back and let the data and let the price trends direct you, because we believe that there is signal in price, there is signal in trend. And I think to sit back and observe the data and react to the data instead of trying to predict, I think is what we should do. Because there's so many unknowns and things are moving so quickly, you got to have a process. And we think price signals. There's wisdom in crowds, there's wisdom in price, and so be very observant and be willing to change your mind.
- [08:07]
Kelly Evans
One final question. We're about to go into the details of the Space X ipo. That's about one of the biggest companies out there. But you still think small caps are going to do okay in part because of the AI trade. A couple of names that you say to focus on their vpg. And is it siva?
- [08:22]
Duncan Davidson
Yep.
- [08:23]
Travis Prentice
Yeah, I do think there. You know, Kelly, you mentioned broadening out. I do think we've seen broadening out. In fact, small cap has outperformed large cap by about 600 basis points or so year to date. I think that what it reflects is that to make AI happen, you need a broader participation across industries and sectors to make it happen.
- [08:41]
Asher Ganut
Right?
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Travis Prentice
So you need industrials, you need energy, you need utilities, etcetera, etcetera. But I also think in small cap you're finding new trends that benefit from these larger AI, you know, massive secular trends. And within small cap you can find the next new trend. So like a Sava, for example, is a leader in npu, which are neural processing units which are very important for AI inference and agents, particularly on device AI. So I think that's going to become important as well. And then VPG or Vishay Precision Group is really a leader in sensors that are enabling physical AI in terms of robotics. So I do think there's a broadening in and out of the market. But there's also very specific opportunities in small cap that are worth looking toward. So there is some life outside of Mega Cap, and it hasn't been that way in quite some time.
- [09:32]
Kelly Evans
There's GPUs, CPUs, GPUs and NP. We need a dictionary. It's exciting, though. It is. To see the way this technology is broadening out. Travis, thanks so much for joining us today. We'll check back in soon.
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Duncan Davidson
Soon.
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Travis Prentice
Thank you very much.
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Kelly Evans
Travis Prentice with the informed Momentum company. I mentioned Space X IPO. It now has a valuation of nearly $1.8 trillion. That's even before the roadshow, which officially kicks off today. Leslie Picker has more on those terms. And Leslie, some pretty telling excitement that is building and the hype that we're seeing around this is pretty, it's something.
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Leslie Picker
Yeah. This is the largest IPO we've ever seen in the world. It's, it's about three times bigger than the largest IPO ever listed in the U.S. spaceX at a $1.8 trillion valuation is about 95 times its sales from last year, historical sales. That's a skyrocketing valuation for this company. It's more than double the valuation it had just a year ago. Now, now the question is kind of what the story is on the roadshow as this company goes and talks to investors, particularly that retail component, because this company wants to sell about 30% to retail. I'm told now there is a big total addressable market figure in the IPO prospectus largely centered on AI. And the FTSE is out reporting that Goldman says that that revenue can grow by 100 times by 2030. So it's that type of conversation that they're having in order to kind of back out into a $1.8 trillion valuation.
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Victoria Green
Right.
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Kelly Evans
No, and again, as we were just saying, it's, it's incredible to see the lengths to which even kind of the CEOs of these financial sponsors are going in order to kind of help create excitement.
- [11:31]
Leslie Picker
Yes. So that 30% retail is a big part of this because typically just institutional investors, you go on your roadshow, you go to Baltimore, you go to Philly. Right now we've got this big retail contingency, contingency to sell to. So you could see there, Morgan Stanley headquarters all decked out in Space X. That's true. Largely across Wall Street. Goldman has some signage as well. Bank of America and JP Morgan are each hosting events today with their own executives as well. As SpaceX, Space X executives, where they're going to livestream a conversation with those individuals to thousands of their high net worth clients across the country and they're basically going to make that pitch why they should invest in Space x because that 30% allocation was very important to Elon Musk. Whereas historically underwriters haven't allocated as much much to retail because they've been concerned about, you know, retail maybe flipping into the IPO and creating additional selling pressure. If you have a couple of institutional long only, big long only is that comprise your book, you can look them in the eye and be like, are you going to sell? And then if they lie to you and they sell anyway, you just don't give them allocation in the next ipo. That's a lot harder to do with the disparate nature of retail investors who are spread out all over the country. So now you have these kind of broadcasting messaging that's taking place over the course of today.
