welcome to power lunch. i'm tyler mathisen. glad you could join us this hour. apple parks the car project and will focus more on a.i. ambitions. will ai features be enough to get people to upgrade their iphones? >> and we continue the look inside the economic ecosystem of healthcare. we are looking at the risky but often profitable world of

biotech stocks. and let's get a look at the markets. the averages are down but not much. nasdaq is the lowest of the three majors down about 30/10. and s & p is about flat. and the dow jones is down about a tenth of a percent. there was an antitrust investigation launcheded into the company but we are seeing a lot of other speculative stocks soaring as money is chasing anything with a.i. in its name. big bear a.i. and sound hound are up 60% this week. it is only wednesday. beyond meat is soaring as the company unveiled a turn around plan including cutting costs and raising prices. >> bit coin crossing $63,000 today, first time since late 2021. a lot of people are looking at the $69,000 alltime high as now a real possibility.

61, 416. let's bring in kate rooney for more. >> bit coin is back near the alltime high. crypto in general tends to be a barometer of risk out there. you are seeing some momentum in chasing stocks as analysts at gladstone put it, there are growing signs of speculation that point to derivatives and leverage in particular. futureers markets are approaching highs that we have not seen since about 2021. they call it the most euphoric period of 2021. that's where we are at this point. leverage is the riskiest way to trade crypto or any stock. it tends to contribute to some of the large moves, both on the upside and down side. then there are more market and crypto specific factors. bit coin etfs is part of this and black rock, and others have topped $7 bill and $5 billion making them some of the best

launches ever. the boom in etfs lowers the amount of coins out there and that dynamic is helping bit coin. there is optimism around a market event called the having, a way to keep cap on supplies. it happens every four years. the boyne case shares have risen but they are seeing issues today, at least the company, with their app. it is leaving users to see balances as zero. coin base says they are aware of the issue and they are investigating it. they say your assets are safe. we will keep you updated on that. >> what is the having, that sounds like something out of the bible. >> or a scary movie. >> like out of revelation. >> yeah. it is the market event where when you create new bit coin, there is a reward. if you see pictures of the miners, the computers, are racing to solve a math problem to get new bit coin. that is the reward you get. that is cut in half. it is a way to eventually keep a cap on the supply which is 21 million that can ever be

created. it is a wonky market dynamic that happens every four years. it has historically correlated with some of the bull markets. if you are a crypto specific trader, you are most likely focusing on that. there are more institutions getting in that say they are not thinking of the halving, they are thinking of this as allocating a certain percentage of the portfolio. we are seeing more evidence of bigger purchases which indicates more institutional interest. that is likely a result of the bit coin etfs being launched. >> thank you. in addition to the speculation in bit coin, we are seeing it in a.i. as investors look beyond big names trying to find the next invidya or amd. christina has more on this. >> we know the major industries are slightly in the red today. investors are worried about month end rebalancing, feeling stretched with the recent run up

in stocks but much of the derisking doesn't seem to impact the a.i. winners that you mentioned and those that appear to be a.i. winners. let's start with sound hound. that is up 62% week to date. when you zoom out ona yearly basis, just over the past three days, on a yearly basis, you can see the run up in the voice a.i. recognition firm is very recent. hopefully we can bring that chart up. invidia revealed a stake in the firm in the filings. you can see the stock shoot up. the hunt for a.i. winners is in the hunt for amd and i love talking about chips but it is not all about semi conductors. there is confluent, mobile tech name, app loving, both up 40% year to date. cloud fare, pega systems all up between 17 to 20% year to date. even though none of these are

pure a.i. plays. they just mention a.i. products on the website or some of them mention it on their recent earning calls. as goldman sachs writes in a note this morning, it is the return of the yolo mantra from retailers who are driving daily trading volume with speculative names. activity on message boards is at the highest level we have seen since march 2020. we remember what happened in march 2020, right? >> absolutely. i was just going to ask you about the volume going into some of the names like sound hound with the mention of a.i. is that from retail traders? is that from more institutional traders or a little bit of both? how can you trace the volume? >> if i reserve to the goldman sachs and uvs, it would be the corperates representing the investment arms of certain firms like soft bank or invidia. and it would also be retail

