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"Warnamount" vs. "Netflix Bros.", Ford's EV JV, and Amazon's Losing Streak 2/17/26
00:43:54
Netflix allows Warner Bros. Discovery to reopen talks with Paramount after it sweetened its bid for the streamer. Ford's surprise joint venture push. Plus, the bullish case for Amazon despite its near-record skid.
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Wherever you get your podcasts, you're listening to the Exchange. Here's today's show. Thank you Scott. Welcome to the Exchange everybody. I am Brian in for Kelly. Today. Stocks are down after attempting to rally mid morning. We are off the lows though. The NASDAQ had been down more than 1%. Industrials, real estate, utilities once again taking the lead in the market moves in commodities as well. Oil, gold, silver, they're all down. Silver the biggest mover off about 6%. So the move of being attributed to the Chinese. These markets being closed for the Lunar New Year holiday. Happy year of the horse, the fire horse by the way and software not on fire still can't catch a bid. Sector ETF, IGV now down 10% this month. Intuit, Zscaler, some other names you know all amid the losers. Hi everybody. Software is where we begin this hour today because as your next guest put it, ports in the storm were far between in the past few months that he's not talking about shipping. In the past three months the IGV fell nearly 30%, the Cybersecurity Index called Hack down 12% and even the Cloud Computing ETF fell 20%. But with those declines you've seen value compression as well. In other words things like price to earnings, price to sales multiples how have also come down. Let's talk about it all more and kick off the show. Greg Moskowitz, senior Enterprise Software Analyst at Mizuho. Greg, thanks for coming on. Great to have it kicked off with those declines that we just talked about. Have the multiples come down enough where you are maybe bullish or more bullish on some of the stocks that you and your team cover. Well, thanks very much for having me, Brian. It's always good to be here. And the short answer is selectively yes. The multiple retrenchment, the multiple compression has just been stunning and it can be seen first and foremost, if you look at the group of SAS names and the names that are within our coverage universe within SAS, on average they've seen roughly a 30% multiple compression and that is just in the first six weeks of this year. If you were to go back to February of last year, which is when this AI disruption trade really started to gain momentum, it is far, far worse than that over 50% multiple reduction. What's also interesting is the earnings estimates, if we look at 2026 have not changed. They're flattish to very slightly up. And so this is purely a valuation driven sell off again due to the fear by AI. Now this does not mean that every name works. And by the way, it's also not just sas. The other areas that we cover, infrastructure, software, cybersecurity, as you said earlier Brian, no ports in the storm. They also have part of this very significant sell off. So we do see opportunities within software. Again, this is not a by all names type view that we have. We think selectivity is very important. You want to look for business models with resiliency and ones that have earnings power. You're much more cultured than I am, Greg, because you said ports in a storm and I would actually say butts in the seats because that's how a lot of these software companies get paid. They get paid based on users, the subscription model. So let me ask you directly, is AI going to eliminate many of the butts in the seats and subscription models for these companies? And if not or if so, what companies are the most at risk or the most immune from an AI disruption? Sure. So I think it's important to note that at this point we have not been hearing of a reduction in seats across companies. It's not to say that it has not happened at all, but nothing that has bubbled up to the point where presenting a headwind on growth today. However, I think when you look at the productivity that AI software, that AI unlocks, that this technology unlocks, and to your point, the fact that the SaaS models specifically have, you know, seed based or per user pricing. Absolutely. We expect that at some point you're going to start to see some incremental pressure. In all likelihood now it's too early to say what's the Magnitude. What's the timing and precisely how does this map out across every name within sas? I don't think anyone could say that with confidence, frankly, at this point. But we do think, I would go back to the comment on, you know, resilient names where we think that there's a moat, there's some degree of differentiation. It doesn't mean they're invulnerable. It's that resilience that we're looking for and we're coupling that with, with valuation. Yeah. One company I would mention is Atlassian. Ticker symbol is team. And again, this is not to suggest that they're invulnerable, but they have seen the worst of in the last six weeks, the worst of multiple compression. In our coverage universe. The multiple has compressed by over 50% as of today and it's trading at nine times next year's free cash flow. They're growing. Revenue over 20% and margins are stable. So that is just a stunning disconnect versus the fundamentals that exist today. And we do not believe that their business is on the verge of falling apart, nor do we think that it will if we're looking at over, you know, minimally a two or three year basis. Greg, somebody's worried because with atlassian, it's down 74% from its 52 week high, down 