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Tracking Nvidia Trades, Retail Wreckage, and AI Super PAC Spending 11/17/25
00:43:51
Options flashing a bullish, but cautious, signal ahead of Nvidia earnings. Bernstein sees near-term risk for the country’s biggest retailer. Plus, the $100M AI Super PAC picks its first target.
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Introducing Fidelity Trader Plus. With customizable tools and charts you can access across all your devices, try our most powerful trading platform yet@fidelity.com TraderPlus investing involves risk, including risk of loss. Fidelity Brokerage Services, llc Member NYSE, SIPC the heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the international space station and wielded at business dinners like a samurai, my sword. It's a classic corporate power move, but the real power move, having end to end visibility on your most critical shipments. FedEx, the new power move. You're listening to THE Exchange. Here's today's show. All right. Thanks very much, Scott and gang. And congratulations to the Joe T ETF as well. Welcome to the Exchange. I'm Dominic Chewin for Kelly Evans Today. Stocks are a little changed right now with investors bracing for some key reports later on this week, including two names that could set the tone from here on out for AI and the consumer trade, Nvidia and Walmart, both on deck for earnings. We're going to get you set up for both trades. We're also watching Alphabet shares hitting a fresh record high today after Berkshire Hathaway revealed a $4.3 billion stake in the company. The stock is up nearly 75% since the company's developers conference that happened back in May. And bitcoin prices bouncing just a bit after dropping to 92,000 over the weekend. We're just above 93,000 right now, but we're still hovering the lows that we saw back in April. So we begin with the big week for the markets overall. Nvidia reporting this Wednesday, followed by the first big piece of economic data since the government shutdown ended on Thursday, the BLS releasing the September jobs report. So could these two events get the markets back on some solid footing? Joining me now is Charles Pabrinskoy, vice chairman and head of investment group at Ariel Investments. Charlie, it's great to see you here. If you look at the markets as they stand right now, this is maybe a little bit of a churn. But you can't, you can't maybe really sugarcoat the idea that we've pulled back a decent amount from the record highs we saw at the end of last month. Is it scary for you right now? Well, when we talk about the market, we have to be careful because there are different parts of the market that clearly are scary and other parts are very reasonable. And obviously the big distinction is large cap growth, I think is scary. Trading it at record highs, certainly record highs relative to historic valuations. There's some big names, if they disappoint slightly, have seen some big downturn. So we would call large cap growth, I would say scary, but I would say small and mid cap value are kind of in line right around historic valuations. Lots of great companies trading for 9, 10, 11, 12 times earnings. So you've got to focus on that part of the market. The best predictor of future performance is starting valuation and right now we've got reasonable valuations in small and mid cap value, but valuations are not reasonable in large cap growth. Charlie, we've been talking about this idea that valuations could be due for some kind of a mean reversion for months, quarters and maybe even multiple years at this point. What makes you feel confident that that valuation catch up trade in other parts of the not so overvalued market are going to actually now play catch up instead of just stalling out like they have over the course of the past several years? Well, we had some good signs in the third quarter. Dom, we had some of the names that you and I talk about all the time, did quite well actually. A number of the consumer discretionary names. Apache, the oil company did quite well. We had very strong performance in small cap value in the third quarter. Now I will admit October didn't continue on that trend, but we are seeing signs that people are starting to get nervous about valuations in the S and P and looking for pockets of value and those clearly is is more towards the smaller end of the market. Charlie, what kind of stocks are we talking about here? There are many value oriented parts of the market both in large and small caps and that big middle ground and mid caps as well. What are the types of companies that stand out in your mind for that shopping list? Yeah. So longer term I think we got to start thinking about inflation not just because it's going to affect short term changes in interest rates and whether the Fed's going to cut or not. I think there are a of forces here that are going to send inflation higher. The first being massive trillion dollar deficits. Both parties seem to have lost the interest in fighting deficits. That's number one. Number two, trade wars are inflationary. Number three, tariffs are inflationary and four, restrictions on immigration are modestly inflationary. Lower cost wages, which you get generally from immigrants tends to keep a lid on inflation. So all of those things moving in the wrong direction mean that things like commodities means like oil, those companies are cheap. We've already seen it in gold, Barrick Mining had more than doubled this year. But we're going to see other names that benefit from inflation. They're treating of good values now. Now, like what we're talking about, of course, oil and gas is one of those types of sectors to focus on as well. If you're talking about inflation. Right, Charlie? That's exactly right. Stuff in the ground. So we like Mosaic, which has wonderful fertilizer business, agricultural fertilizer business. We like Schlumberger, which helps oil