- [12:55]
Kelly Evans
Yeah, it's fascinating to see. You know, Morgan Stanley, welcome Space X. That costs a lot of money to put all that up. Leslie, thanks for now. Leslie Picker. We appreciate it. As mentioned, the valuation now implies a multiple for Space x of about 95 times last year's revenue, which is high for a company that's not profitable on a net basis and has debt. With us now is Duncan Davidson. He's a partner at Bullpen Capital. Duncan, it's great to see you. I've heard people say this IPO is like leading lambs to the slaughter for the retail investor. Do you think that is that there's some truth to that or is that too extreme?
- [13:29]
Duncan Davidson
It's silly. Let me put it this way. Bill Gurley has been talking for years about how tech IPOs underpriced and get a big first day pop. Not good. You left money on the table. If this thing were priced at the Morningstar valuation, it would double on the opening. Why go through that? I think this thing is going to get easily closed and will probably go up a little bit in the aftermarket, maybe 15%.
- [13:54]
Kelly Evans
I guess the question I would ask is for all of those who are excited to get in on this, whether it's the retail investors specifically or anybody else, does it, does the 95 times sales valuation make sense to you?
- [14:06]
Duncan Davidson
Well, of course not, but that is what this thing's being really valued on. That's just today's metric there. This company comes down to data centers in space. That is the big long term play. If you look at Elon, he's got the best launch system in the world. It's going to get better with super heavy. He's got the dominant starlink that he's launching. So he's turned a space launch into a space service and he can launch lots of data centers once that thing gets going. And so.
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Kelly Evans
But how do we know that data centers in space? It's fun to talk about, but nobody knows if that's a good business model.
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Duncan Davidson
Well, first of all, I have an indirect interest in StarCloud. StarCloud already launched a data center in space and it's got orders for a bunch more. The engineering problems have been solved. And if you think about launching a data center through a polar orbit that floats around the day night barrier when you know with the sun on one side and dark on the other, you could easily make the heat system work. So technically these things can work economically. Right now it's marginal. But think about two or three years down the road. Super Heavy is going to greatly lower the cost of putting kilograms in space, the US or the world. Terrestrial data centers aren't really going to get much cheaper, are they? In fact, they might keep on going up in cost for construction, for energy and so on and so forth, but the space ones are going to start getting cheaper and cheaper. And so I think the case, when you look at Goldman Sachs 2030, the case is really strong for these things.
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Kelly Evans
I mean, I get, I don't know, it just, it feels like it's a pretty. The technology to do it is incredible. The business model feels a little more home. The fact that you're investing in someone who's already kind of doing this kind of makes that point, doesn't it?
- [15:55]
Duncan Davidson
Well, I put it this way. If you think about data centers, they really have three big buckets. The biggest, baddest, fastest train LLMs, they always do the latest and greatest. The next level down do all the reasoning or inference when you ask ChatGPT something, it's got to go give you a good answer and not hallucinate the next way. The third bunch will be agents. Now if you think about an agent system, it doesn't have to operate at computer speed, it can operate more at human speed. Perfect for data centers in space. And I think a lot of the future demand for data centers is going to be from agent use, not training. LLMs and the things we're seeing right now. So economically it could work. I mean communication. Starlink has a laser network. StarCloud is tying into the laser network so you can zip data around really fast. Up there. Final comment on this is that if you think about what a data center in space looks like, each satellite is like a rack in a data center. So you put up say 3,000 data center racks. You've got a 300 mega gigabit, whatever it is, data center. It's pretty amazing. So Elon's put up tens of thousands of starlinks. He's going to put up 10,000 or more data centers by 2030.
- [17:13]
Kelly Evans
Are you buying? Would you buy Duncan on the IP? Are you guys already invested? It sounds like you can't get enough of this.
- [17:19]
Duncan Davidson
No, my venture fund does not invest at this scale. We invest much, much earlier.
- [17:23]
Kelly Evans
But you yourself could just buy it on the open if you think it's that awesome.
- [17:27]
Duncan Davidson
Yeah, maybe I will.
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Kelly Evans
You're like, I've got too many other things going on.
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Duncan Davidson
I'll tell you one other thing about this. It's going to go right into the indexes. It has to. It's so important to stock such a big, important stock. There's buying pressure after the offer offering. I know fairly quick. And it's going to keep this stock looking pretty good.
- [17:46]
Kelly Evans
But that's a different case than, you know, it's a great business model.
- [17:49]
Duncan Davidson
Anyway, Kelly, final point.