75% over the last 12 months. So I want to go back to the point you just made at the beginning of that answer, which I think is super critically important. You have not heard, we have not heard any of these companies come out and directly on an earnings call or whatever, say we are losing subscribers or butts in the seats or whatever you want to say because of AI, right as of today. And this could change. We could get these companies in the next couple quarters, say they're all doomed, whatever. But so far none have said that AI is negatively impacting their subscriber base. Amongst our coverage universe, every name that we track, that we publish research on, that is correct. So then Wall street is making, and I'm using Wall street writ large, some kind of a macro for, for all investors is making a guess or a bet right about where the future of these companies is going. And it's down. They're selling the stocks, we know that. Not my opinion. The markets tell the story. So there is a chance, Greg, that even the quote, smart money, and if you can't see it, I'm doing the air quotes under the table, the smart money could be really, really wrong. We're so early in this, you know, incredibly powerful movement. Right. And we are big believers that AI is going to transform a lot of industries. And there is also no question, Brian, that the technology is going to get far more powerful. That being said, we also strongly believe it is not as simple as saying that, you know, any company, any software company, and particularly just because they're a SaaS company, that means that they are roadkill. We think that would be a gross over simply. Yeah. And maybe the market is getting it wrong and is grossly oversimplifying. We've seen it before and with stocks down 75% in a year, maybe we're seeing it again. Greg Moskowitz, Mizuho Greg, we appreciate your time. Thank you very much. Thank you. All right, speaking of AI and software, we've got a news alert right now on Anthropic. Kate Rooney has more on that. Kate, what's going on? Hey Brian, this speaks to your last conversation. It's another day, another AI model update. But this is really important. So software investors everywhere have been paying really close attention to even microscopic updates to anthropics models in particular because of the billions of dollars it's really knocked off of tech valuations and some of the knee jerk market reactions we've seen. So today, Brian, I'll avoid too much tech jargon, but Anthropic is announcing Sonnet 4.6, its chat bot cloud. They say in this release today is they can now operate software the way a person does. Clicking, typing, navigating specialized systems that lack modern APIs. That's basically the plumbing that connects apps and companies with this technology. On the back end, they say that it beats its last model from even two weeks ago. So they talk about some real world economically valuable office tasks. They do mention coding skills. They say it beats the last model model by a wide margin. And Claude code of course, has been a major bright spot for this company. If you've heard of the term vibe coding, this is the company that has really been credited with the rise of pretty much writing code for non professionals and sort of democratizing coding. There's a lot of other technical talk in this release, but bottom line, Brian, Anthropics, Claud, it's getting smarter and even some of these incremental updates and moves have proven to have an impact on tech multiples as you were just discussing. So you just said that the company says this model is better than the model from two weeks ago. Just literally two weeks ago. So how fast Kate, is the technology really moving? I mean, is it every day or Every week we're seeing fairly sizable gains in the processing and technological abilities these, these companies. It feels that way, Brian. And part of this, it's sort of self fulfilling because the better the models get, the better they are writing the code. And that is part of what's kind of going into the back end of creating these models and making them better is actually AI. You have AI building AI and that has sort of accelerated the speed of all this. But it does feel like not every week, you know, we get one of these. Every day we get sort of a model update. So we are seeing more incremental updates, which is different than other tech cycles where maybe you would get one of these, you know, once a month. But they are announcing because it's so competitive out there, you're getting models that are 4.6, 4.7, and that's, that's new here that, that Wall street is paying such close attention to what's happening at these private companies. But as we mentioned, just massive impact on software multiples. And you guys were just talking with the igv. That has been the biggest laggard and the one that's taken the biggest hit as a result is in this. Yeah. And you thought you probably just heard Greg Moskowitz say that to the companies he follows. Not one of them so far has said now they will, they might, who knows that they have not said so far that AI is taking any subscription revenue from these companies. But there is still time. Kate Rooney, before you were born, there was a show called Six Million Dollar Man. Better, Stronger, Faster, we can build it. Kate Rooney, thank you very much. Thanks, Ellie. All right. Meantime, Hollywood's battle over Warner Bros. Discovery taking another twist and Warner Brothers may now be back in play. Julia Boorstin here now with more details on this. Julia. Well, Brian, Netflix is granting Warner Brothers Discovery a seven day waiver to let it negotiate with