companies find that oil around the world. And one of our favorites has always been Apache. It's taken a long time to to get that stock going in the right way, but we think as there's been less capital expenditures in oil exploration, people are going to need more oil and gas over the next few years and Apache is very well positioned for that. All right, so Charlie, please just stand by for one moment here. I want to bring in our own Steve Liesman, who's been reporting on some of the liquidity concerns that have been focusing in on the markets these days and that the Fed is maybe looking to smooth over a bit. Steve? Yeah. The rate that financial institutions charge each other for lending on collateral, the critical repo rate, it's the plumbing of the system. It's been the subject of some concerning volatility the past several weeks and it has gained the attention of the market participants and of course, Fed officials who have been talking about it. A New York Fed official confirming the CNBC over the weekend that President John Williams quietly convened a meeting with representatives of Most of the 25 primary dealers to urge them to keep using the Fed's standing repo facility put in place in the wake of the pandemic to serve as a backstop for increases in volatility and liquidity crunches that we may have. The repo rate used to finance trillions in Treasuries doesn't usually move much until the Fed moves, but it's been far more volatile lately. A potential sign of a lack of liquidity. Volatility has come down since a surge of the end of October, but it's remained elevated and there could be more to come. Among the reasons cited for the stress, the decline in the Fed's balance sheet too much, the rebuilding of the Treasury's general account as well, strong bill issuance by the treasury and banks being reluctant to lend into the repo market right now. The Fed hopes by getting dealers to use this new repo facility can avoid a bigger intervention, but that could yet happen. So far, the level of volatility modest compared to some of the more newsworthy episodes you and I have reported on Dom over the years. But there are considerable stress points to come that officials say they're going to watch closely. Don? All right, Steve, thank you very much. Stick around, please, for us. Charlie, is this something that you would actually worry about? I know we've talked at length in the past about your kind of exposure to banks, your concerns around them. Does this at all raise a red flag to you? This idea that we might have a liquidity crisis that's not yet here, but that the initial tea leaves are starting to maybe show? See, I'd be on the other side of this. If anything. I have seen too much liquidity. I've seen the debt markets be extremely lenient in lending levels. Spreads high yield, spreads extremely tight. So if anything, I would say that there isn't quite the level of credit scrutiny that we need on some leveraged companies. There's all this new money coming into private credit funds. So the short answer is it's good that people are paying attention. I'm glad that people are watching the plumbing, but at this point I don't see any backup. If anything, I'm a little too worried. I'm a little worried about a lot of liquidity in the market. Let's talk, Charlie, about the companies that are the most tied to that so called plumbing in the system. Those are the big banks, whether they're the money center ones like JP Morgan, bank of America, some of the bigger regional banks out there. Is that financials trade, something that you're watching right now as well, to see whether or not there's any kind of an opportunity there given the sell off in mega cap technology? Yeah, again, we got to say the larger banks I think are pretty fully priced. My grandfather always taught me to buy large banks when they're selling at one times book and sell them when they're trading at two times book. And we have a lot of the biggest banks that are very close to two times Goldman Sachs, over two times. So I think more of the value in banking is in regional banks, smaller local banks that are trading at 1.3, 1.4 times book PEs of 9 10. There's decent value in the regional banking stocks, not such value in the large cap banking stocks. Steve, do you feel as though this is a concern that the Fed is at least voicing right now? Because there is a possible fear that there is a maybe I want to. Contagion is not the right word for it right now, but that there could be a ripple effect for these liquidity concerns in the financial system itself with the banks. I think so. I think they feel like they have the tools to deal with this. I think they feel like it's not. I forget which way it goes. DEFCON 1, is that the worst one? It's not DEFCON 1 at this point. It's just, guys, look out here. This is something that we've seen and we've marked. The October 31st surge was something that was worth looking at. Came down from there, came back a little bit. And the liquidity issue is not so much the liquidity that. That Charlie's talking about. It's liquidity and sort of overnight repo. It's financing collateral is what it is. And the banks are husbanding their cash. That's one of the reasons here. There's a lot of different that are happening, Dom, and we just have to be careful because the government's trying to sell an awful lot of Treasuries, and that's an issue. And rates are coming down, at least on the short end from the Fed side. And I will say it's interesting that perhaps because of this liquidity concern, these issues out there right now, the, the probability of a rate cut in December has now fallen to what I think is a new low for the contract, 34%. But there's also talk, Don, that the Fed may come back in and make some adjustments to its balance sheet, as in adding assets as soon as January. That's something that bank of America was thinking about in a report issued over the weekend. Hey, Charlie, we're