>> i love jane frazier netflix. look, with my view of the low-end consumer, they have a great option netflix is killing it. >> did you get it? >> i got it, i got it. >> jenny >> ibm >> good stuff. i'll see you on "closing bell. "the exchange" is now. thank you very much, scott hi, everybody. william to "the exchange." i'm kelly evans. here's what's ahead. the dow is recovering from its worst session in more than a year, believe it or not. so was yesterday's selloff just a blip or the beginning of something else from the macro to main street, we'll make sense of the numbers and talk about where to find value. plus, one of the biggest utilities in the country wants the highest electricity users to pay their fair share the ceo of duke energy joins us with what that would look like as we see demand for ai power

explode. speaking of ai that's been powering tech, but don't go with the high flyers. we have some under the radar names, and one sector and a name that's a bail. that's coming up let's start with the markets with some recovery, we hope. dom chu has the numbers. >> it's a recovery, modest for what happened yesterday, but we are seeing green, fractionally so to kelly's point, the dow at 39,133, up about 68 points about 0.2% of a gain there the s&p 500 is now just above 5300, back to that level, 5304, up 36 points, 2/3 of 1% gain there. and it has been generally a positive day, because even at the lows of the session, we were up roughly 11 points and up about 44 points towards the highs of the session, so tilting a little more towards the higher end of that range. the nasdaq composite, the ted cruz heavier index, show up about 180 points, 16,969.

now, we'll move from stocks to the more macro commodity side of things because what we have seen over the course of this past week is some really decent highs, and then a pullback from those highs, especially in two places that hit records earlier on monday, copper prices and gold prices hit records, just on monday and then it's been a downhill slide ever since over the last week copper prices down 6%, gold futures down 3.5%. even crude oil is down about 3%, as well. a variety of factorsplaying in that story a lot of that being the prospect for perhaps for longer interest rates. maybe some demand worries coming from other parts of the world on a relative basis, driving some of that. but, again, when you hit those record levels, maybe not a surprise there's a breather in the commodity complex. and then stock wise, we have a handful of names that are generally in the green, in recovery mode, as well but microship technology, and qualcomm, yes, they're all computer chip stocks but each

hit record highs in the session today. so they all get little stars on the side of their names. so watch the chip side of things, not just nvidia. and the vaneck was 14 cents away from hitting its all-time high back over to you >> it's interesting about the commodities. i read this morning, michael hartman said we're on track for the commodities to be the winner this year, making it the third out of four that commodities could be the best performing asset class. >> maybe we'll use that word again, super cycle >> dom, thanks stocks they be rebounding today, but uncertainly for higher than longer rates remain the focus. let's drill down on what this means for fed policy and the tech sector. the magnificent seven, which have been driving the market to

highs. joining me now are my three guests it's great to have you all here. larry, i'll start with you overall, just talk to me about where you stand on the markets nvidia was better yesterday, wasn't enough to save the kind of worst day in a year more broadly, and a lot of people are worried about the fed here >> so, a couple things i do think technology continues to be a shining star throughout this earnings season what's happened during earnings season, it's been a microcosm of what we've seen for a significant period of time earnings continue to keep pace with the price appreciation of the stocks but more importantly, you're seeing these companies with incredible profitability, and what they're doing with those profits is buying back their stock. they are doing increasing or initiating dividends, and then investing for the future, so they'll continue to keep their competitive edge i still like that tech sector. >> i guess nvidia is that kind

of a hold your nose and buy it or buy it excitedly? i've just got to ask what is the path from here with a $2.5 trillion company, and as tom lee was pointing out recently, a tech sector -- or as mike santoli said if you add some of the staples, 38% of s&p profits already. does that profit share have to keep growing how much more bullish can you be how much more can they go? >> so, i -- >> yeah, go ahead. >> i'm sorry >> larry, go ahead >> again, i don't follow individual stocks. but when you look at these companies today, a lot of people want to think they're back to where they were around 2000. and they're completely different companies. their profitability is so much greater than margins are so much greater. the companies are so much more diversified than in 2000, and that sets up a longer runway to