Paramount, Skydance, Warner Brothers Discovery saying, quote, wbd will engage with Peace Guy to discuss, discuss the deficiencies that remain unresolved and clarify certain terms of Peace Guy's proposed merger agreement, giving Peace Guy the ability to give its best and final offer. Noting that a Peace Guy representative told Warner Brothers board member that the company would pay $31 a share. That's a dollar more per share than previously offered. Now all of this comes as Warner Brothers sets the date for its shareholder vote on Netflix's offer for March 20. Netflix saying in a press release, quote, peace Guy has repeatedly mischaracterized the regulatory review process by suggesting its proposal will sail through misleading WBD stockholders about the real risk of their regulatory challenges around the world. UBS weighing in this morning saying, quote, we are far from over when it comes to any resolution here and both sides are very much in it to win it. I will be sitting down with Netflix Co CEO Ted Sarandos at 4:30pm Eastern today in a CNBC exclusive. Brian, we've got a lot to cover. Looking forward to it. 4:30, big interview. Julia, thank you very much. All right, so how much of this epic tale is about the big personalities involved? You've got the Ellisons, you got David Zaslav who runs Warner Brothers Discovery, who used to, by the way, work here at cnbc. And of course, the juggernaut that is Netflix. And Julia's interviewee, Ted Sarandos, coming up at about two and a half hours time. Let's talk about all of this and bring in Sean McNulty from the Ankler. Sean, you know, a lot of our view, listen, the media, we love to talk about the media and ourselves. But this story I think does play bigger because it goes, correct me if I'm wrong, to what our viewers and listeners might pay on all the streaming services. What is the ultimate endgame of all of this? You said a lot of big egos involved, a lot of money involved here. I've always maintained. And this is a take that's out on the streets, certainly Netflix, it's a, it's a nice to have for Netflix. It's a must have for peace guy. And the Ellisons, if they don't get wbd, there's nothing else on the market that can give them the scale that they need to get to to be, say, a top four player globally alongside Disney, Netflix and Amazon. You can maybe put Apple in that category if you like. That's it. Otherwise, they are a six player, you know, in Hollywood and streaming globally. Now, maybe they can invest and grow that business, you know, to become closer to that. But they're, they desperately need this asset where Netflix will be fine if, you know, they don't win this out. But we'll see what Ted has to say later today. They are in it. They have a deal. So it's not a great look to lose a deal to a competitor. But they can also bring the screws to, you know, to Paramount and raise that price up and get it up to, you know, $31 a share, as we heard this morning, maybe a little higher. And that's where we're at at this stage of the saga. So what happens if Paramount does not win. What if, what if Netflix ultimately still comes away with Warner Brothers? You said they don't need it, but it's a nice to have. You said Paramount does need it. So what happens if Paramount doesn't get it? Well, I mean Elson has been on the record saying you can either buy or build in there to wait to their future. Obviously the WBD deal is buying. Otherwise they have a lot more cash on hand afterward if they don't get the deal for Warner Brothers Discovery. So you're investing and that's just going to take time. So that's going to be. We have a new NFL deal coming up. You have Major League Baseball coming up and the NHL in a couple of years. You have Premier League. So sports rights will become in the mix 2027, 2028, a few years off. So that's one way to do it. You can invest in more movies. Certainly Paramount can scale up how many movies they're producing versus be adding in. You know, the Warner Brothers infrastructure, if you want will. So it's more costly, it's more time. Time consuming. Time consuming. But it's, you know, the organic way of growth and there's no guarantee that it will get them anywhere near the where they need to be. On the other side of it, where do they need to be? They need to be at a much larger footprint globally and streaming, which they're building out, but they're nowhere near this near the scale of Disney or Netflix or Amazon at this point. So they need to, they still have to enter a few more countries. They need to get their subscriber count way up. They're roughly about 80 million global at this point. So you're still about 50 million below Disney. You're, you know, maybe a third less than a third of what you are for Netflix. So you're way behind the streaming to build, build that up globally. So that's number one is in streaming would be your first place. You need to. Okay, I'm going to throw this out there because why not? It's a Tuesday after a long weekend. I've heard this nowhere. I'm completely making this up, but why not? I mean Disney is a media company mostly it's a parks and a cruise line company at this point. Is it possible if Paramount does not win Warner Brothers, they approach Disney and Bob Iger and that team and say, hey, let us take your, your TV studios off your hands there. I would say NBCU is probably your more likely combination. I've heard of them. Heard of them. Exactly. Perhaps you're familiar with the corporation there, Disney. I don't see a lot of upside in that. Disney doesn't need to do that at all. I don't see where the Ellison also wants to own things. I mean, when you can do partnerships with