going to give you the last word here from a macroeconomic perspective. Given everything you heard about from Steve with regard to rates, liquidity, given what you now know about valuations, do you think the economy is in an okay place, good place, or maybe even a sliding place right now? Put me down for okay place. There are an awful lot of incentives for the current administration to want the economy to, well, going into an election year, next year. So I put me down for okay place. But with these headwinds, tariffs are not good. We need globalization. We have some headwinds. All right, Charlie, thank you very much for that. Charles Bobrinskoy, also, Steve Liesman. We appreciate the conversation. Coming up on the show, Nvidia is the headliner for earnings this week. The options markets pricing in a 7% move for the world's most valuable company up or down on the heels of earnings. We're going to look at how to position ahead of that big Print plus, we're getting our first big wave of retail earnings reports this season with Home Depot, Lowe's, Target, Walmart, Best Buy, others on deck to report. After the break, we'll look at what to expect, who's most likely to miss or exceed, and how some of the near term risks in retail are playing out. The exchanges back after this. This is the exchange on cnbc. Your commute day in and day out. The same old route, but also the perfect time to hear what's new in blockchain and crypto. Level up your commute and join Ripple for conversations with some of the best in the business on how institutions around the globe are being reshaped and revolutionized with blockchain and crypto. From digital asset infrastructure to payments, custody and even our stablecoin rlusd. Listen to special commuter editions of Blockstars, the podcast hosted by David Schwartz. It's happening with Ripple. Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single purpose, making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@ multicare.org the heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the international space station and wielded at business dinners like a samurai sword. It's a classic corporate power move. But the real power move having end to end visibility on your most critical shipments. FedEx, the new power move. Welcome back. Retail giants like Walmart, Home Depot and Target, as you can see there, are scheduled to report their earnings throughout the course of the week as investors continue to gauge the state of the consumer. Our next guest says the outlook is bleak going into the holiday season as rising inflation weighs on the consumer health with low income consumers getting squeezed the absolute most. For more, let's bring in Jihan Ma, the senior analyst over at Bernstein who covers many of these retailers. Jihan, thank you very much for being here. Let's talk first of all about why you are so negative or pessimistic about some of these retail names heading into this all important holiday shopping season. Yeah, I would say first of all, I would probably call it cautious rather than outright negative because there's reasons to be hopeful for next year. But if we just focus on this year between now and year end, I mean why you've got inflation still going up on the back of tariff driven cost increases, labor market appears to be softening. The low income consumers are in particularly the worst shape right now on the back of the lower spending power they have as well as the government shutdown that temporarily at least delayed snap payment. On the top of that we're lacking a pretty strong holiday season, especially from a discretionary sales perspective from last year. So unfortunately I don't have too much good news to report in the very near term. All right, so let's talk about the fact that's the holiday shopping season. Let's talk a little bit about the earnings setup for these reports coming in. Let's go good news first. Are there any retailers out there that you feel as though are well positioned going into their prints this week for their earnings reports who could come out exceeding expectations? Not as much this week I would say. My coverage I think 5 below is the most likely to beat consensus expectations. They report in two and a half weeks time. They're still holding, holding up really well on the back of some macro tailwinds as well as company specific turnaround for this week specifically. Unfortunately you've got some big retailers reporting. Sentiment has been fairly cautious into this reporting cycle. I think Target is probably the most likely to miss within my coverage that's to report this week. They're still not out of the woods yet from a underlying trends perspective. And I feel like, you know, consumers are increasingly finding Target to be a nice to have rather than a must have. So that's still something they struggle with sentiment. Still fairly cautious on home improvement this quarter. And then I would say I expect Wal Mart to have a fairly in line quarter. But at the valuation they're trading at today there isn't a ton of upside. If they report a fairly in line quarter, I don't expect there is to be a lot of upside compared to the stock price today. Can we talk about some of the big boxers out there besides Wal Mart and Target? What about Home Depot, Lowe's and maybe even Costco for those folks out there who are kind of looking at what these types of companies can tell us about the health of the consumer as well. So for Home Depot, Lowe's I think for now is still largely a macro driven story. Unfortunately both stocks have been kind of flatlining for the past year or so. I mean they have both comped fairly in a fairly muted way so far. I would expect both companies results to be non inspiring going into tomorrow and Wednesday. Now a lot of focus is going to be on where rates go from here. What does that do to housing turnover and what does that do to home improvement demand? From here, on the other hand, Costco