- [17:51]
Kelly Evans
Yeah.
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Duncan Davidson
We're at the beginning of the IPO AI wave, not the end. I was involved with the last great IPO of the 90s, which was June 30, 2000 Genuity. It came out and faded at the open and almost brought Salomon Brothers down. The conditions right now are exactly the opposite. The world is hungry for these things. Anthropic open AI. We're at the beginning, not the end. So I wouldn't worry about this. It's going to get this Elon Premium and this AI Premium for a while before we get into any kind of trouble.
- [18:24]
Kelly Evans
All right, Duncan, really appreciate it. Thank you. It's great to get your point of view. Duncan Davidson from Bullpen Capital. Coming up, another IPO today. Crypto taking a quantum step back down 20% in a month. Some of the miners are pivoting to AI and being rewarded as a result. We'll talk to the CEO of Hut 8, who did just that and has soared since. Plus, tomorrow's jobs report comes on the heels of job openings hitting their highest level in nearly two years. More on that in a preview of what we might hear come 8:30am Eastern. The exchange is back after this. At Oppenheimer, we're proven because we're grounded
- [19:05]
Venture Global Representative
in discipline for 145 years we've been building and protecting wealth through every market cycle with precision, clarity, and the courage
- [19:14]
Kelly Evans
to think boldly beyond the moment.
- [19:17]
Venture Global Representative
This is what market tested legacy looks
- [19:19]
Kelly Evans
like for this generation and the next. Put the power of Oppenheimer thinking to work for you. Wealth management, capital markets, investment banking.
- [19:31]
Venture Global Representative
At Venture Global, we think about what can be done, not what's usually done. Innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
- [20:01]
Discover Card Advertiser
It's smart to always have a few financial goals and a really smart one you can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show, see terms@discover.com credit card shares of bitcoin,
- [20:29]
Kelly Evans
as many of you know, are hitting their lowest level since February at 63,000 now and and pacing for their fourth straight week of losses. Oppenheimer says it now costs around $87,000 to mine a bitcoin. The problem, that reward, when you do so, is only worth 63,000. Our next guest runs one of the largest bitcoin miners in North America. But as AI has come on the scene, the company began to pivot its infrastructure towards AI data centers instead. And that has certainly paid off. The Stock has gained 176% this year. With us now is HUD 8 CEO Asher Ganut. Asher, it's great to see you again. Welcome.
- [21:05]
Asher Ganut
Great to see you as well. Thanks for having me.
- [21:07]
Kelly Evans
So I, we've been speaking about this and obviously we've, we've talked about kind of the rise and the change in plans with you a number of times. I guess my question now would be, are you concerned that everybody under the sun is going to start to do this as well and look at what an amazing business model this looks like, at least for right now, and say, why don't we go open a data center too and get into this?
- [21:32]
Asher Ganut
So the beauty with Hut 8 is that we're developing a multifaceted energy infrastructure platform. We actually still have 700 megawatts that supports the bitcoin network. So unlike many companies, we didn't convert any of our sites into AI. We developed net new sites for AI. And we signed about $17 billion of deals since then. And so we see a company as supporting technologies and there will be different demands at different moments in time. And it's also really hard to build this infrastructure at scale. We are deploying large scale infrastructure in communities and raising billions of dollars to support the bills and investing into those communities. And so one is our focus is on supporting technologies, not bitcoin, not AI, but holistic technologies in building the infrastructure to support them. And two, it's incredibly difficult and complex to build this infrastructure at scale.
- [22:19]
Kelly Evans
We talked to Tyler Page about this on power lunch yesterday. His firm has also had a lot of success with pivoting from bitcoin mining to doing data centers. His secret sauce, as he was explaining, is low cost power. And he's turned tier 3 sites into more desirable ones. And I asked if he was still doing any bitcoin mining and he said only with the location that has the lowest power cost. Same question to you.
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Asher Ganut
We're building sites across the board. So we have over 8 gigawatts in our development pipeline. And so something that really mattered to us was being able to show tenants and shareholders that we can continue to develop and grow net new facilities. The most important thing when it came to bitcoin compute was lowest cost compute. So that's low cost energy from a month to month bill perspective. And that's low cost capex. So innovating on actually building the data center that supports that compute. And it's actually pretty similar today. People just want compute quickly. Over time economics are going to matter more and more. And so having that fundamental perspective of how do we drive operational costs down in capex sound by design, efficiency, by operations and by optimization is something we're very excited for to continue to develop and build in the data center infrastructure space.