other companies, that's fine to gain scale, but, you know, the upside is not as large there. I mean, if you look at nbcu, Peacock is a domestic product. They don't have an international, you know, streaming play in a sense. So there's some, you know, upside that Paramount could give to nbcu. NBCU is a big theme park business which Paramount could maybe leverage or, you know, jointly develop together, things like that. Disney doesn't. They have, you know, the largest IP in the world. They don't need the Paramount part of that deal, in my opinion. The. By the way, the Landman theme park would be just amazing. It'd be like an oil Derek. And then you walked around cursing. There's ABC. ABC, which is Disney, NBC, which is obviously NBC Universal, and CBS, which is Paramount. Those were the big three for 50 years. They're still very big. But do you think, Sean, that regulators would allow any one of those three to merge with the other? Because honestly, those linear networks are not what they used to be. When you look at the scheme of viewership numbers under the Trump administration, anything involving a broadcast network is probably a leap. And I think that's, you know, the FCC has, you know, been making a lot of changes or adjustments in their policies about this. You know, they're not a big fan of that. We have a big deal with the local TV stations which is pending, which will also affect a lot of that math on the, on the network scale. So any kind of thing involving a national network. And again, if you mentioned Disney and Paramount, you're talking CBS and abc and combining those two companies, it would be a. Probably a regulatory nightmare. I don't think you're gonna get that through. So I still think I know what you're saying about the maybe lesser leverage or lesser importance than they once were the kings of media, but still very important and still reach all of America. The reach is still there and still meet a lot to local communities that they're in. Yeah, I mean, I'm only bringing this up and we'll let you go, Sean, because it's clear that the Ellison's, David Ellison, is not done making deals. Either buy it or build it. Sean McNulty of the Ankler. Sean, real pleasure. Thank you very much. Thank you. All right, folks, we are just getting going. Coming up, where the biggest opportunities might be in technology right now. And speaking of tech, Amazon speeding toward a nearly 30 year milestone and not in a good way. We'll tell you what's happening next. This is the exchange on cnbc foreign. The day begins at the Chase Sapphire Lounge by the club at Boston Logan Airport. You get the clam chowder in San Diego. It's Tostadas New York Espresso Martini. It's 10am why not? It's the quiet before your next flight, the shower that resets your day, the menu that lets you know where you are. 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Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts. All right, welcome back. Maybe the market story this year has been the hammering of many software stocks, stocks that made investors maybe like you a lot of money in the past. They've been hit hard the last few months. But your next guest says don't lose hope, at least for some names. And he's here to talk about that and more. He is Sam Stovall. He is chief investment strategist at CFRA Research. Sam, great to have you back on. All right. I want to start with Microsoft because I look at my screens here. Microsoft down a little bit today. Microsoft is down 28% from its 52 week high. So it's in a technical bear market. I'm not sure I like that term, but technically that's correct. And below a $3 trillion market cap is there a lot of value right now in Microsoft. Hey Brian, good to talk to you again. Well, you're absolutely right that the the group is down 30% plus and also when you look then at the price decline, so too is the relative P E ratio. Right now it's trading at about a 25% discount to its five year average forward P E ratio. And with earnings expectations still expected to be well above the overall market. Strong reven, strong earnings, good profit margin growth, our feeling is that Microsoft is still a buy for the longer term investor. Because the thesis, as you might have heard the very tippy top of our show is that as we know AI is going to crush or maybe crush a lot of these AI related companies. Microsoft, while a software company, is also a big AI company. And theoretically then I would think that Microsoft would be the crusher and not the crush E. Absolutely right. Microsoft is one of those companies that because it does offer a multiproduct platform and it has a vendor with a very large installed base, a lot of the enterprise customers tend to be more entrenched with these kind of vendors. So it's not just like a one off that this is something where they have a very widespread. And so yeah, it's being dragged down along with software in general. But there are some other companies you still have to be selective. But our feeling is that there are companies that have actually done relatively well post their earnings reports like DataDog, HubSpot and Cloudflare. But then again longer term you want to be sticking with companies that are also in the cybersecurity area. Palo Alto CrowdStrike, those among those that we happen to favor because those companies benefit from the increase of data. Right. They're not killed by a certain thing, just the more information and data there is, they would theoretically benefit from. Absolutely. And also the worry is the more that we do see AI usage, the the more challenging the attack landscape. And as a result companies are focusing on boosting