doesn't report until later this year. They report, I think in the second week of December there's going to be more clarity around what Costco is going to report because they provide weekly monthly sales. So we're going to have some more additional disclosures from Costco from here. They're still holding up just fine, partly because they have more exposure to the middle to high income consumers who are holding up a lot better compared to the low income world. And jihyun, let's explore that theme right now as well. I had mentioned that this season because of the macro headwinds against the consumer could weigh more so on the middle to lower income consumer than the higher ones. But anecdotal evidence and even some real world data suggests that everybody's feeling a bit of the pinch right now. Which ones retailer wise are the most susceptible to perhaps a drop off in that middle to lower income spending. So if we're talking about the SNAP recipients, specifically the Wal Mart, the dollar stores in my space are the most exposed directly to SNAP recipients and we're likely going to see some pretty near term volatility there given the delay in SNAP funding. On top of that, I think broadly speaking my coverage universe, companies tend to be exposed to middle income, slightly higher income cohorts. Costco and home improvement retailers tend to be more insulated from the lower end exposed to middle to high income consumers, so less exposed to the near term gyration. Even though as I said, home improvement overall still very much a macro driven story, there's still a lot of rates driven uncertainties from here. And before we let you go, let's talk a little bit about what kinds of things you would need to see either from these corporate earnings reports or their commentaries or from the economic data that will slowly start to kind of trickle in post government shutdown. What signs do you need to see that would make you more optimistic about the health of the consumer heading into the first half of next year? Yeah, of course we're missing a couple of critical macro data points so far. I think the key ones are of course where inflation goes from here, where the labor market goes from here, especially on consumer spending. Right. This wage growth actually start to outpace inflation growth and our people's real spending power growing from here, which is a critical data point that we're watching out for. On top of that, of course, policy shifts in terms of the big beautiful bill, their impact on the various income cohorts are some cohorts getting more or less benefit than others and how they plan to use such incremental cash windfall on consumer spending or not next year is also critical to watch out for. All right, Bernstein, Senior analyst for Retail, Jihan Ma, thank you very much. We'll see you soon. Thank you. All right. Coming up on the show, a big interview with a couple of big power players in the AI space. The CEO of Box and the head of AI for aws, Amazon Web Services will join us with an inside look at the new partnership they just announced and why it could be a game changer for the future of AI in the business world. Speaking of AI, Google announcing announcing the launch of the new AI Powered features in search to help users plan their travel. Shares of Expedia, Booking Holdings, TripAdvisor all taking a dip on that news. Keep an eye on those. We'll be back after this. Your commute, day in and day out, the same old route, but also the perfect time to hear what's new in blockchain and crypto. Level up your commute and join Ripple for conversations with some of the best in the business on how institutions around the globe are being reshaped and revolutionized with blockchain and crypto. From digital asset infrastructure to payments, custody and even our stablecoin rlusd. Listen to special commuter editions of Blockstars, the podcast hosted by David Schwartz. It's happening with Ripple. Did you know you can opt out of winter with Verbo? Save up to fifteen hundred dollars for booking a month long stay when thousands of sunny homes are waiting for you? Why subject yourself to the cold? Put the snow shovel down, put the parka back in the closet and don't you dare scrape another windshield. Slip into some flip flops. Consider a sunless tan and use the monthly stays filter to save up to $1,500. Book your warm getaway at vrbo.com. All right. Welcome back to the Exchange. Markets right now are losing some momentum. We are in the red fractionally so, but kind of moving towards the lower end of the intraday trading range. Right now the Dow is down about 1/2 of 1%, 46,009, 23. Similar percentage decline for the S and p which is at 6704 and the NASDAQ Composite 22,007, 97. So across the board, roughly 1/2 of 1% declines. But then check out shares of Dell, which are down even more so 8% right now after Morgan Stanley double downgraded that stock to an underweight or sell from a prior overweight or buy. The analysts there are slashing their target price to $144 from $144 to $110. That's 20% lower than Friday's closing price. Now they believe margin pressures could compress Dell's valuation from here, saying that Dell is highly exposed to rising costs within its DRAM and NAND businesses. And historically the firm says there has been a strong negative correlation between rising memory costs and Dell's gross profit margins. So keep an eye on those. But. But we should also point out Morgan Stanley is the only firm with a sell type rating on this stock. In fact, most of Wall street remains bullish on Dell Shares. Of the 26 analysts who cover it, according to FactSet, 21 have a buy or equivalent rating on those shares. You can see they're a big move in terms of the dynamic in analyst ratings. Despite today's drop, shares are still higher since January through now and trying to avoid their first three week losing streak of the year. So on pace. It's been a generally positive year so far. But