expecting a more hawkish stone from powell. >> yeah, two cuts instead of three, perhaps. >> and what he signals in his conference, and tonight it's the bank of japan. i'm watching it. love having you here. that will do it. over to the "halftime report." welcome to the "halftime report." i am melissa lee in for scott wapner. joining forces in the ai arms race, the investment committee is standing by to break town what all this means for your portfolio. joining us this hour, joe terranova, steve weiss and shannon. we are going live to san josé, california, ahead of the nvidia's developers event.

google and apple in talks to use the ai engine in the iphone. that's showing signs of life in the ai trade. joe? >> this potentially reeignites the mag 7. fundamentally this is interesting, and i am not sure who will be paying who in this scenario. obviously we know they pay apple in terms of search. this is also a little bit puzzling to me for apple. is this an admission maybe they could not bring forth their own ai or gemini ai fast enough, and then the regulatory risks for this as well. clearly this is a significant positive for alphabet. i think it's something that probably has been circulating for the last week, because

alphabet has had a strong period. >> apple had open talks about open ai in the bloomberg report. maybe this is a look at apple and maybe they didn't have that ai together in time for the worldwide developers conference in june. >> google is a default search engine for apple, and this deal makes sense from this standpoint. it's no secret, clearly, that the gemini rollout has not been strong, so i think it's obviously a major positive with the price of google today. to joe's point, it's interesting to see apple not having developed this on their own, with all the resources they had on the buildout. i think it could be a short-term

deal, we don't know. we could get a lot from this deal and see how it develops over the long-term. >> and you think that its ai search engine is fixable. that's why you bought this thing. this could openbillions of users potentially for its ai search engine? >> yeah, and that is why i added on the decline based upon the poor launch of their ai tool. look, i mean, the question is, you know, does apple feel they are behind and has to outsource it? guess what? apple is not an innovator. if you go through any of the tech companies, go through the largest tech companies, apple has by far the lowest rnd expense, and you can look at the others that are at least double. of course they are a follower. of course they need somebody else to innovate for them, and

google who is already a partner is a natural partner and a mystery. apple will have to lower what google pays them right now, which is like $19 billion a year, or they will have a separate line where they pay google for using their search. to me it's a great deal for alphabet. it's a fixable problem they have, and there are only two companies out there, maybe three if you include meta, that have these search engines others can use, one being google and the other being microsoft. i think it's a great move. >> they still have to fix their problems, though, joe, and that's an outstanding issue, even if they are potentially unlocking billions of potential users, they have to have a search engine people want to use and that it's accurate. >> yeah, people want it to be credible and it's a reliable source, and the circumstances over the last month have called

that into question. you wake up on a monday morning -- it's like when you wake up on a monday morning and you have a big mega deal, and that's where the market is and it took it away from where it was on friday, and it reignited some of the positive momentum. again, i think the single most important from a strategic perspective element of the story is now do we have the mag 7o outperforming once again. >> we have the lag -- >> steve, you want to but in? go ahead. >> i do want to butt in. >> sure you do. >> we're talking here like microsoft and open ai have flawless products, and that's so far from the truth. the distance they have created in the launch between alphabet and themselves is not that

great, and easily transversed. that just has to level the conversation. open ai is not a perfect product. microsoft is open ai joe, -- >> i didn't hear anybody mention open ai in the first five minutes. >> shannon? >> i think joe hit the nail on the head in terms of what the importance is here. i wouldn't be surprised to see a little more of a tail on this for alphabet, and the second derivative for apple longer term is if there's a rational for users to upgrade hand sets in order to access ai technology, that's where you will get the lift from apple for this type of deal. on the credibility side, google has been looking for credibility in terms of the ability for them to show that gemini can be, you

know, a strong competitor or substitute for microsoft's product. i think across the market, though, i think one of the things we have been grappling with over the last several weeks is the dispersion in the mag 7, which in our view is a positive, and it's also a opportunity for lift in other sectors. i would not say it's at the expense of the mag 7. it doesn't need to happen -- it's not a binary trade, if you will. some of the strengths we have seen in energy, industrials and materials, that feels more as a response to some of the economic data we are getting outside of the u.s., for instance. i don't think it's a binary trade. i think the lift on the mag 7 helps on the concentration perspective but i don't think it negates momentum we have seen in other parts of the market. >> what does it mean for apple? let's bring in steve kovach. >> at the end of the day what we