their cybersecurity capabilities and so it's going to actually benefit some of these firms very quickly. Macro markets, we're on year four. We've had three double digit gains for the S&P 500 in a row. If we did this year, which not a great start, but if we did it, it would be only the fifth time that's happened in 100 years. That's a, that's a pretty heady record. Are you still calling for a pretty good year? You still have a 7,400 target on the S&P 500. Yeah, that brings us to about, you know, 6 to 7% price appreciation for the full year. So I like to say that I'm a bull, but small cap be. I think that we're going to be facing challenging times up until the midterm elections. The average drawdown being 18% in this kind of a year. Average increase for the full year at only 55% since World War II. But once we get past the uncertainty of the midterm elections, the S and p in that 12 month period from October of midterms to the year after has gained 16%, rising 100% of the time. And I gave a speech recently where I quoted a guy named Sam Stovall, I don't know if you heard of him, where election years tend to be more volatile than non election years. So the bottom line is we could have more ups and downs this year than a, quote, normal year. Right, Sam? Absolutely. As Bette Davis once said, time to fasten your safety belts. That's Sam Stovall. He's got some great data. You should talk to him. Sam, appreciate it. Thank you very much. Thanks, Brian. All right, coming up on deck, how the mighty pickup truck and China are helping investors at least at one big car company. Picture this. A curve in the road, a change in plans. Well, what do you say with the all new Audi Q3? The answer's always yes. Yes to adventure, yes to escape. Yes to performance. Yes to comfort. Yes to right now. 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Ford is reportedly considering a joint venture with A Chinese or China based automaker. Here's what former Ford CEO Mark Fields told us about the pros and cons of any potential deal. It could help them compete more on cost and technology, particularly around EVs and connected vehicles. But it would expose Ford to just massive regulatory and political risk and brand perception risk. So bottom line is the economics are very compelling here, but the political and strategic risks are pretty enormous. All right, let's talk about all this and more with Phil LeBeau joining us. All right, Phil, what's up? Could and it's a big could a potential partnership between Ford and a China based company look like? Well, it would be like a joint venture similar to what we see between Ford and Chinese automakers in China, where the majority is owned by a Chinese automaker. The minority by Ford gives Ford access to the China market. The Chinese automakers obviously would like the Ford name over there, which is why all of those joint ventures in China started originally. Here's some reporting that's new, not just reportedly, Brian, but new reporting. We've checked with some people at Ford about these reports that they're considering a joint venture with a Chinese automaker. We can tell you that there are no active talks going on right now between Ford and a Chinese automaker regarding a joint venture in the United States. There are reports that they may do one in Europe using their European facilities. But here in the United States, these reports that they're looking at a joint venture that's a little overcooked, to be quite honest with you. The focus is on the Trump administration policy. In other words, what are the discussions going on as the Trump administration has thrown out the possibility that someday you may have Chinese automakers manufacturing in some capacity here in the United States? Jim Farley has been clear that when you look at the EVs coming out of China, the quality is far better than what people initially saw from China. They're improving and Ford could benefit from this. Look, they lost $4.8 billion on EVs last year here in the United States, probably going to lose another 4 to 4.5 billion. That's their guidance for 2026. And then they have their new EV architecture coming on market in 2027, ultimately planned to be profitable by 29. When you look at the EV market right now in the US it's still Tesla that dominates with close to 50% market share. There's Ford at 6.6% market share. The EV market overall, if you looked at all the vehicles sold last year, which is about 15.9 million vehicles. Only 7.8% were pure electric vehicles here in the U.S. one other thing to keep in mind, as I mentioned, their new EV platform architecture, it does come online in 2027 with a low cost electric pickup truck. And then they expect to ramp up production from there and be profitable by 2029. Quickly. I know that you talked to RJ scoring of Rivian. That stock's been kind of red hot, kind of red hot lately, hearing about a lot of, you know, positive demand signals from their, their upcoming R2. Right. Well, you know how this goes. I mean, it's easy for people to say, yeah, throw a couple of hundred dollars or one hundred dollars down for the deposit and, and then if they ultimately get to market and they say, well, look, I don't want the highest priced version, so I'm going to pull my deposit here. But RJ is pretty confident that once they launch the R2 in the middle of this year and it's going to be with the higher priced models, higher trim levels, closer to $60,000, ultimately they'll be selling a model that is going to be at that $45,000 price point and that would allow Rivian to compete with the Model Y and the Model 3. You need that lower priced EV to really tap into