continue to rally going forward. >> so you're in the 1995 camp, we're in that moment in the cycle, it sounds like. kim, jump in here. what were you going to say >> well, i was going to stay it depends on lot of things, but it looks like right now, the people who are investing in technology are the technology companies themselves, because they can see demand and i think that's super exciting and growth begets growth i think that is what's happening. so could it become 50% of the s&p 500? maybe. but at this point, there's a lot of good out there, because not only are they entertaining stocks, like netflix and meta. i mean, i don't think either one of those like save lives but this whole ai thing, it could move into greater productivity and the ability to optimize many things, which we can't right now through technology and that's why i think companies

are pouring money into that sector >> yeah. so kim, i guess would you -- you know, i'm looking through your notes here to see the names in particular you like. we've talked about the intels and the chip names what's the strategy now for you, given what ai is capable of doing? >> sure. well, i think it is to wait out the cycle. i think what happens a lot of times in any new technology, like god knows back in the late '90s, 3-d printing is something that kind of was a boom and a bust even autonomous driving. i think in 2017, if you would have said, are we going to ever drive cars in 2024 ourselves, the answer would be no and they would be wrong. i knew they were wrong, because i know this technology takes a very long time to develop. so if you're going to win, ultimately in this area, you have to wait a very long time. and we're in the just initial flushes of this. so please, don't forget that,

investors. >> so where does that lead you towards then in terms of picks in that space, if any? >> sure. i mean, i don't own nvidia for the portfolios that i run or my own. but that's certainly is a name that doesn't look like it has much against it. although if you're going to have three to five years as your timeline, maybe competitors come in even sam altman is talking about -- the guy who is the ceo of openai, he's talking about starting his own chip company. so pay attention to that so i think you have to be invested in chips, but maybe that chips over time as new winners and losers are developed. i think microsoft is probably well positioned to take advantage of this initial run in using ai for consumers and businesses >> yeah. mark, let's turn to you and

figure out what the fed's going to do here even this morning was a good synopsis of what's going on. the consumer sentiment number was terrible, inflation expectations were up this is a fed that thinks they have to lean back against that we have seen a number of expectation surveys lately >> well, no, i don't think so. i think the inflation expectations in the surveys are t tied directly to the cost of gasoline prices, which have pushed up over the last couple, three months and inflation expectations with it more broadly, expectations are well anchored, particularly if you look into the bond market and what investors are thinking. you combine that with overall inflation, which continues to moderate i suspect in the next couple, three months we'll get much better inflation statistics. they don't have enough ammunition to lower rates, so my

guess is in september. but in that period >> is that because you're bearish on the economy do you think we'll see negative payrolls or it will come down as the expansion continues? >> no, i think the fed -- mission accomplished i think they have two objectives, we're sub4% unemployment for more than two years. in my view, they need low and stable inflation that's the mandate and i think they're there they're there in everything except what they want which is 2% inflation they need a couple three months with numbers close to that before they decide to cut rates. but i think they'll get those numbers in the next few months >> larry, you've been doing some interesting anecdotal digging on this watches, where else do you see, used vehicle prices. you think the official stats do need to play catchup, and that could be a dovish development. >> i think that the realtime

indicators are showing that inflation is decelerating very quickly. whether it's rental prices where the statistics show it's up around 6%, but if you look at rent.com, it's pretty much flat. same with watches, used car vehicles that could see further downward pressure as inventory levels pick up. and oil is about 10% lower than where it was at its most recent peak here in april so i don't necessarily think that the window is closed for even this july keep in mind, we get three pce numbers between now and that july fomc meeting. two cpi and two jobs reports so two months is like an eternity in this market. >> i guess, mark, just to end the conversation with sort of the things that as you see it play out, it souls like goldilocks, so why is consumer sentiment so poor then, is it all because of gas prices? >> well, i mean, you're looking at the university of michigan

surveys. there's a political overlay on top of the survey. so you can look at the survey results from republicans, independents, and democrats. republicans are pessimistic, thinking the economy, according to the survey, is as bad as it was in the teeth of the financial crisis obviously, that's not the case so i think people are looking at the world through the prizm of their politics particularly leading up to the election and given the political -- >> is it -- >> i strongly recommend that you look at the conference board survey of consumer sentiment, not the university of michigan the conference board is where it's been on average going back to the '80s. that's much more and is consistent with what consumers are doing, which is out there spending >> i was going to say, i wonder if the answer is just more simply that consumers are fed up with prices where they are, not that they're rising much further, but this pushback just being where they are >> sure.