have to think here is what is most important to apple is selling more phones in the new upgrade cycle coming in the fall, and basically convincing folks that whatever ai features they do announce, tim cook says they are going to, and this is quoting him, break new ground in ai, and we have some kind of hints, i guess, at what gemini can do. google already started gemini in a couple phones, and samsung is using google ai in its latest phones that came out a couple months ago, and they can do live translation between languages, and they can take a voice recording and scribe it on your device, and erasing objects in pictures, it can do that. it's not the break through that tim cook teasing, so the question is what else can gemini do for apple for them to

leverage the language model, and like so many folks were saying here on the panel, it speaks to apple's inability so far, if this is true, at least, to come out with their own ai model and that should cause concern as well, because five or sex ix ye ago, they hired somebody to run that operation, and this is his baby, and right now it seems to be more leveraged on the google side and a rival more than it is building in house. >> if there's a partnership, do you think it will be an apple branded search engine or gemini? >> that's the biggest question. apple has siri on the phone and a lot of ai stuff going on under the hood but if they need to inject google technology in there, what does that do? does that mean it's no longer an

apple product? i will note the best analogy we have now is the search deal, when you open up the safari browser on your iphone, and the search bar is a google experience, and it's not an apple experience, and that's what google is paying for, and like some other folks just mentioned, the big question is going to be paying apple? or is it going to go the other way, and apple is licensing this from google. either way it's great for google. >> steve, thanks. steve kovach. i am curious, what is your take on the up 1.6% for apple? it seems like a ah kind of response? >> yeah, the most important thing is i think it helps with the upgrade cycle going forward. what is the new news and catalyst, and all the points are well-taken in terms of they have

been slow to innovate, and weiss made that point, and that's not their game, and it's the user base and user experience is what makes apple special, but it's not getting the lift that maybe some would have imagined because this deal is more leveraged towards google and that's where the opportunity is. >> the interesting thing is, and steve mentioned the lack of innovation at apple, but the bigger question is apple scrapped the electric vehicle emissions which is billions of dollars a year, and what do they do with all that cash? if they are not paying alphabet for the ai, what are they doing with the cash, and so steve is on something, and at some point the market punishes you for sitting on all that cash. they can't sit there and continue to buyback stock. that's not enough for the market. >> the regulatory forces are

hard at work at this point against acquisitions in tech. the other big story we are watching is nvidia. kristina is there live in san josé with what we can expect from ceo jensen fong in a matter of hours. kristina, the bar is high here? >> reporter: it's incredibly high. this is a developers conference, and they are going to want to hear first and foremost about the latest products, specifically specs of the latest ai gpu, how much memory will it have and how does it compare with amd's latest chip. we will want to know details about going beyond gpus to ethernet cables and storage and that entire ekecosystem as well

and the fact that 11,000 people are coming to the big arena behind me is something new that we have not seen in the last five years. we should hear details about partnerships, and examples, and microsoft earnings are out on wednesday. they eluded to a collaboration on nvidia, and we could hear more about the chips and see the impact on some of these shares, like supermicro, and you can see that is up 2% just today. lastly, the theme, demand sustainability and invisibility 2025 and beyond. many large language models are trained and how will that expansion into other sectors continue to grow, like finance, government, sovereign wealth, and that could help show that the pace of growth is going to continue. much of these points, to come full circle, melissa, are priced

into the stock, and there has been a lot of volatility just within the last week and a half or so and it was down four out of the five sessions last week, and it's the total addressable market, and jensen said it would grow from 1 to $2 trillion in the next five years. any type of details on what that means per year for them could reinforce this ai trade and provide confidence in demanding sustainability beyond 2025, which is a key theme here. in other words, the best of the golden ai age is yet to come, or as jensen said, we are still in the early innings. >> same thing, right? and when you talk about the market number, does that also include software? this is a developers conference. nvidia has to convince people they are not just slinging gpus, it's a system they offer, and

