stephanie? >> ge health care. quarter growth of 7% to 8%. gross margin expansion, and organic growth of about mid single digits. i like the stock. >> joe t.? >> netflix. at the end of today, the individual joe t. will own netflix. >> great stuff. thank you. "closing bell," i'll see you then. "the exchange" is now. ♪ ♪ good day to hear from jan. hi, everyone, welcome to "the exchange." i'm kelly evans. nvidia's stock has been on a tear, profits have exploded. you probably think you missed the rally, but there's still more room to run if you look at one key metric. what about the rest of the market? as yields rise today, with doubts about rate cuts, our market guest says it doesn't matter, the setup is there for the bulls to keep running, even if the cuts don't come. he'll tell us where he's seeing

opportunities. the health of housing. jpmorgan is houtout with a new report on the market. let's begin with the markets and dom chu has the numbers. file >> interest rates are a big part of the story and a fear for the higher for longer but even higher for perhaps longer, that's the real permeating theme throughout the markets today. we are finding a little bit of stability. it's still red across the board, but we are rwell off the sessio lows. the s&p 500, 5278, down about 27 points. at the highs, we were down roughly 24 points, so it willing towards the highs. down as much as 44 at the lows. so that gives you an idea of the trading range. the dow, down about 1%, 356 points to the downside, 38,496. and the nasdaq composite at

16,970, down 52 points, about 1/3 of 1%. the outperformer. but again in context, the nasdaq hit a record high in yesterday's trading session. deal news, it's not a takeover tuesday, but it's a wednesday, i don't know what we'll call it, but a couple of deals. marathon oil will be acquired by conoco phillips, about a $22 billion enterprise value if you include debt. about $17 billion if you look at stock alone. so marathon shares up about 8%, conoco phillips down about 4%. merck is buying ibio for $1.3 billion in cash up front, $1.7 billion in milestone payments. so shares are down about 1/3 of 1% on that news. again, a number of names in takeover talks today. and then if you want to take a look at the mega cap world, this is becoming a very interesting dynamic move between apple and nvidia. both shares are up today. apple about 1%, nvidia about one

half of 1%. at this stage right now, apple's market cap stands at roughly 2.94 trillion dollars. if you look at that. you can see it right there. the market cap for nvidia, $2.8 trillion. so if you are talking about a roughly $140 billion difference in market cap, that perspective in context is roughly the size of a nike in market value, so there could be in the coming days an interesting move where nvidia might, hypothetically, overtake apple as the second most valuable company in the world. back over to you. >> i'm just looking for syn synonyms, consolidation wednesday. >> what's a "w" word? >> there's no "w" words for merger. as he weighs that question about market cap, the larger question is whether nvidia is overvalued. the answer may be know, based on its low forward pe. but the sheer size, you might be

wondering. n my two guests join me now. great to have you both here. welcome. >> thank you. >> nick, let me start with you. the low pe, and again, i think sub-40 is still where we are is pretty good for what this company is up to, is often cited as a reason why nvidia can still go on a strong run from here. do you think that's likely to be the case? what do you think about the valuation? >> yeah, i think it's entirely fair. 40 is a big double, the market trades for 20, so it's double that. but it has all this locked in growth rate from all the companies that want to invest in generative ai. against that metric, it looks good. the highest intel ever got in the 1990s was number three in the s&p. we're now talking about nvidia perhaps getting to number two. so it is interesting that chip companies have a little bit of a cap where they can end up in market cap.

but given that nvidia is much stronger than intel in the '90s, we can keep working from here. >> shawn, turning to you. what are your thoughts on it? >> sure. so just to step back a little bit and put this in historical context, there's always the element that we should be wary when we see high price-to-earnings ratio. if we look back at the data, we find high prices relative to earnings struggle to generate enough earnings to repay those high valuations. now, this is a broad feature rather than something that applies to every individual basis, but it should set your baseline expectations that for a company that has a fairly his price-to-earnings ratio relative to the market, you should already be scrutinizing where it will find those extra sources of growth. now, nvidia in this case has performed quite well in the last couple of years, where it's really increased its earnings substantially and brought its

price earnings ratio down. it used to be substantially higher. so it may be an exception here where it is able to generate sufficient earnings growth to justify those high valuations. it will really depend for comdme ma -- demand for its product. >> nick, the point about earnings, i don't know if we can show a historical pe chart for them or other stocks, but if you go back to 2010, netflix had a pe over 100. there was massive debate whether it was justified. in the long run, it was. tesla, maybe during covid, had a pe of around or a little over 100. that seemed to mark more of a sign of a short-term top. so is there a number at which pe means something, or are they stages of momentum, or can nvidia earn into the high ratio that it has?