keep an eye on those year to date gains for dell right up about 7% now. Let's send it over to Contessa Brewer for a CNBC news update. Good afternoon, Contessa. Hi there, Dom. The head of FEMA has resigned. The Washington Post reports David Richardson is leaving the agency that the administration repeatedly has said it wants to dismantle. Richardson was on this job for about six months but faced criticism that frequently he was in a accessible especially during those deadly floods in Texas over July 4th weekend. The Supreme Court today agreed to hear a dispute over the administration's policy to limit asylum claims processing along the US Mexico border. Now a lower court has ruled that the process that's known as metering where immigration officials decline to process asylum claims on the spot. A lower court said no, nope, that's against federal law. We'll see what happens next. And O.J. simpson's estate has agreed to pay $58 million to Ron Goldman's father, decades after Simpson was acquitted of murdering Goldman and Simpson's ex wife, Nicole Brown Simpson. Fred Goldman filed the creditor claim after a civil jury found Simpson liable for the deaths and ordered Simpson to pay millions in damages. But the money was never paid before Simpson died last year. That's the news right now. Dominic, I'll send it back to you. All right, thanks very much, Contessa for that. Coming up on the show, Nvidia shares are up 40% this year. But the company's March to $5 trillion in market cap has not been as smooth as some expected. Coming up next, we'll take a look at what the options market is saying about Nvidia's earnings report this week and how investors can take advantage of that pricing and data. And as we head out to break, we spoke to a small business owner and owners across the country about the impact of tariffs. Here's what one travel company told us about those effects. We're seeing anywhere between 11 to 19% of decline in terms of reservations and revenue. That should be on the books right now. We're hopeful and anticipate that to come in closer to the arrival. But the price of the property declines. So not only are rates lower historically, but with the shorter booking window, the revenue declines even further. The international business comprises around 8 to 10% of our clientele and we are seeing a fairly significant decline in that business. When the tariffs were first announced, we actually saw kind of a retaliatory effort in clients actually actively canceling reservations. And that is concurrent with a lack of incoming inbound reservations. So not only is demand softening, but supply is really exceeding that demand. Typically each year we will see around a 3 to 6% increase. This year we're seeing actually a 5 to 8% decline. So in the average daily rate for these properties and in some cases more just in order to stay competitive across the market while simultaneously absorbing the increased cost to do business in terms of materials production and staffing. Tech is still trying to find its footing following last week's big move lower. Nvidia is one of the names in the red. That stock was down about 2% as it gears up for earnings on Wednesday. Our next guest says these results will be a pivotal event for year end sentiment since Nvidia is worth nearly 10% of the NASDAQ and 8% of the broader S&P 500. So what exactly is the options market telling us about what traders are expecting? For more, let's bring in Chris Murphy, the co head of derivatives research over at Susquehanna. Now, Chris, the Nvidia report, the options implied move is roughly 7% up or down. The key is, is that more or less volatile than it has been historically? What does it tell you? Believe it or not? Hey, Don, believe it or not, it's less volatile than we've been expecting over the last couple of years. Basically what's happening is, you know, Nvidia has 80 to 90 analysts. It trades 3 million options a day. Everybody is looking at this Any kind of unknowns or inefficiencies or kind of traded out. So as we've gotten each successive quarter, as more eyeballs are on this print, the move in Nvidia is actually been smaller. Now, that doesn't mean its impact on the broader market hasn't been smaller, but the actual Nvidia moves are getting smaller. I would expect around 6 or 7%. Unless, you know, it's a big surprise in one direction or another. And if it is a big surprise in one direction or another, that's going to be the way that the market trades into year end. Chris, what exactly does the so called skew tell you about what's happening with the options trade in Nvidia right now? That is to say, the relative price of options for call options to buy 10% away from the money versus 10% below the money for put options. How is that playing out right now? What does that tell you about sentiment? We're seeing a lot more demand for upside in Nvidia options compared to downside than we normally see. That might surprise some people with stock down, you know, something like 10% over the last two weeks, but if you really think about it, people have gotten out of the stock book some profits, taken down, some risk, but they don't forget about the stock. And if anything, they're looking to position for the, for a potential rebound or show that they're willing to buy the dip through the options. So there's a lot more demand for upside in the options and a lot more supply or put selling on the downside. And because of that, we see a shift in what we call skew to the upside, much more so than we've seen in a while. All right. Outside of Nvidia. Nvidia is maybe you could call it the focal point or the center of that kind of AI solar system, if you will. There are other plays around AI as well. And Nvidia, where exactly are you seeing other notable options activity tied to the air trade that are not directly tied to Nvidia itself? It's a good question. So, you know, we saw a call spread trade in, for example, ticker etn. And