amd made progress with their own software but not as far along nearly as nvidia. >> yeah, and the developers are already using this type of software, and they are switching costs and learning what would be difficult to go on to any other type of software ecosystem, and it inkpcampuses, the entire datacenter infrastructure. they believe every infrastructure out there that data centers will need to be revamped to accommodate the processing for ai. that's why the number is so high and can go from 1 to $2 trillion. what would swing the stock is if we hear a number per year, and if it's $500 billion per year for them, that would be a big mover, and reinforce the trade that ai is sustainable, and it

will not be just a short-term thing, and fixed cost will be diminished in the next two years. >> kristina, thanks. do not miss nvidia huang interview on squawk on the street. >> the stock tumbled to 874. something somewhat similar this morning, 946, and the talk was op at 924, and it got down to a low of 878.37. the thing is the importance of nvidia on the market. nvidiahas a little rollover this morning, and you saw the market pull back with it. nvidia is still at the center of the universe, and as goes nvidia

will go the market. it's interesting, because jensen huaug has more impact on the market, and it speaks towards the market is able to overcome some of the friction and inflation and treasury market because it sees the opportunity and the revenue growth in the ai story. >> the impact on tech, like semiconductors, since the launch of chatgpt last year or in the early part of 2023, semiconductors outperformed the s&p 500. >> i think we have run out of adjectives for nvidia, and i think about datacenter growth and it has quad gtkpwau wyear or

year. are we going into 2026, because we know what the price action has been over the last year and a half. that will be a question. we have seen those cycles in the semiconductor space before, and nobody would debate what is going on in the short-term, but how much have we priced in. >> what concerns you about the stock, if anything? >> well, the valuation. i think they will grow into it, in terms of what we saw today, the stock was up 35 points at one point, which is not tremendous when you consider what base it's operating off of. to me it would be more of the same, and not in a bad way, and it will be nvidia is the leader and it has new products coming out and will raise prices. i think everything is fine for now, and if i were there i would

probably fall asleep during it because i fall asleep during two-hour movies. here's what i would say. every large tech company, microsoft, apple, meta, are incentivized to build their own chips, and they will, and they will do so through taiwan semi, and competition is coming and you have such expediential tpw growth in ai. i think there will be multiple winners, but i would not dip down to the large cap companies. >> the ripple effects are immense, and for every dollar spent on the h 100 trip, there's $1,200 to support that chip, and it's not just the chips but the whole array of goods that kristina went through, the ethernet and software and et cetera. >> i think the concern is too,

melissa, when people are talking about valuation, what they are concerned about is the shorter term, over estimation of ai, and longer term there's likely an under estimation in terms of not only revenue growth that could be derived from ai, and if you think about it from a longer term perspective what you are hoping for from a market is that we are still cresting that first wave and we don't hit that inflexion point where there starts to be perhaps disappointment in what is happening on the enablers from an ai perspective, and we start to see the modernization come through, and the concern is the shorter term concern that we don't see the pickup on the second wave, and longer term, there are a lot of analysts likely underestimating the long-term impacts and they could offset some of the higher structural costs we are likely

to see over the next few years. >> this is an open question for everyone. thinking of this, there's blue skies for the semiconductor industry, and at what point does the mark price in the risks? is there election risks surrounding the supply chain for semiconductors getting weaponized if the election went in a direction surrounding tariffs? >> do you think the market doesn't see that risk sitting here months and months before the election? >> maybe if i could see it, maybe everybody else would see the same thing and they are not concerned about it, but i just wonder if it's not -- >> what are you worried about, joe? specifically, what risks are you

worried about specifically? >> does the supply chain get weaponized in response to an elevated environment where we start talking about tariffs -- >> so maybe tsm gets cut off -- >> no, that's a taiwanese company, and we are looking to support taiwan, and china is a net semibuyer, and i am not worried about that at all. what may be a worry, but i don't think it should be, is cutting back on the funding that we have seen so far for building the chip plants in the u.s., because that was bipartisan, very clearly bipartisan. i don't see any weaponization of that, other than potentially being positive. >> i would say that i am certainly not worried about what -- steve is not reasonably