traders. retail traders get a lot of the conversation because it is trending on twitter with the hashtag moass. and then you also have the active managers. all of those are driving but retail traders are creating the biggest headlines given the search for palo alto or bit coin or beyond meat that are surging as of late. >> all right, thank you. we have seen our share of companies acing their a.i. rollouts. others are having a bit more of a tough time. recently google facing backlash over its gemini a.i. to the point where the ceo saying that the blunders were unacceptable. jennifer is here to tell us more about the blunders and what did the memo say? >> right. you have talked about this thoroughly over the last week. last week google had to pull one

of its a.i. imaging tools that was supposed to be associated with gemini, the major a.i. rollout. it had mistakes in what was factually incorrect in turning up images that were wrong for what people would enter into text. so the company pulled it. there has been much chatter since then and on monday the company's shares were hit hard. so last night the ceo spoke out telling the workforce that the mistakes with the a.i. tools were completely unacceptable. he said the mistakes were problematic and that it showed bias and that he also said the team has been working around the clock to address the issues, and that they will instate a clear set of actions, improved launch processies and he went on to say that users trust us for accurate and unbias sed information and

that should be no different when it comes to the a.i. products. >> what did the images show that were incorrect? what was wrong with them? >> well, people were inputting text that asked for historical images such as the founding fathers, other kind of characters in history which were turning up to be different color skin, people that were inaccurate to how they were initially. it was things like that and then turning up wrong information. >> so it was just wrong. just incorrect stuff. and it traces back to the algorithm that is used to unearth the images or create the images based on the inputted text or questions. jennifer, thank you very much. we appreciate it. >> thank you. stocks are lower today but near record highs. as we mentioned, money is pouring into bit coin and speculative a.i. stocks. is that a bad sign for the broader markets? let's bring in the chief

investment officer. brett, thank you for being with us. that is a good place to start. if you look at the broader indices, it doesn't look like a lot is happening but there are big moves with some of these names. and there seems to be some risk appetite when we talk about bit coin going over 61,000 and some of the smaller a.i. adjacent names are seeing some big moves. what do you make of all of that? >> yeah, your whole lead in reminded me of 1999 and the internet boom and those that rode the high and then rolled over for the next 10 to 15 years. there are echoes of 1999 in the market. they are built on the hopes that the inflation narrative will improve and that the federal reserve will be able to cut rates and we will have a soft landing and we will escape recession in the u.s. which i think is unlikely. we think that inflation is a

cycle and transitory and caused by covid. and now we have switched and it is more tied to the business cycle. all of the data suggests we are later in a business cycle and inflation is stickier and it is harder for the fed to get inflation to go lower. which means they would leave the rates high and eventually the u.s. economy will fall into a recession. i think a lot of these names will see some down side to them. >> so you think some of these moves we are talking about the bit coin or the a.i. adjacent plays, you think it is risky to be in those names because we are towards the end of the cycle? >> absolutely. back in 1999, everyone thought the top ten names in the s & p would forever top perform in the market. today it is 34%. the market has been driven a lot, despite the pockets of a.i., the market has been driven a lot over the last few years by the magnificent seven of the top which make up 34% of the index. to me you are where you are at

in 1999. they are great companies. they probably deserve where they are today. but how much is priced in the future? i think that is good news for things like small caps, mid caps, value stocks. if history plays out like it did back then, those names will guide us better in the future. >> so do you have any names or ideas in terms of sectors, apart from smaller capitalization issues? >> it is more broader, just more in the asset classes. every economic cycle in the past 40 years had different leadership. if i take you back to the 1980s, that was driven by japan and japanese stocks. the international markets did very well. after that, japanese stocks made a 34 year high last week. i take you to 2000, that was driven by tech stocks. that took 17 years for tech stocks to make a new high. think about the 2001 to 2007 cycle and that was all about china, energy stocks. china is half where it was then

today. to me, the future is going to be different. every economic cycle kind of rhymes but they are unique. i think the leadership and the next economic cycle will be more towards value stocks, mid cap stocks in the u.s. >> you seem more worried than some about inflation. >> i think the evidence has shown that inflation is pushing higher. so it will be interesting tomorrow, there are two different inflation readings. the pc inflation which i know is the feds preferred index has come down and continues to come down. cpi shows it has stalled out. you have median cpi which is a good measure of underlying trend. it bottomed in july and is back to 6.5% month overmonth. the service sector inflation is running in 5% to 6% on the three month annualized basis. you see companies raising wages. if you are a service sector, small business owner and you have to raise wages. what do you do to protect