>> i tell you, i used to work for steve cohen. he would drill into our heads that valuation in a single stock company level just doesn't work for picking stocks that go up or down. in a single stock level, i don't worry too much about pmee, whether it's 10, 40, or 100. in addition, 1% to 2% of stocks generate all the long-term returns in stock markets around the world. so you have to look for those 1% or 2% of stocks that work over 15, 20 years. nvidia is clearly in that camp. and it should continue to be in that camp. it is bust of those must-own stocks. >> shawn, the question for me is a little more difficult to answer is how big a company is nvidia going to be potentially? if it's already $2.5 trillion in size, and if it runs up -- let's say it doubles from here, which the stock investors probably think is conservative, are we talking about a $5 trillion company? i don't know if people want to incorporate buybacks into that,

but i'm sure size alone -- i would love to know the economics and the market history behind the company of that sheer size putting the pe totally aside. >> right. so there's certainly the element of how large a company this can eventually become, and in terms of how large the eventual market can become for the product that it's selling. now, one point i'll highlight here is that a lot of the discussion with nvidia revolves around what the prospects for ai will be going forward, but one element that doesn't get say as much discussion, when you're buying into nvidia, you're not just making a bet that say ai or ai needed chips are going to take off and dominate the market going forward, but you're making a bet it will be specifically nvidia that continues to dominate that market 10 to 15 years down the road. i think that's where it becomes a little more difficult to try to evaluate whether it will earn

enough to repay say a $5 trillion valuation. it's not just a question of how much demand for ai processing power will go up, but whether this company can remain as the dominant figure there. because what we have seen in the past is that there are many industry leaders that are eventually sup planted. it's relatively difficult to remain the industry leaders for 10 to 15 years. there's obviously the example of say cisco, the most valuable company in the world at $2,000, which eventually was unable to really reap the benefits of increasing use of internet services, for all those transformative elements that we saw develop, but largely profited other companies. >> that's a great point. we know the next phase could be that in which other companies try to do exactly that. gentlemen, stay there for a moment. just had a seven-year auction. the five-year yesterday was poor. let's bring in rick santelli. how did it go, rick?

>> you know, a little better than yesterday's five-year, but not by much. 44 billion in seven-year notes, completing $183 billion in coupon supply from the treasury. the yield, 4.65. the one-issue market, well, 1.5 basis points lower than that, which means it tailed, not good. and every metric was below the ten auction average. the ones that stand out, 2.43 bid to cover the week since april of '23. dealers take 17% versus 14% ten auction average, the worst since november of '23. d minus -- excuse me, i gave it a d plus. yesterday was a d minus. as you look at the charts, a couple things jump out. we keep moving up all day, and seven-year doesn't look as aggressive a selloff pushing the rates off as the longer maturities like 10s and 30s. it's on pace for a one-month

close in high yield 7s. if you look at the chart, right now with the ten-year solidly above 4.5, with the 30-year floating with 4 3/4, and the fed on hold potentially, many think the two-year will be glued to 5%, and all the action will be on the longer maturities. and that certainly seems to be the case. kelly, back to you. >> rick, thank you. so nick, another poor auction. what do you make of sit? this comes as global bond yields are moving to the other side. >> the bond market has been in a mess the last couple of weeks because of worries whether the fed will cut rates on the short end and issuance on the u.s. side on the long end. the issuance has become more of a factor. it tails back to our discussion of nvidia. how many companies out there are rate proof over the next 12 months? does it matter if rates go to 6% on the 2s? not at all. that's an appealing factor for

the stock. >> appealing factor for the stock? >> yeah, that's in nvidia's favor. you don't have to worry about rates in the context of that. >> professor, i'm going to put you in the hotseat here. you see these bond yields breaking out to the upside. there's a lot of different ways to think about this through corporate finance and so much more. but i'm just curious what your take is. >> so if we want to connect this back, there's certainly the element where high interest rates really change the amount of patience investors have for these types of long-term investments to pay off. while definitely i agree with nick's point that for a long-term investment say into ai or ai processing power, fluctuations and interest rates over 12 months are not that substantial, given their long horizon. it does indicate that investors are likely not as patient as they were in the last 10 to 15

years where we had extremely low interest rates and companies could make these long-term investments and rely on investors for those to pay off. now we are seeing a lot of companies, meta, microsoft, alphabet, sink very large investments into ai. there may be some substantial pressure for those to turn around profits relatively quickly. investors may not be willing to wait 10 years for those to pay off. >> very interesting. i know one area you're watching is the spread between a lot of corporate bonds and treasuries. that's becoming narrower and narrower. plenty of people said they wouldn't be surprised to see people be more interested in owning apple than u.s. government debt. we flirted back and forth with some of those key borrows going sub-what the u.s. treasuries are offering. do you expect us to plum new lows in that realm if we have people worried about the u.s.