that's definitely why people -- there's a disconnect between the happy talk that economists like me spout and why the average american thinks the economy isn't that great they don't think it's bad as the university of michigan survey would suggest. but the prizes, remnts are up 2, 25% from three years ago food prices have gone flat they cost no more today than a year ago, but are up 20% from three years ago and gas prices are up from three years ago. those are staples that everyone has to buy, and you look at that and say this is not a good time. i've seen inflation very high, most americans have not. this is the first time most have seen it and felt it. >> consumer confidence last month was at a two-year low, down to 97 so it's not exactly as if -- >> no, no, wait, wait, take a step back. the average is 100 since the

beginning, so it's right on average. >> fair enough we need more data. let's see what the next couple months bring >> we always need more data, kelly. >> it could be the start of a trend. if it keeps going down, you know it could be more meaningful. >> okay, fair enough >> kim, bring us home. >> okay. so i'm just a regular consumer, right? at a certain point, i am shocked, shocked at the cost of some groceries like, $10 at costco for grapes i've never seen grapes in double digits before. and i think it's these topical items that people walk by and are amazed at. yes, i see other prices coming down, but there are some prices of things that should be really cheap that are really expensive. and i think that puts lots of

people in a sour mood. it just does >> no pun intended, i think dom and i were the only one that knew the prices of grapes. eggs are cheaper, but other things are not we'll leave it there thank you for your time today. appreciate it, especially going into the holiday weekend larry, kim, and mark since we're nearing the end of earnings season, almost everyone has reported. let's get over to dom chu for more >> it's not about the rotisserie chicken for me i buy grapes, milk and eggs at costco the stretched consumer may be one of the reason why is there's not as much clearness or clarity about what's going on with the consumer health picture, and how much they'll spend on discretionary things the discretionary sector within the s&p 500, over the course of the past year was a decent outperformer over the broader s&p 500, until the point of the start of this year that's when you can see that blue line, which is the consumer

discretionary sector has lagged, the orange line which is the broader s&p 500 in terms of performance. we've been range bound as you can see here for that consumer discretionary trade. one of the reason why is we are talking about this is because we are seeing some decent earnings growth within the consumer discretionary sector if you look at every other company, there's not that many, that are yet to report the results. if they all report as expected, the q1 earnings scorecard says the revenue growth rate will be up 5% compared to 4% for the s&p, so outperforming there slightly and the earnings side of things, it gets more pervasive if you look at the blended earnings growth rate, it's 28% compared to the broader s&p 500's 8% blended growth rate but there's one company in particular, and maybe you don't need to guess which it is, that's driving the bulk of consumer discretionary earnings growth, and that's a magnificent seven stock in tech/consumer

discretionary, that's amazon.com right now over the last year, up 55%. the reason why we're see thing is because it is a massive driver in the sector it's not just the biggest weight in the sector but a big earnings driver for the entire sector overall. kelly, just to give you an idea, it's about 216% earnings growth. >> it's almost like instead of saying consumer discretionary, we just just say amazon. coming up, one of the largest non-traded reits plans to limit investor withdrawals. and one seeing commercial property prices falling further. we'll look at the headwinds facing that market and three names we can talk about. is america's power grid ready to handle the surge from generative ai? not to mention we're expected to see an abnormally hot summer we'll check in with duke

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it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for. welcome back to "the exchange." real estate is one of the worst performing sectors this week this as one not-traded reit says it will limit investor

withdrawals. diana? >> well, kelly, the $10 billion s reit, a non-traded reit, is just losing gones of cash due to lower valuations in commercial real estate brought on by higher interest rates so they're now limiting redemptions. so investors can't pull out all their cash another option is to sell assets, its properties but in a letter to shareholders, they said their forecast, which includes the fed's lower rate forecast, improving capital markets and the 70% of decline of new construction starts, across residential and industrial, that all points to what we believe will be a more advantageous environment for realfuture as a result we cannot recommend being an aggressive seller of real estate assets today interesting. as for the publicly traded reits, i just want to clarify the difference between those and non-traded reits like s-reit and