margins? you raise prices. that's not what the fed wants tosee. that means you will see some sort of layoffs to protect margins and that is more of a recessionary call than anything else. >> just to wrap things up, consume spending is an important of driving the economy. we have heard a lot of retailers report in recent days. and i'm thinking of macy's ceo saying when asked about the consumer and he said under pressure but yet resilient. so how do you think they are dealing with things like rising prices as we have been going through these cycles of seemingly persistent inflation for some time? >> i think a lot of the excess savings at that lower level is starting to wear off. if you think of interest rates and where they have impacted the u.s. economy so far, a lot of consumer debt is mortgage debt. that has been fixed. you are seeing credit card debt repriced and auto loan debt repriced. this is why the market is so

caught up on when the fed will cut rates. the longer rates stay higher, the more it makes the debt makes its way into the economy. the lower end consumer is starting to feel pain obviously. that's why consumers are cutting back overall in certainly their spending and savings has come down too. i think there is a consumer dealing with that right now but certainly starting tofeel more and more pain from the impact of rising interest rates working their way into the economy. >> thank you. we appreciate it. >> thank you. coming up, the next part of our econecosystem series on healthcare, looking at biotech, a space that is seeing big stock swings. we will discuss them and more nce meaconow per luh. (vo) sail through the heart of historic cities and unforgettable scenery with viking. unpack once, and get closer to iconic landmarks, local life,

and cultural treasures. because when you experience europe on a viking longship, you'll spend less time getting there and more time being there. viking. exploring the world in comfort. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. [disconcerting stomach gurgle] not again. maybe i should get this looked at? [suggestive stomach gurgle] zocdoc? [talkative stomach gurgle] you're right, i bet they deal with this all the time. dr. finley really puts you at ease. let's do it! you've got more options than you know.

book now. ♪♪ ♪♪ ♪♪

is it possible to count on my internet ♪♪ like my customers count on me? it is with comcast business. keeping you up and running with our 99.9% network reliability. and security that helps outsmart threats to your data. moaire dida twoo? - your data, too. there's even round-the-clock customer support. so you can be there for your customers. with comcast business, reliability isn't just possible. it's happening. get started for $49 a month. plus, ask how to get up to a $800 prepaid card with a qualifying internet package. don't wait, call and switch today! welcome back to power lunch. we have been looking at hot areas of the market.

let's check out biotech, the xbitf is up 40% over the past few weeks. for today's installment of the ecosystems series, we jump into biotech. we have the senior biotech analyst joining us. welcome, laura. there has been a lot of deal making in this area. dooupg it will slow down or keep a pace? >> thank you. i think this is a trend we have been seeing a lot of this year and even at the end of last year. from december until now, we have over 11 deals, and i don't think it will stop soon. large cap pharma biotech has to address and looking for revenue growth. a great spot to look is in the biotech space for assets that may be a little more b risk. are there certain areas in the

biotech environment that would be more prone to be involved in biouts or is it lots of different individualized scenarios? >> you know, that's a great question. obviously obesity has been a big theme in 2023. we will probably continue for the foreseeable future. across the area, at least in the recent m and a transactions, it has been broad based. that is a testament to the space. we have a number of deals in oncologist, immunology, neuro and rare diseases. it is not just within certain verticals at this point. >> i admire your job because it can be really tough to pick bio tech stocks. there is a lot of risk and can be a lot of reward but of course it goes the other way. if you are an possibility of

fda approval or not? it seems like that is sort of the biggest risk potentially when you are looking at some of these names. >> oh, sure. fda or regulatory risk is one element. but i would say that in the past year, we hav, over 50 approvals in the year alone and the calendar is not slowing down. i think there is really good dialogue in the industry. there is also scientific and clinical risk. but companies are getting smarter about the way they design studies. a focus on rare diseases helps focus down to a specific population that you can deliver value to. i think there are unique ways to find insight. >> we just put up a chart of

some of your choices in the area. i think neurocrine systems wuss one, edge wise, and viridian. i'm guessing there are not too many people watching right now who know anything about those companies. so i invite you to tell us. >> absolutely. let's start with neurocrine. this is a larger cap name with a product ingressa. the carta diskinesia market has only diagnosed about 35% of the patients but ingressa already has a $2 billion run. and beyond that, they are marketing another product that should be in the market by 2025. so a lot to like here with neurocrine, a focus in the neurology and endocrine areas right now. >> and the other, viridian?