- [23:28]
Kelly Evans
In a weird way, you know, the fix for bitcoin miners is for enough bitcoin miners to get out of the business or for the bitcoin price to go back up. But at some point there it will become attractive again. Is there a point at which it's attractive to you or do you just kind of move on?
- [23:45]
Asher Ganut
So today had eight supports the data centers. We actually spun out the bitcoin mining business into a company called American Bitcoin and we own a majority of that business today. And so we're still mining bitcoin and over a 50% margin over the last two quarters. And I saw some stats that you showed earlier. We're actually mining close to $40,000 a coin and so it's still profitable for us to mine it. It's exactly what you said. Everybody is leaving. Network difficulty has come down. And so therefore it's actually efficient. And so that's what I love about what we're building at hut 8 is we're building infrastructure that supports a bunch of technologies. And right now, AI is the thing that everyone's talking about. Bitcoin is volatile, But I looked five years ago, Bitcoin is up still 77% in the last five years. And so you still see kind of growth over a longer period of time. And we're building long term infrastructure. Even if there's volatility in these new and emerging technologies, as long as we believe in the underlying thesis, the technology will continue to remain supported if we build really efficiently, if we have low cost facilities and energy. And we're excited to continue to support both ecosystems.
- [24:48]
Kelly Evans
All right, Asher, thanks for making the time. Good to see you again.
- [24:51]
Asher Ganut
Thanks so much.
- [24:52]
Kelly Evans
Asher Ganute with HUD 8. Coming up, the country's first confirmed case of new world screw work. First one since the 1960s. We'll look at the impact on the cattle industry and how officials are handling the outbreak. That's next.
- [25:12]
Venture Global Representative
Adventure Global. We think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
- [25:41]
Discover Card Advertiser
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- [26:07]
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- [26:39]
Kelly Evans
Another big IPO we're watching today is Quantinuum. That stock preparing to make its first trade on the NASDAQ. After pricing above the range at $60, the latest indication we have for the open is now 6. The Quantum company is a spin off from Honeywell. The US government recently gave them $100 million to develop a supply chain for quantum chips. Our David Faber spoke with the CEO this morning on the company's goals post ipo. Listen, our view of the long term
- [27:07]
Asher Ganut
opportunities for this is made more confident
- [27:10]
Antoine Legault
by our interactions with our blue chip customers.
- [27:13]
Kelly Evans
Whether, as you stated, it's in the
- [27:15]
Asher Ganut
pharma industry, chemicals industry, industry, you know, drug industry, financial sector, the need for
- [27:21]
Kelly Evans
these kinds of computing resources is absolutely a given. And so what we are doing is
- [27:27]
Antoine Legault
very patiently but very methodically building out that infrastructure, working deeply with customers.
- [27:34]
Kelly Evans
Our next guest says this IPO will legitimize not just the company, but the entire quantum category. For more, let's bring in Antoine Legault. He's an analyst at Wedbush Securities. Antoine, welcome. Does it need legitimacy? I mean, look at the stocks. People seem happy to give it plenty of credibility right now.
- [27:51]
Antoine Legault
Yeah, thanks for having me. You know, we think today, you know, IPO Quantinum reflects a marquee public listing for the space, which had historically been dominated by a SPAC transaction. Right. So we think Quantinum is positioning itself as a institutional grade premier quantum asset. We think it's an important milestone for the space and it just gives it that much more credibility and legitimacy.
- [28:16]
Kelly Evans
I found it fascinating that none other than Dave Cody himself, who was there, you know, way back, you know, this was 11 years ago. I think the company first kind of was incubated over at Honeywell and he was on earlier this week. I asked him what are his thoughts about the quantum industry. He's actually very bullish on it. Take a quick listen.
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Duncan Davidson
It's transformational. Quantum working will be transformational. And yes, before you ask, quantum computing
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Travis Prentice
requires data centers also because a lot
- [28:44]
Venture Global Representative
of the data has to be stored digitally.
- [28:46]
Kelly Evans
So this, this would be also a
- [28:48]
Venture Global Representative
good thing for Verta.
- [28:49]
Kelly Evans
But yes, it will transform and it will work.
- [28:52]
Venture Global Representative
I'm not actually worried about that. I mean, there's always the naysayers who
- [28:56]
Duncan Davidson
point to the technology issues that have to get sorted.