blackstone's b-reit. reit stocks, that's public, are repriced every day in the market as cash flows and interest rates move so as an investor, you can buy and sell much more freely and valuations are adjusted in realtime now, non-traded reits are less liquid and their valuations are updated much more slowly so that said, the s&p real estate sector is one of the worst performers of the week, down 3.7%. it is off the 8% there that 52-week high, and that is the furthest from the high of any s&p sector so still a lot of trouble in cre. kelly? >> so you don't think they're getting any surprises waited investors in the publicly traded reits in taking this information and marketing it every day >> exactly they all have the same assets, but there are many different sectors. you have office, retail, those are the most beleaguered, but you have multifamily, industrial reits, digital reits

so, you know, the reit sectors across the board are not in terrible trouble, and, again, in a publicly traded reit, if you are an investor, you're buying and selling a stock and you know exactly what you have, what you can buy and what you can sell. it's not the same as in those non-traded reits >> diana, thank you very much. we appreciate it let's turn to some of those publicly traded names, three of my my guest is bullish on. here with his top picks is ron camden ron, great to see you. welcome. >> thanks for having me. >> so we haven't checked in, in a few months time. how would you say the reits, broadly speaking, is holding up? >> good question so this year, interest rates have been higher than anticipated. if you think about the beginning of the year, everybody thought the fed would be cutting in march. now expectations have been pushed back to september, if not later. and that's been a headwind for the reit market, both the multiple and as well as the refinancing.

so as you said before, the reits are one of the worst performing sectors year-to-date but i want to remind that there is a lot of diversification in the reit market, and there are sort of pockets of opportunities still left >> what are the common threads between these reits, which are having problems in the private markets? what's the main problem, you think? >> i think real estate is a long-term investing asset class. usually you think about five to ten-year holds if you think about the different asset classes for multifamily to industrial, they really have very strong fundamentals going long-term. but i think some of these private reits, being able to offer monthly liquidity, creates a scenario where you can be a seller to meet those redemptions. that's what you want to avoid, because when you are a for seller in a tough environment, you're not going to get to frit -- participate on the upside. >> i think you're right, that

ultimately it's the higher for longer rates that is really challenging a lot of these trades that we thought perhaps had their worst days behind them let's turn to the bright spots what are they? >> yeah, so the regency is the highest quality open air owner in the u.s. right now. and it trades very cheap, about 13.5 times earnings. phenomenal balance sheet this was one of the only companies that did not have to cut its dividend during the pandemic, just to give you a sense of the defensibility of the cash flow. we think it's traded down too much, concerns about interest rates, concerns about sort of tenant closures and so forth this is a business that we think can grow 5%, plus or minus, for the next couple of years with a 4.5% dividend yield. we like the entry point, the quality. it's a good opportunity. >> other one you mentioned is one people were obsessed in

2022, prologis that had all the right things it had logistics, warehouse, the e-commerce boom during the pandemic shares are now about, more or less, 40% off of those levels. why do you think it makes sense to pick up here? >> yeah. it's a good one to touch on. so they put out three-year targets in december, and three months afterwards, they saw leasing activity slow in their businesses they called out two areas specifically one is third party logistic providers, as well as southern california, which was a great covid winner i don't think the business's fulls have changed long-term because of the higher interest rate environment, potentially the election, tenants are taking longer to take on lease to commit to space. they're not giving backspace, just taking longer to commit to new space. so, what's missing, i think what

the market miss is as you go into 2025 and 2026, the supply picture becomes very compelling. this their markets, supply deliveries will be down 60% to 70% from the peak. so, to the extent that we -- the economy continues to grow along at 2%, 3%, tenant also start taking backspace and in a declining supply environment, we think it's a really good entry point to pick up the stock >> your last name, it's been a good call. ron, we'll check back in with you soon appreciate your time today >> thanks so much. still to come, let's take a look at today's mystery chart, which is down 65% in a year, and now announcing a new round of layoffs. can you guess it that's on the other side of the break. we're back on "the exchange" after this

welcome back to "the exchange." lucid was the mist try chart we showed you before the break, after revealing plans to cut its workforce by 400 employees, and most of the cuts will be made by the end of the third quarter and tesla is slashing production