you know, we don't see a big catalyst coming up for that specific stock. So we start to work backwards a little bit. And you know, it sounds like, you know, potential partnership with Nvidia, if that name is mentioned specifically on the earnings call, then of course you could see a lot of upside. And it kind of goes back to the general idea that everyone has really overanalyzed the Nvidia earnings. So really where some potential advantageous trades are on, all the ripple plays within the semiconductor sector or the power sector or things like that. All right, Chris Murphy over at Susquehanna, thank you very much. We appreciate it. We'll see you soon. Thank you. All right, coming up on the show, we're 350 days away from the 2026 midterm elections, believe it or not. And one AIA super PAC is already putting its money to work. The big names behind it and the candidate or candidates they're backing coming up next. Welcome back to the exchange. An AI super PAC backed by heavyweights like A16Z and perplexity has announced its first target, which is an assemblyman in New York State. Emily Wilkins is in D.C. with a look at how the AI picture could shape the upcoming midterm elections. Emily? Hey, Dom. Well, yeah, the super pac, it's called Leading the Future. It's this AI pack. And its first target is Alex Boris. Now, he is one of many candidates in a crowded primary race to succeed New York Congressman Jerry Nadler. And the pack's backers, as you mentioned, it's a lot of heavyweights. Interesting. Horowitz, Ron Conway, OpenAI's Greg Bachman and Palantir's Joe Lonsdale. They've got $100 million in the bank so far, according to reports. And this PAC does plan to focus on candidates from both parties who support uniform federal laws on AI. Now, the PAC is opposed to some state level efforts and that includes an AI safety bill that Boris co sponsored. The PAC spokesman saying in a statement that the bill is a clear example of the patchwork, uninformed and bureaucratic state laws that would slow American progress and open the door for China to win the global race for AI leadership. Now, Boris pushed back in a statement saying that I am someone with a master's in computer science, two patents and nearly a decade working in tech. If they are scared of people who understand their business regulating their business, then they are telling on themselves. Now, Boris has been fundraising off of the PAC's recent opposition. In a tweet, he urged donors to help him push back against, quote, Trump's mega donors writing all tech policy. His race will be one of the early tests of the AI pact's influence. And that pack is modeled after the success of Fairshank, the crypto backpack, which already which played really big in the 2024 elections and has already notched at least one legislative victory this year. So definitely one that we will be watching from now until the Midterms. All right. So, Emily, I'm curious. So the Boris is one of them, the first one. Who exactly else could this group potentially target to go after in terms of trying to be negative against them or throw their resources behind in support in this AI race? Well, Dom, I think because this group is modeled a bit off of what we saw the crypto Group do in 2024, it seems like what they might do is they'll pick candidates that seem to align with their positions, bolster them, give funding, funding to their campaigns, and then maybe look for individuals like Boris who they disagree with on policy and try to target them with ads. You kind of saw with the crypto pack, they both supported individuals, endorsed some and then they opposed others. And they did that for both parties. And the idea is because you know that once you get to D.C. especially with the Senate, you absolutely need bipartisan support to get anything done. And so these groups are getting out there. They're being very public about what they want, what they expect to see. And of course, we'll be keeping a close eye on who they decide to back in these midterms and whether those folks wind up going to Capitol Hill next year. All right, thanks very much, Emily Wilkins for that big money coming not just for the infrastructure but for the politics as well. For more on this story, just head over to CNBC.com you can get all the full color and context around just what politics and AI will mean in the midterms coming up on the show. It's been a rough go for bitcoin recently, down about 20% over the past couple of months and crossing a key technical level that could spell some more pain ahead. We'll tell you what that is. That's next. The exchange is back after this. All right. Welcome back to the Exchange. Bitcoin prices below the 93,000 level right now and down about 6% just since Friday. Mackenzie Sagalos joins us now with what's been driving the recent downside action. It's got to be a lot of things, Mac, but what can you tell us about what the charts are telling us? So, Dom, the sell off that's underway right now is setting up for a make or break moment in the crypto market. You've got bitcoin plunging to a seven month low below $93,000. And that dropped has triggered a death cross. Now this is a bearish signal that forms when short term momentum falls behind the longer term trend. And typically when bitcoin flashes that signal, the next seven days become the inflection point if it doesn't bounce back quickly. That signal has historically been followed by another leg lower before any real recovery. And the institutional money leaving the space that's dragging confidence even lower. Whale sailing, weak Asia. Demand and leverage longs getting wiped out have all added pressure. And those Bitcoin ETFs just posted their largest weekly outflows since February. And even with a pro crypto president in the White House, analysts say that part of this comes down to policy uncertainty. And then there's the retail buyer. Instead of purchasing spot Bitcoin, we've seen those investors