- [28:59]
Kelly Evans
They will get sorted.
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Venture Global Representative
What people would tell you is that
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Duncan Davidson
one computer will have more capability than
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Kelly Evans
all the compute power that exists today.
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Duncan Davidson
That's just incredible.
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Kelly Evans
And that computer he's referencing, Antoine, is a continuum, I think. What is it? 100 qubit machine coming online next year. What are the implications of this technology?
- [29:21]
Antoine Legault
Correct. You know, when I would agree with, with how he characterized the long term potential of the industry. When we, when we look at, you know, the future of the broader technology universe, when you think about the current state of the technology universe and ecosystem, you have these very large critical subsectors like the chip makers, the foundry players, memory complex, which are all worth well over a trillion, in some cases multiple trillions of dollars in terms of aggregate market capitalization. Today the quantum computing sector sits at just about $75 billion. So we think there is, and that's including today's IPO pending IPO of Quantino. When we think about the long term potential and we fully expect the space to grow and evolve as the technology improves and to eventually reach multiple hundreds of billions in market capitalization, if not over a trillion and over the next
- [30:15]
Kelly Evans
five to 10 years, not to mention that they could potentially break encryption. That's going to require companies to ramp up, you know, their defenses a whole lot more. But just very, very specifically because we're giving, we're putting Space X under such a microscope here for its business model and valuation. What are Quantinum's earnings and revenue and what's the multiple assigned here if it opens around 68?
- [30:35]
Antoine Legault
Yeah, that's a great question. And you know, much like the sort of mind bending physics that underlie, you know, these computing systems, you know, the valuations and quantum computing tend to be a bit mind bending as well. Right. But we think that reflects the long term potential of the technology and the growth potential. So Continuum, you know, posted modest revenue in a few tens of millions of dollars in 2025, but it's not really about a 2025 or 2026 story.
- [31:01]
Travis Prentice
Right.
- [31:01]
Antoine Legault
For Quantum, we're expecting sales to ramp over the next few years and to really hit an inflection point when Quantum advantage. Quantum advantage is here. So we're thinking of 2028, 2029. You know, even 2030 will be very important years for the space and for these companies to really showcase the technologies. So these systems are going to keep developing. There's still a few next generations of systems that we expect to be rolled out and launched over the next few years. And we expect commercial adoption to, to be, to, to come out more than
- [31:37]
Kelly Evans
it seems like a lot of the story still has to be filled in for sure. But nevertheless, if people complained that the trillion dollars companies waited too long to go public, here's a chance to get in on a new technology in a much smaller and yes, riskier moment. Antoine, thanks very much for joining us.
- [31:54]
Antoine Legault
Thanks for having me.
- [31:54]
Kelly Evans
Antoine Legault with wedbush. Let's get over to Mackenzie Sagalos now for the CNBC news update. Mac.
- [32:00]
Mackenzie Sagalos
Hey, Cal. So Republican Senator Bill Cassidy filed an amicus brief urging a federal judge to block President Trump's $1.8 billion so called anti weaponization fund. Cassidy and Democratic Senator Cory Booker write that the fund presents an immediate and direct threat to our constitutional order and was designed to compensate people who stormed the Capitol on January 6th. Cassidy has long been a target of President Trump after he voted to impeach him. Cassidy lost his primary bid last month to a Trump backed challenger. Several people were injured after the nose gear of a Lufthansa Boeing 787 collapsed at a Frankfurt airport gate. An airline spokesperson tells Reuters only crew members and ground staff were on board. Boeing told the outlet that they were aware of the incident. Incident and supporting Lufthansa And NASA confirmed the end of its Maven spacecraft mission at Mars after more than a decade of observations. The mission launched in 2013 to study the planet's atmosphere from orbit, but it went silent in early December after passing behind Mars. Data now shows that the spacecraft went into a fast spin which disrupted its orbit and drained its batteries.
- [33:08]
Kelly Evans
Kel, back to you. All right, Mackenzie, thanks. Sticking with the news, want to just quickly show you shares of Quantinuum, which have just opened for trade. The IPO price last night was above the range at 60. They officially opened over at the NASDAQ at 68. So that's about a 12% increase, a little bit below that level right now. Again, one of the newer, one of the older, I should say, quantum names on the market, one that has now come to compete directly with the likes, for instance, of Ionq. That's what Antoine said was probably its most direct public comparable. And he said both are leaders in Trapezian computers. So much more work to do on that front. But Quantinuum, once again, they're opening at 68 now, trading a little bit higher than that price. Meantime, USDA officials have confirmed that a new world screw worm has been detected in a young calf in South Texas. It's the first confirmed case in the US since the 1960s. Pippa Stevens is here with more details. And Pippa, what happens now?