in shanghai. reuters saying it will be cut by 10%, aimed at addressing weakening demand here's elon musk >> neither tesla nor i asked for these tariffs. i was surprised when they were announced. you know, tesla competes quite well in the market in china with no tariffs and no differential support. so, in general, i'm in favor of no tariffs >> that said, we all know chinese ev demand competition is heating up let's get over to tyler mathisen for a cnbc news update >> kelly, thank you very much. joe biden and egypt's president have agreed to send aid through the crossing the white house confirmed the two men spoke on the phone earlier today and agreed to the temporary solution until the

rafah crossing reopens on that palestinian side the agreement comes as reuters reported some of the aid for gaza has begun to spoil, as the rafah border crossing remains shut for a third straight week, creating a backlog of deliveries of perishable goods. an american man was arrested for bringing bullets on a trip to turks and caicos is now freed. a judge sentenced him to 52 weeks, but 12 months suspended which means he won't serve any time in jail the judge ruled he brought the ammunition unintentionally a former mlb draftee, he was facing up to 12 years in jail and was the first of five american tourists facing punishment for taking ammunition in the country, which is forbidden. so leave your ammo at home if you're going to turks and caicos an italian teenage computer whiz is set to become the first saint of the millennial generation

pope francis attributed a miracle to him, who died of leukemia in 2006 he was the youngest contemporary person to be bedatified by pope francis in 2020. >> amazing they asked his mom, did you know growing up that you were raising a saint? she said, he was like every other kid. >> not so much a saint >> by the way, my friend's daughter went down to belize, came back and bullets were in her luggage. they have no idea what happened. >> whoa! crazy stuff. see you in half hour still ahead, data centers across the country are expected to use more than three times as much power compared with last year, but are america's utilities prepared to handle the surge in demand? after the break, we'll ask duke energy's ceo how they're getting ready for the new normal back after this. champion iron offers a rare solution to decarbonize the steel industry. which represents up to 10% of global emissions.

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welcome back to "the exchange." with the need for electricity and energy ever expanding, especially now in the age of ai, let's check in how one of the biggest utilities in the country is managing demand duke energy power's 8.4 plmilli

households in six states for more in an exchange exclusive is lynn good, ceo of duke energy. welcome. >> kelly, thank you. a pleasure to be here. >> you guys, when i think -- what's the link -- is it like norman >> lake norman, lake wylie it's a beautiful area, kelly and many of those lakes are lakes built by duke energy >> that's what i thought was that because you needed the energy for cooling or something like that? >> related to the power plants, absolutely >> interesting how times have changed the population down there is tremendous, now the data center demand as well as is tremendous. how big a portion of that is demand these days? >> sure. you know, kelly, we have benefited in an extraordinary way here in the southeast from not only population migration, it really began during the pandemic where we have seen just

an extraordinary number of customers moving to the area 2.4% in the southeast, which is a very strong percentage but then economic development has come right behind it, and it's a very diversified portfolio, evs, batteries, of course, data centers fundamental data centers and those supporting artificial intelligence chip manufacturers so we're seeing demand like we haven't seen in probably 30 years. so you should think of us as a growth industry these days, and we're really anxious to pursue that growth in a way that works for our customers and investors. >> we were just speaking with a data center company that has partnered with dominion in virginia northern virginia is also a big virginia for data center usage is this becoming a competitive thing, where to lure some of these mega projects, do you have to be part of proposals, whether it's through the data center

companies or other parts of the local government to kind of explain and say, here's how -- make the case, yeah, our power could be provided more cheaply, because these are massive power users. >> kelly, what is true is that the size and scale of the growth that we're seeing is bigger than what would have been the case five or ten years ago. but it's also true that our industry has a history of developing customized solutions for large energy users it's been important for steel manufacturers and auto manufacturers, et cetera so we're bringing that spirit of innovation to our data center customers and our advanced manufacturing customers to say, how can we make sure that our product is not only competitive for you, but affordable for the rest of our customers, as well if you need a customized solution on green energy, how can we accomplish that i think you'll see more opportunities for partnership

that could be innovative in financing, direct investment it could be a range of options really looking for the best way to structure growth, maintain affordability, reliability, so our states continue to thrive. >> i have two questions, i probably only have time for one. are your profits capped by law can you explain for investors, how much growth is there allowed to be? >> kelly, we can sell as many mega watt hours as our territory demands. where the returns are is on the amount of capital we invest. there is a regulated return that we can earn. typically, our regulatory structure gives us an ability to earn within a band, above and below that return. but it is true that growth comes from selli ing kilowatt and megawatt hours so the more profit we have the