the market for larger growth. My $100 deposit for the RAM Revolution went nowhere, Phil. But you know, chalk it up to a night out. Brian, you're like a Brian. You were like a friend of mine. He said he put down his deposit on a cybertruck. He goes, I can't wait for my $39,000 Cybertruck. Because that's what they said it was going to be originally. That's right. And then when he stalled the price, he said, what? No, I'm not going to be buying a cybertruck. That happens quite a bit. It happens night out at Applebee's on me next time you're in town. Philibo. Appreciate it. Thank you very much. Now to Mackenzie Seagalos for a CNBC news update. Senate Democrats sent a counteroffer to the White House and Congressional Republicans as part of the negotiations to reopen the Department of Homeland Security. Minority Leader Chuck Schumer has not said what's in the offer. The agency shut down Saturday afternoon. Two weeks of stopgap funding ran out. Palantir just became the latest tech firm to move to Miami. Several tech leaders and investors have made the move since the pandemic. Among the recent transplants there, Ken Griffin, Citadel and Palantir co founder and investor Peter Thiel's company, Thiel Capital and European regulators said today they've opened an investigation into fast casual retailer Sheehan over concerns the company hasn't done enough to stop the sale of illegal products on its site. The Chinese retailer came under fire from France last year when authorities found illegal weapons and childlike sex dolls for sale on its website. Sheehan says it's cooperating with the probe. Brian, back to you. I'm going to move on from that one. Mackenzie Sagalos, thank you very much. All right, on deck, the bull case on one stock that you might not think would even need a bull case, it's Amazon. We'll talk about it coming up. All right. Welcome back to the Exchange. I'm Dominic Chiu. Here are some of your biggest movers of the day. We're going to hit both ends of the S&P 500 intraday barbell. The biggest gainer so far in a way today is Norwegian Cruise Lines. It's up about 12% right now, driven in large part by a report from the Journal saying that activist investor Elliott Management has built up more than 10% stake in the company. It intends to push for changes to get its share price moving higher after lagging peers like Carnival and Royal Caribbean. So that's your best performer on the day. On the other side of the spectrum is Genuine Parts. The company best known for supplying auto parts under the Napa brand name is down right now 13, almost 14% after what's being viewed as a disappointing earnings report and the announcement it's going to separate into two publicly traded companies, one focused on auto parts, the other on industrial parts. Now, that move follows a strategic review of its business and pressure from Elliot Management as well. Those shares were up about 20% year to date before today's losses. So keep an eye on Genuine Parts and we're going to end on General Mills. This is the company behind Cheerio Cereal, Green Giant frozen veggies, also Blue Buffalo, Pet Foods. It lowered its full year profit and revenue outlook, citing things like weaker consumer sentiment and heightened uncertainty. The company made those comments while presenting at the Consumer Analyst Group of New York or Cagney conference Brian, earlier today. So keep an eye on General Mills, down 8%. I'll send things back over to you. Yeah. Looking more like a colonel than a general today. Dominic Troupe, thank you very much. All right, everybody in the markets is watching one stock and that is Amazon. Because if Amazon ends lower today, and it's a little higher right now, but if Amazon does end down, it will have fallen 10 sessions in a row. The last time that happened all the way back in 1997 when Amazon was a newly public, tiny little online bookseller. But your next guest says stay long and stay strong, Amazon. And he recently raised his price target to $315, saying the ramp in their cloud business capacity is compelling. Let's bring in Andrew Boone, he is research analyst at Citizens. Andrew, stocks not a 300, it's a 200. So 315 is a, is a pretty heady price target. That's a big jump from where it is right now. How does it get there? And please don't answer. It goes up $115 a share. It's a little bit more complicated than that. We're pretty bullish on the US business. Amazon talked about in their last earnings doubling their electricity capacity, their gigawatts over the next two years from the end of 25 to the end of 2027. And we think that's going to lead to an acceleration in terms of US revenue as more capacity comes online. Everyone's talking about it, everyone is supply constrained. And so we think that just the unlo talk of more data centers, more chips, more electricity, more compute, basically going through as pipes just means that you're going to see this acceleration that comes through over 2026 and then stability into 2027. That's underappreciated. We just talked about Microsoft. I don't know if you heard that a few minutes ago. Andrew and I made the point that if so, if AI is going to eat software, the companies that make AI are going to be the winners theoretically. Right? Because they're going to be the ones doing the eating. They're not going to be the ones getting eat in. And Microsoft was the example we used a few minutes ago. Amazon would seem to be in the same boat. I don't understand why both the ones that are supposed to get eaten and the ones that are doing the devouring are all falling right now. Yeah, I mean it's, it's a conundrum on, on a certain extent. One of the things that