worried about that either in terms of pulling back on the chips, and i think about the political aspects of this, on joe's point, you know, i think more about just look at what we have seen from a supply shock perspective over the last few years. the impact of supply shocks in general i think is much more known and a reasonable concern for investors at this point. it's something that feels much more uncontrollable, and if you will, less able to forecast than changes on the demand side. i think what we are seeing with shipping, i think there could be political concerns as it relates to chips, and all of those are impacting costs. from my perspective, if you look at supply shocks versus demand shocks, supply shocks are harder to forecast in the next couple of years. speaking of the ai trade, goldman sachs has a list of ai names that may not be on your

radar. check out that story right now. you can scan the qr code. coming up, we will hit calls of the day. we're back in two. business. it's not a nine-to-five proposition. it's all day and into the night. it's all the things that keep this world turning. it's the go-tos that keep us going. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities.

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welcome back. the calls of the day starting with netflix, and netflix remains the streaming leader. it's hitting a 52-week high in the session. weiss, you own this one. >> yeah, they are the winner, spao sp pure and simple. i bought it on one of the days where the stock was dislocated, and i wish i would have bought more because it has done well. it's not cheap, and there's only such a large multiple i am willing to pay for anything. >> and it's interesting in creating sporting events and not getting into the bidding wars, and weiss will probably fall asleep during it because it's

more than an hour -- >> it's because he is old. >> the mike tyson flight will be an interesting one. >> netflix has been an amazing winner here. to weiss's point, i think they have been the undisputed winner. the wwe deal, we will see what happens with the mike tyson story, fight, i think that will be fun. pay sharing and margin expansion, i like it. >> next up, fedex, shannon, you think it's going to be all about execution at this point? >> well, i mean, i think a lot of emphasis has been placed from 2020 to 2023 on shifting good volumes and how much the post pandemic world would really rely more on goods or services that switch back, and if you look at the costs fedex needs to be concerned about, you know, it's

increased shipping rates and obviously what they have to pay for jet fuel. with the recent tick up on the energy price side, not anything over concerning particularly if they hedged out earlier at the lower prices, but on the execution side, whether it's fedex or ups, analysts are looking for them to keep their costs under control and to have a better sense of volumes coming in, and look to be as ruthlessly cost efficient as possible, and that's where it comes down to execution. >> all right, let's get to darden restaurants. this is one of your stocks, joe? >> this is not my favorite name. obviously in consume discretionary, i would go to

chipotle. they will have better comps to work against, and i think you are going to get a good report from darden on thursday, which will take the stock above at all-time high. >> finally, let's get to vertiv, and weiss, you say you love this one. this is an interesting one. it cools data centers? >> yeah, yeah, and mel, it's getting kind of boring to come to me for the winners in my portfolio, but i will play along and talk about this. yeah, they are the leader. data centers run very hot and you have to continue to cool the servers, and they sell the cooling racks for the servers, and ai searches take as much as 20 times the power of a simple google search. ai data centers are multiple levels, three levels versus regular ones being one level.

the future for the company is very bright. it's growing earnings in the mid-20% level, and ebitda as well. >> we will dedicate the back half of the show to your losers. >> it will be a short back portion. >> i think we can fill 30 minutes. let's get to kate rooney. >> president biden will announce more than 20 commitments by various federal agencies and that follows $100 million for women's health announced last month by the first lady. for now authorities say a nearby town and energy facility remain safe. this is the volcano's fourth

eruption since december. a deal has been reached between the owners of "sports illustrated" and minute media, just two months after mass layoffs were announced. minute media said it would take on all of "sports illustrated" digital and print operations. back over to you. >> kate, thanks. up next, back to the tech, and the firm behind the mag 7 has new ways to detail the space.