>> starting with viridian, this is a company focused more on immunology and information space. their asset is going after thyroid eye disease. you may have heard of that from it peza. it is an exciting year. they will have a trial leadout in the middle of this year and later this year in two forms of thyroid eye disease. a lot going on there. and edge wise, the last name on the roundup, this is another company focused in muscular dystrophy. and we saw edge wise move up for the cardiac drug. we will have three different readouts for edge wise this year. so catalyst activity is a theme across a number of the names that can help unlock value tradition. >> laura, thank you for being with us and you get an a plus for pronouncing all of the drug names, amazing. appreciate it. >> fascinating.

i wrote a piece on how they come up with the drug names and there is a big science to it. there is a lot that goes into it. it's fascinating. be sure to join power lunch tomorrow, february 29th, the rarest day on the calendar as we mark rare disease day. laura mentioned some rare diseases that affect few people but together the rare diseases impact the lives of millions. joining us will be former fda commissioner scott gottlieb and the ceo of chrisper as we discuss the efforts being made to help those dealing with the diseases. tomorrow on power lunch, they will. i'm looking forward to that. the current tone of the iphone market, one analyst thinks we could have a strong refresh cycle over the horizon, we will ask them why when power lunch returns.

rylee! from rylee's realty! hi! this listing sounds incredible. let's check it out. says here it gets plenty of light.

and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪) welcome back to power lunch. shift four payments jumping to session highs as reuters reports pfizer and amday us i.t.

group is preparing to submit final bids to buy the companies. a deal is not guaranteed. pfizer hit the session low on the report and is bouncing back slightly but down 1.3 percentage. time for the bond report. rick santaly has that for us. >> we know about the big numbers tomorrow, feds favorite inflation numbers. look what is happening in front of that. stocks are lower, interest rates are lower. look at the two year note yields, lower on the session and lower than yesterday's yield. here is something else , a two year break right now is hovering around 2 and 3/4 percent, highest in 11 years. it is hovering near the highest levels in four months which means that investors, traders, are looking at sticky inflation in front of what should be a

good inflation number. let's go talk to a trader. hey dave. >> hey. >> so tomorrow, personal income and spending and all of the pc consumption, inflation gauges, is there anything you will bow looking at in particular tomorrow? >> if the number is good, i think we rip roar higher. if it's bad, we may have a little bit of a pullback but nothing that feels like it will stop the market right now. >> that is a great point. every hurdle put in front of equities they find a way around it. you think inflation could be the same? >> i do. it is high and i read an article about hotel wages, they can't get employees. wages just keep goinghigher. >> and everyone passes it on. >> it is a vicious cycle. then they pass it on to the peopleal. everything just keeps going up. >> the federal reserve in the beginning of this episode of

tight cycle. after transitory, it was we will be inflation fighters until it gets down to the target. that's not the sense i get from feds. >> no. they are slowing up. we are not at the 2% target and now it is like we are going to ease at it gets close. >> there is no doubt that anyone would argue that inflation has come down significantly from the high. but the next question is how sticky will it remain? >> that is a great point. if it is not sticky, there could be some panic. >> i got you. the final analysis for tomorrow, the one area i want to watch is the year over year core pce. we have made progress there. my final thought is, do you think there is anything going on with respect to the numbers that will alter your feelings? >> i think people thought it would happen at the first meeting. i think march, priced in at 65%

it will happen. >> below that now. but it was at one point. >> it was. i looked at the last day or two, yeah, i think it will happen soon, i really do. >> when you look at the market movement, what is it doing in front of tomorrow's number? >> it is not a panic. it will come off of the chill, it is tame right now. >> it seems quiet down here. >> all i can tell you is that it may be the biggest number we have seen in a while but it certainly seems as though there are more people getting out of positions than getting in them. back to you. >> enjoy the warm weather in chicago for as long as it lasts. thank you. let's get to contessa brewer now. contessa? >> donald trump's lawyers say he is prepared to post a $100 million bond as he appeals the $454 million fraud judgment. they admit he would be unable to secure a bond for the full amount and may need to sell properties if he is not able to delay payments. trump's attorneys asked the court to pause enforcement of