- [34:04]
Pippa Stevens
Yeah, Kelly, so this was eradicated. Eradicated decades ago, I should say. And it was previously a very big issue for the cattle industry, costing millions. Now, this is not a surprise for the industry which had been preparing for this for over a year. As the new world screwworm slowly moved north through Mexico, Strict protocols have already been implemented to contain the spread, including a roughly 12.5 mile quarantine zone around the animal, as well as an expedited targeted release of sterile screw worm flies. Now, this comes as the cattle herd is at the lowest level since the 1950s after years of depressed prices meant ranchers were reluctant to rebuild their herds. At the same time, beef demand has been strong, Sending cattle futures to a record. A screw worm is not a food safety issue and animals that recover can enter the food supply. But ag resources Dan Basie telling me unwarranted fears that humans can be infected could soften demand. And check out chairs of Zoetis, Merck and alonko. They all make screw room treatments. Kelly and are seeing a little bit of a boost today.
- [35:04]
Kelly Evans
So this is treatable. As we also heard the USDA secretary saying, does that mean it can quickly be eradicated once again?
- [35:12]
Pippa Stevens
So they are stepping up measures very quickly. The most effective way is to release 400 million flies every single week in order to mate with the females. These are the sterile flies that are being released. And then you kill off the population, you eradicate it. Now, secretary Rollins was saying earlier today in testimony that we had stepped back those efforts and we're only releasing about 100 million flies per week. And so that is one of the reasons that they think it has started to come back. The main fly producing facilities in Panama, they have now expedited one for Texas. And so they do expect that population of sterile flies to be boosted. And that is one of the primary ways to treat this.
- [35:49]
Kelly Evans
There's so much to unpack there, including that we regularly release. Okay, there's these production facilities in Panama. This might scare off consumers from eating beef, Even though they say treated animals. And this is what's going to scare them. Can that product can safely enter the food supply, but in a weird way, killing off demand a little bit right now could help on the margin. This is a very tight market. Beef prices have already skyrocketed. If high prices don't do it, a little bit of maybe, you know, angst about eating the product could, because otherwise, how much more can these ranchers expand their livestock when we're at levels that are the lowest in what, 70, 80 years?
- [36:23]
Pippa Stevens
Yeah, exactly. Lowest since the 1950s. And I was talking to a rancher in Montana who said that he is loving these high prices, but that he thinks the prices consumers are paying in the grocery store are outrageous. And he said that last year was very good. And the fact that now they're seeing record high prices means that they could be sending more cattle to slaughter, which would actually reduce deuce the herd even more because you want to take advantage of where prices are right now. And so if that then pushes prices at the grocery store even higher, that could soften demand. Another thing though to watch here is the coming drought season. Hearing some rumblings that it could be pretty bad if ranchers then don't have enough enough ground to raise enough grass to raise their cattle on. They could also then send more to slaughter and then that could flood supply a little bit more and then also lead to a downtick in demand. But the bottom line here is that there are a lot of enforcement mechanisms ready to go to combat this and it does not affect the food supply. We also import a lot of beef from Mexico, by the way. So you might have already been eating beef that had previously had screw worm and not even known about it.
- [37:22]
Kelly Evans
Great.
- [37:22]
Pippa Stevens
But it could make consumers a little bit wary, especially given how much coverage and pickup and talk it's getting today.
- [37:28]
Kelly Evans
Absolutely. Pippa, thanks for all of that information. Pippa Stevens and the CEO of Elanga, one of the companies that Pippa mentioned. They will be on closing bell overtime today and the 4pm hour coming up. We're counting down to tomorrow's big jobs report with a look at where the jobs are. And are we still seeing eye washing in the labor market? We'll talk about all of that next. Job cuts rose 16% in May to the highest May total since 2020 according to Challenger, Gray and Christmas. And I was cited as the leading cause of those cuts. But my next guest isn't buying it. His data shows nearly half of us job postings now require AI related skills. Evan Sohn is managing director at Revelio Labs. Evan, welcome. So do you think people are using AI as an excuse to cut workers?