we're back. let's get to dom for etf edge. >> it's a big week with the big ai conference and reports of a possible apple/google partnership. but could one misstep take down the whole mag 7 group. let's ask the chief officer at round hill investments. this firm just launched two more ways to play that mag 7 space depending on your view with the products around that mag 7.

the original mag 7 ticker is less than a year old but more than $150 million in assets under management, and tell us more about why these products, what is the genesis and what do you expect to accomplish for investors? >> thank you, dom. not a day goes by where the magnificent seven stocks are in the news, and investors have a spraou on them whether it's positive or negative, and we wanted to offer investors and traders an opportunity to take that a step further, so for those looking for amplified upsides, so two times the daily exposure of the mag 7 stocks, there's magx, and there's magq,.

>> this is important for the folks that are new to the leverage type of etfs, and they need to know the etfs, the new ones, are daily return etfs, and not not a buy and hold strategy, right? >> absolutely right. thank you for emphasizing that point. for somebody taking a longer term view on the mag 7 stocks, stick with the mags. again, a tool for investors, and then two new tools for traders to take that view. >> quickly, before you go, are you seeing more traffic one way or the other, more towards the short side or longer side these days? >> even with some of the stumbles that we have seen in

the mag 7 group over the last couple of weeks, today actually more activity has been on the 2 x side, and so magx, and some are taking advantage of the short opportunities, and with nvidia in the news today, we might see reasons behind that sentiment. >> much more on the mag 7 strayed, and even the weight loss eft craze coming up on "eft edge," and check out the online show at 1:10 today. melissa, i will send things back over to you. >> thank you, dom. oil gets fresh highs for the year, and how the committee is playing that space. that's next. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. why not? did you forget something?

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welcome back. we are watching the energy

market, and energy is the best performing sector so far this month. joe, you are overweight energy and you have a lot of exposure in energy. >> yeah, the joe eft was carrying 13% exposure to energy come into the end of january, and that exposure was reduced down to 7%, and that's still carrying it at an overweight positioning. why? because oil was in a position where it needed to prove itself, and that's what it's doing, proving itself and breaking out above $80, and the refiners are a remarkably hot trade right now. valero is trading more on momentum than fundamentals, because the crack spreads on the underlying commodity is not representing the strength you are seeing in valero, and it's phillips 66, and if you are going to do something in the market right now, the commodity

trade is back. the commodity trade right now, you have them coming off low levels, and the steel trade, and the materials are in a bull market but the commodity trade, copper, precious metals working remarkably well. >> yeah, that's your contrarien play coming into this year. >> yeah, and pleased to seize the momentum, obviously. natural gas and ag commodities are weaker, but overall, you know, a stronger economic outlook, but also, melissa, you know, perhaps some glimmers of hope for china, which could be the tip of the sphere per this trade as well. >> weiss, speaking of copper, you were from freeport and you sold it, though. when did you sell it? >> i did.

giving the market optimism that copper was going to go up, and i sold it about $40 last week, and so commodities are cyclical, including oil companies, go back ten and 11 years, you will find them in the exact same place. these are always trades. it's more for the accounting issues that will be revolved than the commodities, and so i am going to stay with that and let that be miy commodity exposure. >> i sold chevron in january, and that was mainly an execution story. again, oil is not always a proxy for the price action in the energy stocks, but it is now. i mean, you see oil drifting higher and you are seeing a lot

of the oil companies continuing to produce. we like it and like the energy trade and it's up 9% yearto date and 6% for this month. and big interviews tonight and tomorrow here on cnbc. up next, mike santoli joins us with his midday word. we'll be right back. the very definition of change is to be different. i embraced what it means to be a different leader and as a female in a predominantly male space i have had to say that, to change an industry and culturex for bobby that meant so much more than powdered milk, to change fundamentally what it means to the a parent in the u.s. today. this is not just design because your e-class... it adapts to you. it recognizes you. understands you. empowers you.

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♪ ♪ welcome back to "the "halftime report."" and mike santoli joins us with his midday word. >> a lot of back and forth. i think most of the market is kind of holding firm and waiting for the big events this week, and the s&p is not back up to where it was on thursday, so there's a little zone and feels like the process is ongoing and it's happening in a painless way for an index investor, and it kind of has cooled off and hasn't really upended other things. very lucky if it lasts this way. you have yields inching higher, and how do we get that equilibrium holding for a while.