other penalties ordered by the judge including a ban on running a company in new york for the next three years. convicteded ftx founder sam bankman-fried is arguing that the federal guidelines recommend he spends no more than 6.5 years in prison. probation recommended a sentence of 100 years for his role in orchestrating a billion dollar fraud. a bill judge will decide his fate. mitch mcconnell announceded he will step down from his leadership position in november, ending his time as the longest serving leader in senate history. mcconnell turned 82 last week. he said it is time for the next generation to take the helm. so a lot of attention being paid to the ages of those serving on capitol hill. >> absolutely, thank you, contessa. after the break, beyond belief, despite expectations, beyond meat is making a bit of a

comeback. we will trade that stock next on power lunch. come hungry. wall street forecasts over 100 billion in sales for anti-obesity drugs known as glp -1. but these treatments are largely administrated through cumbersome injections. enter lexaria bioscience with their patented oral delivery technology. early studies were glp-1 suggest reduced side effects and better blood sugar control with reduced spikes. lexaria bioscience. transforming the future of glp-1 drug delivery. ♪♪

[storms sound] whatever weather comes your way [wind and snow sounds] weathertech has you covered. [bird chirping] [laughing] with our laser—measured cargoliners. no drill mud flaps and floorliners. to secure your phone don't forget the cupfone. order yours today at weathertech.com. you never know when it's gonna be a weathertech day. perfect weather today...

whoa, how did you defeat them? you never know when it's with a little kung fu strength and by connecting my devices to the most powerful force of all. skadoosh. hah, huh? cool right? amazing. harness the power of xfinity internet and stay connected to the things you love. ah, they'll be like this for hours. hello dad, hello dad, hello da. uh-oh. good bunnies. ahh!

time for today's three stock lunch where we look at three big mover of the day. we have cio of auto shares. united health, there is an antitrust probe into the company. what is your trade on the yient of healthcare? >> this is a giant. a $500 diversified company in the eye of a storm. on one hand, the justice department issued an antitrust investigation on them and they recently faced a cyberattack from the well known ransom ware group known as black cat. even though they have revenue growth above average, 50% above average, their evaluation is also 50% above the category.

given the high valuation and the risk overhead they are now facing, i think that is definitely a sell. the cost benefit here is not justified. >> okay. this is interesting. next is ebay. the stock is on the rise after it reported results after the bell. this one i find very interesting for a lot of reasons. it is in the online space but it deals with a lot of resale items. what do you think of this one? it did hike the dividend by two cents and announced a $2 billion buy back program as well. what is your trade for ebay? >> ebay, i think it is a hold. we need to measure that they are having a good day today after beating guidance expectations but this is a company over the last ten years has not seen a margin improvement. in fact, even though their evaluation is one third below it the net income margin is 37%

according to spears. it is less than half revenue dwroeth growth. the company is down by 40%. it is on a downward path. we don't believe things are changing any time soon. there are better options in the category. we believe investors should not look any further than amazon in this case. >> what is their fundamental problem in this case? >> the fundamental problem is their net income margin. even though it is improving and up 27% compared to 7%, they are not growing as fast as the other competitors. the other competitors are taking away market share from them. economy has economies of scale and no one can compete with amazon. at the end of the day, they will lose the raise. we already have signs. i don't see how ebay will ever win over amazon. i don't know why investors would choose ebay over amazon. >> let's move to beyond meat.

the shares are soaring as they announce plans for steep cost cuts this year. your trade on beyond meat, ava? >> it is beyond me why investors would ever invest in this company. the best case scenario, it is a short-term hold. like even a one day hold or a two day hold if not a sell. so their sales administrative costs have doubled in the last four yours. their growth margin went from positive 34% to negative 24% and the debt has sky rocketed by 17 times from 10% to 172% in the last four years. so we are seeing costs sky rocketing. margins are plummeting. i don't see why investors would have this company. they are having a great day but it is a short squeeze. one third of the shares outstanding a short. so best case scenario, short

hold. >> i like a clear recommendation and i think we got that. thank you so much for joining us, good stuff. still ahead, apple slamming the brakes on the electric car plans. we reported that yesterday. the tech giant is pouring resources into a.i.. steve kovac will give us details when power lunch returns.

do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought

we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. our friend sold their policy to help pay their medical bills, and that got me thinking. maybe selling our policy could help with our retirement. i'm skeptical, so i did some research and called coventry direct. they explained life insurance is a valuable asset that can be sold. we learned we could sell all of our policy, or keep part of it with no future payments. who knew? we sold our policy. now we can relax and enjoy our retirement as we had planned. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit coventrydirect.com to find out if your policy qualifies. or call the number on your screen. coventry direct, redefining insurance.