start to rotate into crypto treasury names and AI linked miners. But even those trades are cracking now. Bit mine Immersion and Strategy are both under pressure. And Strategy just disclosed its biggest bitcoin purchase since this summer, yet it's now trading close to its Bitcoin net asset value. That's a clear sign that the premium has vanished. So bottom line here, Dom, retail got burned chasing the highs. So far, institutions are not buying the dip. And then thinning liquidity is exaggerating every move. All right, so Mac, one of the other things that some of the crypto analysts and watchers out there have pointed to is the massive boom we've seen in stablecoin demand and issuance as well. Maybe even taking the place of using things like Bitcoin and Ethereum and those blockchains. How exactly has the Stablecoin picture impacted maybe this latest leg lower in things like Bitcoin and Ethereum? Well, there are two schools of thought related to this. So on the one hand, you've got names like Cathie Wood moving her Ark investment fund into more of stablecoin exposure, saying that it's fulfilled some of the use cases that she initially thought Bitcoin might be able to succeed in doing, especially in emerging markets markets. But then you would have a name like Tom Lee, who's got who's behind bit mine immersion. This is an Ether proxy trade. And he talks about the fact that, you know, they're firmly invested in Ether, they're a permanent holder. But he also talks about the fact that this treasury asset strategy is beneficial to the spot market because of the fact that total value lock, so the amount of money that is locked into Etherium is reflective of the trade. And so you talked about Stablecoins. And part of the strategy here is that they are built on top of blockchains like Ethereum, like Solana. And so that's a net benefit for the underlying crypto asset that's pegged to it all Right. Mackenzie Segalos with the weakness in bitcoin prices coming up here. Thank you very much for that. Still ahead on the show, Nvidia's results are critical to the market trade and the AI trade this week with tech under pressure amid bubble concerns. We're going to check in with two of the industry's biggest players coming up next. The Exchange is back after this. Welcome back to the Exchange. Box will soon be available to Amazon Web Services customers as the two tech companies deepen their long standing relationship. Deirdre Boyce joins us now with Box CEO Aaron Levy, also Vice president for Agentic AI at aws. Swami Siva Subramanium. Dee, I'll send it over to you. Dom, thank you very much and thanks to Aaron and Swami for making the time. It's great to have you on the back of the this new partnership. Let's start really broad. I'm wondering how this partnership allows you guys to compete with the likes a Native startups like OpenAI and Anthropic that are really showing credible signs of enterprise traction. Aaron, we'll go to you first. Sure, yeah. Thanks for having us on. I think overall the nature of the partnership is obviously Amazon is a clear leader in powering infrastructure and AI models for enterprises and we want to give access to those technologies and you know, specifically things like Amazon Bedrock to our customer base which powers models like Anthropic and other leading Amazon models. So we are making those models available to our customers via Box agents so you can do things like process all of your documents, understand what's inside of your contracts, invoices, research data and much more. And Amazon has been a fantastic technology partner for us over the years and now we're expanding that even further in the AI space. So I think it's about giving customers more and more choice and we're very excited to be able to bring that to our entire enterprise customer base. Right. And choice, Swami has always been key for AWS customers. I remember early on in the Beginnings, right after ChatGPT was announced, you guys sort of had these custom tailored products and solutions from AI. How does that help you compete once again with the AI native companies that seem to be getting a lot of credible business here, like the Anthropic. We've seen those enterprise numbers and you know, they're just climbing straight up. Yeah. First of all, great to be here and thanks, Aaron and Deirdre. So as Aaron said, the crux of it is AI is as good as the context we provide. This is where the combination of Box with Its intelligent content management system and AWS services like Amazon Bedrock or Amazon Noah or Frontier Models or quicksuite. The combination of these two powerful AI services with the Box content system really helps break down content silos and opens up AI for everyone. And that's what is exciting about it. And of course, the other big one is we are generally excited about having Box be part of AWS marketplace so that our customers can actually streamline their procurement as well and make Box available globally as well. This combination is really going to open the doors in regulated industry where the combination of Box content management system with AWS scalable and secure infrastructure is going to open up a lot of doors for our customers. Okay, another question for both of you. I'll go to Aaron first. What work is AI replacing and how are you measuring return on investment? Yeah, so as I think you know, from my perspective, I think AI is going to be used mostly to augment work and to bring automation to the kind of work today that is either too expensive to do manually or we just never get around to in the first place. So the kind of customers that are deploying AI right now are turbocharging their productivity across things like reviewing all their contracts for any risky clauses that allow them to have just that extra edge when they're inside of a negotiation. Being able to review all of your research data for critical trends that might lead to the next, next breakthrough in