potential to generate all within the construct of that regulatory framework, reviewed closely by regulators >> so as long as your capital use is growing and your investment is growing, your profits can grow as well, because they're in tandem with that the last question is about the energy transition. you know, how might this massive cap ex have looked five or ten years ago versus how does it look today and how do you think it's going to look going forward? >> the amount of capital is increasing, kelly, and i look at just duke's increase we went from $60 billion of five years to $70 billion as we look out over the next ten, it will increase even more. it's a combination of building resources and infrastructure to support this growth, but it's also continuing to modernize our system for cybersecurity, for resiliency, reliability and the clean energy transition, introducing renewables, as we retire assets, introducing new assets, perhaps nuclear by the

2030s. so the capital is demanded by the transition and electrification, but also the growth we have been talking about. >> we think about toyota, samsung, all clients in your area, we know what you're doing to power that. lynn, appreciate checking in with you thank you for your time today. >> kelly, thanks to you. >> lynn good with duke energy, the ceo. coming up, ai will no doubt change the way we live and work. it's already having a major impact on major league sports. we'll look at how leagues are vegi t thnogy already, next. are you interested in safeguarding your investments with gold? alamos gold is a growing canadian gold producer with a long track record of outperformance. alamos gold. invest with us.

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>> >> welcome back to "the exchange." it's not just traditional sectors, new ai tools are helping major league sports tackle some of their most time consuming jobs julia? >> that's right. new ai tools are helping sports leagues save time and money. they manage a massive amount of logistics.

the nba has 30 teams, with over 1200 regular season games. so putting together the schedule was traditionally a tedious manual process it's improved over the past decade thanks to software, and that process has gotten a whole lot faster, thanks to artificial intelligence starting with a pilot last summer, the league partnered with and invested in ai startup fast break to craft its schedule fast break's technology enables the nba to plan matchups and design travel around constraints such as rest days, player health, and venn you availability evan wash, who runs the league's strategy and analytics, says the program is able to easily design road trips for teams, and it helps minimize the number of flights taken and miles traveled >> ultimately, we write over

1,000 co 1,000 constraints into the system the number of possible schedules is truly astronomical, and it's able to return back to us the schedules that best meet those constraints that we set out. >> reporter: the nba is part of a growing group of leagues using the technology, including the nhl, major league pickle ball, and college conferences, such as the s.e.c. and big east. the nba says these latest ai tools build on other investments in computing automation, which together have led to a 40% decrease in the number of back-to-back games over the past decade wash says the ai technology optimizes exciting team matchups, which can drive ratings. >> things like national television viewership don't directly drive revenue, but are important for us to grow our fan base and exposure, and as we are now in the midst of national media, extension discussions >> reporter: leagues are also deploying ai to cut highlights

what's what wsc sports says with over 450 leagues and broadcasters its ai tools analyze live sports broad casts, identify big moments and create video highlights instantly to create content for fans across social and digital platforms. ai is also starting to be used by leagues to make refereeing more accurate. there are various tools for that, and i'm sure there will be a lot more use cases for ai that help the leagues out >> helping the referees. are they replacing jobs, julia >> you know, we don't have any indication that they are replacing jobs just yet. we asked the nba when they were using fast break, all these new software tools to help make planning their whole schedule more efficient, did that mean that people were losing their jobs they said no, these are just tools, they're making everything work a little better >> to borrow a quote, it's not that ai is replacing humans,

it's humans with ai replacing humans without it. julia, thank you mark your calendar for cnbc's game plan summit on september 10th out in los angeles. it will bring together industry leaders from the sports and entertainment world. to learn more and register, scan that qr code or go to cnbc events.com still to come, nvidia is one of the biggest gain they are week, but there are some underloved names you may want to consider that's next. to start a business, you need an idea. it's a pillow with a speaker in it! that's right craig. a team that's highly competent. i'm just here for the internets. at&t it's super-fast. reliable. you locked us out?! arrggghh! ahhhh! solution-oriented. [jenna screams] and most importantly... is the internet out?