you have to appreciate is just the fact that Amazon is becoming a more capital intensive business. Right. $200 billion is their guidance for 2026 and that's a massive number. And so certain people are questioning, hey, are you going to get the demand with that increased supply or does this basically crater pricing across all of hyperscalers? You heard the CEO of us on cnbc, I think a week ago, talk about capacity constraints for the next two years. Right. Who knows in terms of three, four or five years down the line. But we're pretty confident that despite everyone investing in data centers, that AI is just this massive trend that can gobble up that supply. Do we care about Amazon's retail business anymore? We never talk about it. We talk about Amazon Web services, we talk about AI, we talk about data centers. Sometimes people use the term hyperscaler. Still don't really know what that means, but you get my point. Do we care that they're delivering boxes to everybody's houses every day? Does that matter at all? Yeah, it's, it's really interesting. Amazon has a massive benefit in terms of the logistics angle of their business. And so they have the lowest cost to be able to deliver whatever package to whatever consumer in whatever suburban neighborhood. And so that's a massive advantage. And so if you think about AI and the ability to look across all of the web and find you the best price, Amazon should have a structural advantage for that retail business that we think can continue. And look, they've gotten faster over time. They're now making a massive, massive investment in terms of accelerating delivery in rural markets. I think that continues to win. And the interesting thing about that is it's really the adjacency of retail, which is advertising, that is the massive business that is fueling profits for Amazon's overall business clearly, as well as aws. But that's the kind of the adjacency for retail that we really like to see continue to grow and shorter. Andrew Boone, I think what you're saying, they have more information and data on us than we probably know about ourselves. Yeah, totally. And it's really interesting to look at what they're doing with retail search. Amazon is starting to add third party vendors that actually aren't associated with Amazon. Right. So if you're a whole nother shoe seller, right, and you're not actually on the Amazon platform with your shoes, they're starting to incorporate that into search. So, hey, is this now another search business that Amazon is starting to incorporate? Advertising is just a massive arm and look, we're, we're very bullish on aws. We're also very bullish on the advertising opportunity for Amazon at large. All right, Andrew Boone. Citizens really appreciate the view, bullish view on Amazon and the market needs it today. Andrew, thank you, thank you. Speaking of Amazon, one of the world's leading wealth management firms also still loves the stock. And Peter Malukis, founder and CEO of Creative Planning, he'll be your guest on that and more Right at the top of Power lunch in about 15 or so minutes. But we are not done here yet on the exchange. And ahead, if you can't beat them, join them by one beaten up tech company is doing. We're going to try to try to reverse its recent downward fortunes. Stick around. Welcome back. Figma stock is higher after announcing a new partnership with Anthropic. Let's get more details from Deirdre Bosa, who spoke with Figma CEO moments ago. Deirdre. Hey Brian. So this feature, it's called cloud caught. Sorry. It's called Code to Canvas. It lets users take interfaces built in AI coding tools like cloud code and convert them into editable designs inside of Figma. Now this is a bet that in a world where anyone can build software or design something with AI, the real value is in what happens next when teams come together to refine iterate decide what is actually worth shipping. So Dylan Field says that is how you actually thrive, not just survive in the agent era. I also think you shouldn't be sacred about trying to lock your users into one workflow. That's what the bet is today that we are talking about, is that we're trying to make it so that wherever you start, whether it be a napkin sketch or shower thought or design canvas or code, you should be able to go anywhere else that you need to go. Now this is a bold position for a company that has been caught in the crosshairs of the software sell off Figma's stock. It is down sharply since its IPO last summer, along with the rest of the sector, particularly over the last few weeks. So I asked Field how he's talking to other startup founders considering an IPO about that kind of pressure. Literally, it's the same as what I tell my employees, which is we control the inputs, let's show up every day, work as hard as we can to go make it so that we build the right things for our customers and everything else will take care of itself. I think that other private company CEOs, you know, some have asked the frequency of people that have asked me about it has gone down. I'll say that. So fewer CEOs are calling Dylan for IPO advice these days. That is startup CEOs. But he says that he's still glad Figment is a public company and it pushes him to face disruption like the one we're seeing right now head on. And Brian, it's very interesting, maybe those private startup CEOs aren't calling him, but you know what? But maybe some more public company CEOs are going to call them because look at the stock. I can't think of any other reason. It's up right now, up more than 4% after announcing this partnership with Anthropic, the very company that is creating this sort of