i'm jack black. get tickets right now for kung fu panda. you don't have time for a drum solo. get tickets! [ screaming ] get tickets! skadoosh. get tickets! the apple car has hit a dead end. the tech giant scrapping the ambitious ten year plan to build an electric vehicle and instead, they are shifting resources to artificial intelligence, what else? steve has the details for today's tech check. we heard so long about apple was maybe developing a car but we didn't know much about it for all these years and forget it all. >> let's do an obitary for the car. they are scrapping the plans. it has been a decade and billions in spending for this.

this decision comes after years of leadership changes and deviation from the original dream they had of a self driving electric car, called project titan for a long time. no steering wheel or gas pedals. at one point apple thought they could sell the car by 2020. the project also created a revolving door of talent between tesla and apple and attracted some from traditional car companies like gm but nothing shifted. many top executives poulted from the project after a few years on the job. doug field, known for tesla was in charge and left apple for ford in 2021. the project was recently run by kevin lynch who was hired by apple to make the apple watch. his job is changing too and he will report to apple's a.i. boss. now it is all over and a group of approximately 2,000 people are affected. presumably, many of those

focused on the car engineering side will be out of a job. if there is one bright spot for apple, some of the talent is being moved to work on artificial intelligence. i point you to 2017 comments from tim cook. he called the company's self driving the car the mother of a.i. projects. so there are a few ways to look at this. one way is realization from apple here that it is better to focus investment on technology that is happening now, a.i. of course instead of chasing a highly regulated and low profit margin market like autos. all of that time and money spent on self driving a.i. can apply to whatever apple may be working on with generative a.i. later this year. or you can see this as a straight up blunder in apple's failed attempt to disrupt a $10 trillion industry. morgan stanley at one time said they needed to capture 2% of the auto market and they have a business as big as the iphone. >> they end up scrapping the idea that they will be a car manufacturer. >> yes.

>> is there any room for them to be a provider of software to other car manufacturers to employ in self driving vehicles? >> that was the idea when i talked about the pivots they went through. the original idea was to have a car, no steering wheels, no pedals. you walk in and it goes. then they started talking about maybe we provide the software and operating system if you will for other manufacturers, hyundai at one point was in talks with apple to try to use that technology. then they went back to maybe making a car and then they went back to making a car that was not as capable as they hoped it could be leading up to what we heard yesterday which is the project is just over. >> thank you so much. good to see you. still ahead, the bullish case for apple, they may have parked electric car plans but one analyst says consumers are revving up for new iphones. he will give us his take next.

noil a recent study of business ownership in the u.s. found only 3% of businesses were black owned. according to the pew research center, the states with the highest number are florida, california, and new york. celebrating black heritage, i'm sharon epperson. ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

the economy is simply not working for millions of hard working families. they're working harder than ever and they still can't make enough to get by to afford food and medicine to even keep a roof over their heads. we need to build more housing that's truly affordable. we need to address this terrible epidemic of homelessness. we need to invest in good paying jobs, union jobs and investments in our future. this, this is why i'm running for the us senate. i'm adam schiff and i approve this message.

welcome back to power lunch. we want to keep the conversation going on apple now. we just wrapped up with steve kovach, who is still with us. bank of america out with a new note saying that consumers may soon be ready to upgrade their phones, so in the first global smart phone survey, more than 40% of respondents indicated intent to upgrade their phones every four years, up 5% from its previous survey, so here to discuss is the analyst behind that note. also, reiterating his rating on apple, and has a $225 price target. as mentioned, steve is with us as well. give us a little bit more of the survey. the upgrade cycle looks a little better than it did on the last survey.