- [38:19]
Evan Sohn
Absolutely. First of all, Kelly, thanks for having me back. And yeah, absolutely. I think AI did not break the job market or we certainly think AI didn't break the job market, but it is reshuffling it. It's giving tech companies like Meta the ability to lay off a pretty significant number of people and at the same time invest. I'll give you an interesting statistic. We actually saw that wages were up in the tech sector by I think it was like 4.4%, something like that month over month, 4.5% month over month in the, in the information sector. So that means is that they're cutting. So Meta is cutting 10% of its workforce, but it's still going to be hiring, just getting more selective.
- [39:01]
Kelly Evans
Okay, so you think, and we should all think if we hear such and such firm cutting 2000 positions because of AI, to be careful, that it might not be for other firm specific reasons and struggles. And meanwhile, your advice is to everyone, don't necessarily worry about losing your job to AI. Just go get the skills that would be needed to kind of incorporate AI into the work. Is that right?
- [39:22]
Evan Sohn
Yeah, you said it best. And I think that's what the leading folks are really talking about. Get the skills. I think the biggest in demand now are people that actually understand AI. And that's really what we're seeing. We're seeing a huge boom, if you will, in consulting services. So helping companies understand AI, that is really what we're seeing now, is it? As a huge trend. And that's what I recommend to everybody that asks me.
- [39:47]
Kelly Evans
You know, it's funny you say that, because in the job openings data there was this huge surge in job openings. And the reason was in professional business services. And a lot of the economists said this can't be right. This is kind of almost multiple levels above the typical standard deviation that we would see. But do you think it's possible that there's actually been this huge surge in job openings for things like being a consultant to help companies figure out AI?
- [40:12]
Evan Sohn
Absolutely. And I think it's across the board. It's the larger companies that are scaling up, it is the major management consulting firms that are scaling up, and it's the small businesses that are starting that are helping companies implement AI. Do a search for it now. And let's go back to the early days of the Internet. The number of companies that will help you build a website were just sprouting out all over the place. And that's before the major consulting firms were were doing it and everybody was doing it. And now we're seeing that really on the side and it's just happening a lot faster.
- [40:44]
Kelly Evans
All right, the. The street is at 80,000 for tomorrow morning. You're at 123k, which is both wonderful, but we'll also introduce that complicated Fed hike story. Evan, we'll still take it. Thanks so much. Good to see you again, Evan. So joining us from Revelia Labs, you too. Coming up, from token maxing to token capping. Cost concerns are pressuring the AI trade today. Companies are starting to question whether pricey models are the way to go, what that means for anthropic and OpenAI. Welcome back to the Exchange. The red hot air trade is moving to the back burner today. And in part as AI costs become a bigger concern, more companies are reportedly skipping Anthropic and OpenAI going for cheaper Chinese models. Deirdre Bosa has more in today's tech check. Deirdre, it's like Deep Seek for Open Claw or something.
- [41:39]
Deirdre Bosa
I mean, from where I said Deep Seek never really went away. The market just ignored it for a while and continued to treat demand like it only moves in one direction and like pricing is always premium. But inside companies, the conversation is shifting from how fast can we deploy this? To where's the actual return? The cost gap, it is becoming very difficult to ignore now, which relates back to Deep Seq. Look at this. Artificial analysis runs major models through the same workloads and compares the price cloud opus costs about 19 times more than Deep Seek. The issue is that it's not 19 times more capable. So companies are starting to get more selective. They still want the strongest models for the hardest work, but for routine tasks they're looking for those cheaper options. Options. And it doesn't have to be a Chinese open source like Deep Seek. There's more open source coming out of America too. So that is also where model routing comes in. And that's a phrase, Kelly, you are going to hear a lot more. It means sending easy tasks to the lower cost AI and saving the expensive frontier models for the work that actually needs them, the difficult tasks. For customers, this is discipline. But for OpenAI, Anthropic, the Frontier Labs, it complicates their narrative, their IPO cases, they rely on huge growth and premium pricing. But if enterprises start managing AI like any other cost line, not every task is going to flow to them. And because so much of the broader trade is tied, is levered to their growth, that pressure may not stay contained. And that may be what you're seeing sort of in this trade Calais, it's no longer so straightforward and companies are back to looking for roi.