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welcome back stocks are clawing back some of yesterday's big declines after nvidia's strength failed to hold up the major indexes what is the source of the market divergence and how should you play it? jeff kilburg joins us. great to see you again welcome. >> thanks, kelly great to be here. >> let's start with palo alto, up 50% in the past year. it had the big drop on earnings a quarter ago. on pace for the fifth straight up week after the losses from

the april billings decline you like the stock here. what would you do with it? >> i do. i want to be a buyer here, but you're absolutely right, kelly, we have seen back-to-back, tough earnings call, down 30% on the previous earnings report down 10% this week it is clawing back, up about 3% today. i think when you think about the transition, the reasoning, why they've seen the stock price move lower, is the platformization. i know it's not a word, but they want longer-term customers the bundles customers, there's only 900 now, their goal is to have 2,500 that business longer term is going to help them they are the biggest cysign cybr security company out there, bigger than crowdstrike. you can own crowdstrike, too look at the three-year chart pa palo alto is the better concern long term. >> despite the change. >> yes. ibm we're talking about. it is up 4% this year.

>> big blue. >> medium blue on pace for their seventh positive month in eight. some weakness in the stock after earnings bernstein called their a.i. picture muddled but you like the picture. >> we like to say nvidia, nvidia, but it is interesting. when you talk about ibm, you don't think cloud and integration, but the legacy, the heritage, high-powered computing as the ability to put an a.i. stack on top of it they are fighting momentum think it is interesting, technically, if you look, kelly, is above the moving average of 264 but it is not above the 50-day moving average at 179 there is more room to run for medium blue. this is a stock i own and want to own because these underloved tech names, they're going to find some love when people start using nvidia and atm, if nvidia goes down. move on to intel why do you like this even though it's been a dog this year? >> oh, it's been taken out to the woodshed look at intel. when you talk about the way this has been beat up, but think

about if it is mets ta, maybe microsoft, maybe our friend elon musk at tesla. maybe they buyin tell. supposedly, this chip is sup po supposed to be better and 40% more efficient if that's all true, i just can't understand why this stock is down it's a laggard i want to own the laggard. someone either buys it, selfishly, internally, and plugs into meta at a $1.2 trillion market cap, or they find their groove later in the year. >> interesting thought. let's get on to three stocks you liked, tech space, but now the bail is nike, also down so far this year. down for its fifth month out of six. what's going on here even the googen hahaim is up for innovations. >> you have to get away from the a.i. theme and think about what sectors are working this year in 2024 this is the second worst sector,

next to real estate. when you think about consumer discretionary, if inflation is stickier like everyone is telling us, and you're seeing the middle to lower-income housing get punished with the higher inflation, they're not going to be buying new nikes i know the kids, my kids, all still love nike, but if you look on the chart for three years, this has not been a good investment i want my money to go elsewhere, find a different sector. i need a catalyst to own nike again. >> sounds like major, groundbreaking, earthshattering innovation or what >> michael jordan coming out of retirement major to own it again. >> we'll tell him. we'll let him know broader market, we were checking in before earnings, kilburg. you were cautious on nvidia. it is funny because you were saying, look, this has to work for the markets to work right now. then we kind of had the opposite happen the stock itself did okay. yes, they're doing a split the rest of the indexes, what is going on here? >> this is fascinating we've seen a couple cycles over my os of trading, kelly.

we saw nvidia beating to its own drum, moving assets higher we saw the 10-year note move higher maybe no cut this year for the fed, maybe not until election year i think this is telling in conjunction with the vix at 12 there are oddities going on, and you could see more volatility. the volatility should rebalance, reconfigure. and i've been buying puts into nvidia, a losing bet, but nonetheless, i want to protect profits here as fast as the high fliers have gone up, you can see them pull back. >> see the vix at 12, amazing. wow. >> yes. >> jeff, thanks. have a great weekend appreciate it. >> see ya, kelly. >> jeff kilburg. that's it for us on "cathe exchange." next on "power lunch," burger king is rolls out the $5 meal eyo comes out on top th or mcdonald's i'll join tyler after the break

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♪ good afternoon, everybody. welcome to "power lunch. alongside kelly evans, i'm tyler mathisen glad you could join us on this friday. coming up, a double feature this holiday weekend could be a make or break for the box office coming off a series of flops is the truth this summer will never, ever live up to the barbenheimer hype of last year. >> if this