what does that mean for apple's financial potential gain from that? >> yes, thank you for having me. good afternoon. i think this is a bank of america proprietary survey. we surveyed over 25 other people over four different regions, including the u.s., india and china. it's a very good indicator of what the demand trend looks like, but also can we get a very fine view into what the install base currently is, of existing iphone users. what the survey really told us is that there are about 40% of users that are on older iphones they are holding onto, and 25% with four years or older iphones. what this means is if you think about the install base of apple devices, iphones, close to $1 billion with a four year replacement cycle. it would mean 250 million units shipped annually. consensus is only modeling 230

million iphones, and with the generative ai coming next, over the next two years, it's going to become really meaningful. there is a real reason and meaning for these old phones to upgrade, and this is where we see immense potential, and we think it could be as high as 240, 250 million units over the coming years. >> it seems to me, one of the things that has stricken apple and other phone makers is that the refresh cycle is very incremental now. the camera is a little better. the speed may be a little better. there may be some things come the form, the function connection, they may be a little better. what is it that apple could do with ai that would take that and make a quantum leap, that this is a new, revolutionary product, one that gets me excited, and not just let me do some photographic effects a little better. >> that's a great point. when we look at it through the lens of, no pun intended, of

the camera, right? you look at it through year-to- year change. yes, it's a little bit better, but when you look at it across a four year timeframe, it's phenomenally better. when we talk about the replacement cycles being four years, people who hold in iphone x versus and 11, 14 or 15, it's night and day. you can also do more with the 15 in terms of capturing spatial video, for instance, so there are a lot of improvements that while you are absolutely right on a year-to-year basis, it's incremental, for the person upgrading from an old iphone, it's fairly significant, so that is point number one, but on the generative ai side, the real interesting thing here is that seery, which is a mediocre assistant is actually something that people will look forward to using. this is involving a whole new revamp of that. i think it gets into the place where now you are actually getting a very helpful

assistant, something that can help you manage your daily tasks, automate a lot of that function for you, so generative ai, we are all starting to use it in different ways, but it really has not yet come in any meaningful fashion to the end device, and at the edge, this opportunity, we think, apple is the best one positioned to capture this, because they have the hardware, they have the software, they have the chip design and the semiconductor, to incorporate all of that very tightly, while at the same time, navigating the very complex issues of privacy along with it. when you think about the use cases, it's all about being able to automate it and make your life a lot better, managing your daily tasks, making reservations for you, ordering uber for you, whatever your commute plans are, being much smarter and automating a lot of those manual tasks that require us to go through so many different apps. >> this survey focuses a lot on cyclicality. this is something we have

noticed very recently, or relatively recently with apple products. three or four years, you are ready to get an iphone because you are ready to get a new iphone, you are not necessarily chasing after a new feature. there have been exceptions, like with the iphone 6 lineup. bigger screens. 5g, to a lesser degree, spurred a huge upgrade cycle. what are you hearing about this ai and this potential generative ai announcement that tim cook was teasing as recently as today, that you see some real features there that could spur the upgrade cycle, or is this survey purely based on, hey, a lot of people have a bunch of old iphones out there and they are ready to upgrade? >> yeah, i think, steve, look, it is kind of mixed. a, yes, the install base is aging, and clearly, the last few iphone cycles have been relatively weak, and they have been weak because there hasn't been a super compelling reason. people feel, well, maybe i can

stretch it out from for years to four years, and our survey shows that people's intent to purchase has elongated overtime, so that's very consistent with what most people are seeing, and with apple's financials as well. that said, our survey is getting ahead of what could be a big update from a generative ai perspective. consumers, i don't think, yet, have a great sense of what are the use cases, so i don't think the survey is actually something that is suggesting there was a huge uptick coming from generative ai. though, that will come. i would like to distinguish between what the survey is saying, which is, yes, there is a whole install base waiting for some capable features, but when we do our supply chain checks and look at what asia is telling us about what is happening on the tsm side of things, where the chips are being manufactured, high- bandwidth memory, and capturing all of that into the four factor of the iphone, that's where we see, really, the excitement around the wpabilities in the future.

>>amsi mohan, we thank you very much. steve kovach, we thank you. more power lunch, after this. personalized financial advice from ameriprise can do more than help you reach your goals. i can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about.

ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

♪ (captivating music) ♪ (♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪)

all right, folks, it has been a pack hour for the dow down .2% right now at 38.85. thanks for watching power lunch, everybody. >> closing bell starts right now. welcome to closing bell, i am scott wapner live at the new york stock exchange, and we begin with a broadening rally, just the sign that bulls have been waiting for. the big question, can it last? we will ask our experts over this final stretch, in the meantime, take a look at your scorecard with 60 minutes in regulation. a tight day for the averages that seem to be looking forward to tomorrow's inflation report, what the fed considers its most important reading, so e are red across the board, moderately so, nasdaq down more than others. shares of apple, the company holding its annual shareholder meeting.