life sciences, being able to do quality control processes on drug trial data that they're working with. And so a lot of these cases are it's actually enabling organizations that have a finite amount of fixed capacity in the form of people in their organization to do the work. And now AI is augmenting that and allowing them to accelerate that work even further. And so I think if you just sort of go out by three or five years from now, I believe that the vast, vast majority of AI usage will be on things that we don't even do today as people. It'll be about augmenting and creating all new forms of work in the future. And so in the process, that's allowing customers to actually do more with the talent that they have or be able to create new breakthroughs and better serve their customers. So I think that'll be the vast majority of AI in the future. Okay, so what I'm hearing from you, Aaron, is that it's augmenting, not necessarily replacing work. Is that what you see, Swami, as well? I. 100%. I mean, air is replacing some tasks, such as the boring task of actually Looking into contracts and finding out various things on what we might be missing. But, but at the end of the day, what AI, especially AI agents enable is that because they have the ability to actually plan, reason and work through various aspects, all the hard data that is sitting in contracts are designed and various other things enables. Now you can get insights and no longer do people have to deal with the boring drudgery of having to pass through hundreds of pages of contract to figure can you measure the ROI on on that on those tasks? Actually yes. And we are starting to get some really impressive metrics, I will tell you that. Just take Amazon itself and our CFO Les. He said that what used to take in our weekly business review something like a day or two to prepare our WBR DAX are now done in matter of hours and you're starting to see what we are able to do on AI agents on software. But upgrade last year alone our agent saved something like thousands of developer years worth of work as well. Well, these are just the beginning. I happen to think this is going to be a game changer in terms of productivity for us and we are going to start shaping at a next level in years to come. As Aaron called out, we talked about this. Yeah, go ahead, go ahead. I was just going to say to build on that, I think we have a pretty myopic view of what ROI means. You know, we tend to think about it as I'm doing a certain amount of work Today, I replaces 20% of that work. And so the ROI is whatever I was spending previously on that 20% more and more of the customers that we talk to. I'm sure Swami sees the same. Actually, customers are showing ROI gains in the form of all the things they didn't do before now that they can do with AI and what does that do for their business? So imagine you're in commercial real estate and you've never been able to analyze every single lease agreement that you have to be able to deliver better terms for your clients or be able to get a better deal. The ROI on that is not that you save people time, it's that you actually delivered a new breakthrough in the form of the ability to differentiate and drive more revenue for your organization. Even for us internally, when we use AI, let's say in things like coding, the ROI for us is actually shipping more features. It's not saving dollars on a like for like basis. It's actually the delivery that we now have for our customers. And that's what we're seeing now across all of the box AI usage with our customers and in partnership with Amazon now. Right. And I think the reason I ask about ROI and sort of challenge you guys to put numbers on them is because we do have hard spending numbers that are hundreds of billions of dollars and there are some worries in public markets that maybe that's getting ahead of what we can actually measure in terms of that return on investment. But Swami, we just have a few moments left here, so let me just ask you, you recently signed a $38 billion deal with OpenAI for compute power. How are you going to be giving them capacity? Will you give them a dedicated site like you did for Anthropic? I think the details on what they want are going to be tbd, depending on whether it's in France or various others. But the crux of it is, I mean, as you called out, model choice is one of the big things we pioneered in the industry and that is ever more so important in the agentic era. And we are excited to also do the partnership with OpenAI and already their OSS GPT models are available as part of Bedrock and enable all these great applications. What you're seeing with what we are building together with Box as well, because the combination of data along with actually the best in class models is what is going to unlock AI adoption. And very excited about this. Okay, well, stay tuned for more details regarding that partnership. Aaron and Swami, thank you so much for being with me today. I appreciate your time. All right, thank you very much, guys, for that and deeposa for sure for bringing that story. Before we go though, I want to get you a market check right now because we are pretty much at session lows at this point. The S&P 500 Dow and the NASDAQ are all roughly off 3/4 of 1%. As you can see there. The Dow is down about 370 points, the S&P down by 50 points, and the Nasdaq Composite off by about 185. Check out some of these moves that we've seen year to date so far for the S&P 500. The pullback that we've seen on a month to date basis has kind of taken us from those record high levels. Here are some of the ones that you want to keep an eye on the biggest decliners since that move. Check out some of these shares again. We'll keep an eye on what's happening with the market right now. That does it for us. Keep it right here. Thanks for watching. The Exchange Power Lunch starts right now. 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