>> the two-year is at the high for the year, and the ten-year is close to it, and the market doesn't seem to care until it does care. are we almost there? >> everybody has their own threshold for this, and people are using 5.35 on the ten-year, board? the trade is not rate sensitive. it's not going to be. it's all about other energy, and i think the rest of the market arguably could be, if you thought it was going to slow the economy. i think what powell, the suspense about powell on wednesday is if they take rate cuts out of the forecast that only really matters to you if you think that means they're making a big mistake and the economy's weakening a lot and that might be the debate that's going to be coming. >> when you say rate cuts out of the forecast. >> if the consensus says there will be two cuts as opposed to three this year. >> if you kind of remove one, who know, though.

>> and the regional banks. >> new york community bank faced a disaster again today. i'm curious, mike, since you're the senior markets commentator. what's more important? jensen wong at 1:00 p.m. pacific time or jay powell wednesday? >> i'm of the mind that there's a little more debate and a little more interpretation that's over with powell. look, nvidia's gone up and it's just levitated no matter what anybody says and no matter what anybody thinks and what the street believes it's worth and so i feel like we're more dependent on the broader economy and even the broader market on powell. >> mike, thank you. good to see you. mike santoli. coming up, the tesla shares are rallying and we'll debate the call next. ♪♪ ♪♪

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back to the halftime report. tesla, with the model y and goldman slashing the price target on the stock from 190 to 220 and this follows ups last week. a lot of people taking the delivery numbers and when you hike in price do you think it's coming from a position of strength or a position of weakness? >> it's clearly coming from a position of weakness, and i think that tesla has broken momentum. i think that's very clear. obviously, we took a position in tesla at the end of january. we'll address that at the end of april, but i will say this about tesla. it is oversold, and the distance between current price and the

200-day moving average is very significant. i always cite that as others do in the reverse situation where you've got a bullish chart. well, let's look bearishly. the 200-day moving average is 234 for tesla, current price at 173 and tesla is oversold. >> how are you short? the old-fashioned way, through options? how? >> i'm short the equity. look. that 200-day moving average in 200 days will be at a hundred. this stock is grossly overvalued. they're not raising prices. we have proof of that and what we have is musk with another tweet. look, if you're a fiduciary you should not own the stock. there is no other company that trades that i'm aware of that has worse governance with the ceo at odds with the shareholder and the board being its puppets. so i would not own on that alone. i have gm at four and a half times earnings, and i've got tesla at 75 times earnings with

their markets collapsing, with the ev craze subsiding greatly and with all of the oems that came out of the products that are newer, better designed and more attractive, selling them at a discount because they're not selling. so why would i own it? and by the way, we're trying to be in 20% of tesla sales and the chinese government pushing domestic manufacturers over tesla. there's nothing,but a whole bunch of trouble here. so wake me up when they finally put the solar panels on the cars from the solar city acquisition a few years ago. >> by the way, x announcing a cheaper model or cheaper ev in china so that could be real competition for tesla. finatresrep xtl ad a une. ontario has all the partners you need to make the electric vehicle of the future.

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>> final trade time, shannon? >> we talkeded about it earlier, melissa, but commodities. we think that china could become much more important later this year and it is a colossal consumer of commodities.

>> weiss, are you awake? you're up. >> lidos. you haven't put me to sleep yet, mel. it will get through and it's timing anyway. >> jason? >> crowdstrike, cybersecurity continues to grow. >> joe? >> thank you for being here. the industrial name paccar. >> that does it for us. "the exchange" starts right now. thanks, melissa. welcome to "the exchange." i'm jon fortt in for kelly, vans. he is betting on what he calls the underrated methodology instead. he'll be here to tell us what it is and the names to buy using it. plus, shares of alphabet higher on the report that apple is looking to license gemini ai and is that smart positioning? we will have the latest and homebuilder sentiment just turned positive for the first time since las