- [43:13]
Kelly Evans
Right. And maybe come back, we'll discuss this, you know, another time. But every, every query that shifts to a Chinese model probably shifts the supply chain, you know, that underpins that as well, you know, which could be a little. Yeah here. But Deirdre, thanks, that's fascinating. Deirdre Bosa reporting. Coming up, while many investors are running away From Broadcom and CrowdStrike today, our next guest is buying. She'll make her case right after this. Shares of Broadcom. Hey look, this isn't so Bad. They're only down 11% right now. But it was much worse after they reported weaker than expected second quarter revenue last night and left the full year forecast unchanged. But our next guest is sticking with it. Victoria Green is G Squared Private Wealth CIO and a CNBC contributor. We've got Broadcom crowds. I mean, is the trade over because. Because of what Broadcom reported. You got to get out of it here.
- [44:06]
Victoria Green
Absolutely not. Can we all stop acting like this is some unmitigated disaster dumpster fire of an earning? It was fine. Did it meet the whisper number and the high expectations was a little bit of a miss. Yes. So that's why the stock went down 15%. But look, you're already seeing people come in here and buy the dip. If people love this stock at 450, they love it at 400. Lots of great technical support here. This is where we have the April lows. We've got the rising to 50 day moving average at 397. We see the stock as really well positioned and it was a fine earnings. Was it impressive in a blowout? No. Did we need to re rate these expectations a little bit lower? Yes. Well, the band aid is ripped off now. It's still planning to grow semiconductor revenue 200% next quarter. It grew at 160% this quarter it generated 10 billion in free cash flow. This is not a bad print. So I am absolutely a buyer of Broadcom here. It's not dead, it's not over. We did need to rewrite expectations. The sector has been on a tear a little bit. So yeah, it hurts a little today. And I'll be honest, I own this stock in my dividend portfolio, my core portfolio in my growth portfolio. So was I super happy this morning with futures? No. Am I sticking with it and looking to add a little bit? Absolutely.
- [45:15]
Kelly Evans
What about CrowdStrike?
- [45:17]
Victoria Green
Yeah, I like them as well. I think you're seeing a lot of here on a sentiment shift. First look at how the market's trading today. The leadership is health and financials. Right. Everybody's kind of upset at tech right now. They're taking maybe some profits. Some of these had moved up tremendously. CrowdStrike also had a really good earnings result. We love the adoption. We think they're forefront. We think they are competing a little bit for revenue. Was the RPO a little bit messy yet? But we look at it and say they're where we want to be. We think there's going to be significant continued enterprise spending and cybersecurity, especially as the air Threat grows and the whole mythos moment and they referenced that on the call. This is the AI cybersecurity inflection moment. And crowdsyke and our Falcon platform absolutely are a leader there. So I look for this, I look at Palo Alto, I say there's a lot to like here. Maybe they needed to come down a little bit because they'd run a little too far too fast. But then again this is a good entry point. And so it always amuses me when people when these stocks are on a terror and people want to buy them, but then we have a little bit of a stumble and maybe we re 8 a little lower, get a little cheaper and suddenly everybody's scared of them. What changed so badly between last night and today that you don't like these stocks today?
- [46:22]
Kelly Evans
Right. Fair enough. And so there are. We had. We're Chris, Chris, Chris. Onto yesterday was saying it's time for the health care trade. Unh is up big today on an upgrade. Do you jump in to some of the names there? I mean with the financials with Goldman. Do you look at other areas here? The rise of the rest balanced?
- [46:40]
Victoria Green
Sure. I think there is a little bit of a reason to stay balanced here and not Chase. And I talked about that Monday on morning call and I said look, I like the tech trade but I'm staying balanced. You know, I may be trimming position sizes back. If they run up, I want to trim back to original position size. Take those earnings off the table. Nobody would be surprised with tech, you know, pulling back a little bit because of how fast it's moved. Nothing wrong with some health and financials here. Nothing wrong with quality in your portfolio. But tech is not dead. It should still remain a core part of investors portfolio. That is what is generating the above average earnings growth. This is where the investment in the capex is going and so I see. Yeah. Do you want to be a little bit more balanced? Do you want to play offense and defense? Right. You want your tech but maybe some health and financials quality companies that on days like today do provide you a port in the storm.
- [47:25]
Kelly Evans
But tech's your growth and thank goodness they do provide that port still. Victoria, thanks so much Victoria. Great, appreciate it. And that's it for us. Thanks for watching the exchange. I'll join Brian Sullivan for power lunch right after this quick break. You've been listening to the exchange. Make sure you're subscribed to get each episode every day, same time, same place.
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