SaaS. Existential moment. Figma was the hottest stock in the world for about a hot minute. I mean it's ipo. We couldn't stop watching it go up and up. It's been a tougher run. So is Figma an outlier, a one off or will more companies do this? I mean, Dylan Field, he's a great CEO and founder. I've talked with him for years and he sort of is embracing this. So he's unique in that sense. He just came from sort of the private startup world into this public CEO position. But maybe he's an outlier. For now that may not be the case. It was like what Ali Gadzi told us a few weeks ago. No more lazy software investing. You've got to go with these companies that are thinking about how to integrate these new tools that can either, you know, lead to your demise perhaps. I mean we're seeing that with some companies or maybe power you like it is. Or investors are seeing it in this case today with Figma shares up again nearly 4% and that's ahead of earnings on Wednesday night. You stole the title of my book. No More Lazy Software Investing. Now I got to find a new title. Deirdre Boss, talk to Ali about that one. That's it. No more lazy investing at all, Deirdre. In any sector. Deirdre, thank you very much. All right, coming up, the one area of the market still seeing a whole lot of demand. Investors, they're not being lazy around this group. What that is ahead, AI disruption fears continue to slam various parts of the stock market. So if you have been dumping software or other stocks, maybe you've been using that money to buy bonds or maybe you should have been because there's more action in some bonds lately as spreads are hitting multi year lows in some cases. Let's talk more about where to make some money. Tom Kozak is Hilltop securities head of Public Policy and Municipal Strategy. And you know, it's funny Tom, a lot of people don't realize that this is actually an AI story because if, if various areas boom or get hurt by AI, it hurts their credit rating or helps their credit rating and changes the bond rating as well. What are you seeing in the muni market right now? So from a big picture, Brian and thanks for having me back. I appreciate it. From a big picture perspective, I'm seeing a renewed premium on stability. As you were mentioning before, investors and municipals are not lazy right now. They have been acting. I think that actually 2026 could very well be as good of a year, if not the best year for investing in municipals, even compared to 2007. And one of the reasons I'm saying that is kind of like you were alluding to is the fact that there's been a lot of risk taking going on. There's been a lot of volatility in other asset classes. Municipal yields are still near generational attractive levels. And I think that a lot of investors are coming around to the fact that they can make some money while playing defense and municipals. Yeah. So if I wanted to put some money to work in the muni bond market, some of that may be tax advantaged in a very nice way. Because let's be honest, I mean a lot of people made a lot of money in the stock market the last few years and maybe they're like, you know what, I'm going to put some of that in Muni's. Where should they go right now? So what I like right now, there's a post golden age recalibration realignment going on right now. I'm really telling investors to be selective about their credits. Be very selective in state local governments. I like high quality state local governments. I like single family housing. Make sure you understand the nuance in single family housing. And even though we have negative outlooks on both the K through 12 and higher education sectors, be selective with the credits there. But I still like those sectors. One of the areas that I'm telling investors to be careful with is to be extra careful in the high yield sector. How extra careful? Like some of these companies are going to go bankrupt. Extra careful. There's, there's some structural and somewhat cyclical issues that are kind of sliding through into high yield. And I'm really telling people to be careful. Just you really need to know the ins and outs of every, of every transaction you're looking at in the high yield sector. Quickly, in 30 seconds, what's the biggest risk in some of these areas then what's the big problem? So one of the things that I'm hearing a lot about is I'm hearing a lot kind of like you're alluding to about concerns about AI from my perspective, I really think that places like San Francisco, the bigger tech hubs, they've reinvented themselves over the decades, and I think that they're going to continue to do that. So I really think there's more upside than downside. One would hope. And I could tell you, having recently been to San Francisco, it definitely felt like it was on the up, but then again, it probably couldn't have gotten much worse. It was grim for a while, but we're hopeful. Tom Kozick, Hilltop Securities Tom really appreciate that, folks. That's it for us here on the Exchange. But don't worry, if you want more of this, you got it. Power lunch after this quick break. Stick around. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place. This is the table, the one with the view. This is how you reserve exclusive tables with Chase Sapphire Reserve. This is your name on the list. This is the chef sending you something he didn't put on the menu. This is 3 times points on dining with Chase Sapphire reserve and a $300 dining credit that covered the citrus pavlova and drinks. And the thing you didn't think you liked until you tasted it, Chase Sapphire Reserve now even more rewarding. 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