deficit situation, but not really worried about corporate finances? >> it's very interesting. i looked at single a corporate spreads of treasuries going back to the '90s. you would think they would be tighter than the 1990s, but they're on the same levels. so if there will be a move to very high quality corporates over sovereigns, we haven't seen it yet. so there's still room for that move to happen. >> gentlemen, thank you both. appreciate your time. we had another weak bond auction with the ten-year hitting its highest level in a month. my next guest doesn't expect yields to come much longer, though. joining us is paul siana. great day to have you with us. you see these moves. it feels to us nonexperts a breakout to the upside, but maybe you see it differently. >> it sure does, kelly. we just published a new note, the short-term technical

patterns point to upside in yields, breakouts in the five-year and ten-year, and following signals that etas might get involved. so we see upside in june. but bigger picture, kelly, i would say our base case is starting to shift towards buying the dips, because our year ahead call has been yields rebound in the first half, likely peaked by the end of q2 and begin to roll over in the second half. >> why do you expect them to rollover, or is that just what the charts say? >> sure. mostly that's what the charts say, but two good reasons off the cuff here. number one, we view the trend in the u.s. unemployment rate as up. if you remember last year, the u.s. unemployment rate was 3.4%, and since then it's made three higher highs and three lower lows. so slowly the labor market is starting to crack and reached a two-year high. when we look at ten-year yields,

there have been seven dincident, and both secular and bear markets for treasuries. so that's one. the second would be the seasonality patterns at hand. good to know is that the average trend in the ten-year yield throughout the course of the year since 1963 is up into may. it begins to top and rolls over into year end. now, this is a special year, because january was an up-month for the ten-year yield. when we look at those years in the past, ten-year yields tended to be up in august, peaking by september so the word patience by the fed screams itself in the seasonality patterns here. so shifting to buy the dips this summer, being patient with the turn. but we think it's coming by the second half of the year. >> overarching thing that you think is happening is an employment slowdown.

that does obviously explain a lot of what could be going on. and in that case, you would say okay, well, then the fed's next move would still seem like a cut and not a hike, unless they squeeze in a hike before that takes place. >> yeah. look, the fed's in a tough spot, as the markets have covered. and one side of it, you have the labor market starting to weaken. on the other side, you have commodities rallying substantially. and financial conditions very loose with equity markets at all-time highs, right? so there is that predicament of what is the fed's next move? do they have to come in and squash inflation by tightening policy? i don't have the answer to that, that's out of my realm. what i do know is that in the past, kelly, there have been ten technical bottoms in the u.s. unemployment rate. many of the patterns we talk

about, this would be the 11th. it does suggest that the rate does go above 4% this year. and that's a modest comment relative to history. history would suggest that it should have broken sooner and gone further. so patience. >> no, absolutely. and i guess the next phase of this discussion and debate moves to, you know, how far does the ten-year fall? a lot of people think not nearly as far or fast given that dynamic. you don't have anything on that yet, do you? >> we do, actually. so in one of our many trend following strategies, it would suggest that now wave c occurs next, which could be 38.2%, or a third of the prior up-trend, which was essentially the ten-year yield from zero to 5%. so 38.2% retracement of that, kelly, is 3.25. that is something that technical

academia would suggest. that's a headline. we like a headline. everything surprises us. paul, thank you very much. thanks for your time today. >> thank you. coming up, mortgage rates for today are moving higher. but new numbers suggest the higher rates aren't stopping renters trying to buy a home. a look at what that means for the market. but first, stocks not named nvidia are moving lower today. and what's the next catalyst for the market? we will dig into that next, on "the exchange." (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish.

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welcome back to "the exchange." stocks have been under pressure throughout the trading day, as global yields rise. and now that a relatively strong earnings season is behind us, should we expect more choppy trading ahead? joining us to talk about that and what to expect in the back half is the ceo at zoe financial. great to have you here. >> nice to be here. what is do you make of this move in bond yields? it's not just the u.s., it's japan, it's the uk, it's kind of globally. >> yeah. one term i like to use when you look at the long-term, nominal growth and the ten-year yield, you have a relationship. the fact if you look back two

years ago, the ten-year was at a three handle. there was in essence fundamental reasons for the yields to rise. you still have nominal gdp growth with a five handle, and you have a ten-year yield with a four handle. so i think there is still fundamental reasons beyond the noise for it to continue to go up higher. >> it sounds like good news, but a lot of that is inflation instead of real growth. so if the mix is 4% real growth, 1%, we're happy. if it's reversed, it's a nightmare. >> you ask a bond investor versus a stock investor, they might give you different answers. if the economy holds up, it doesn't have to be gang busters, you will continue to see corporate earnings deliver. i'm impressed with corporate america and how resilient it is. for stocks, i believe that if

inflation is 3% or 2%, that's not the big question. can earnings continue to deliver? can the economy -- >> so stock investors don't have to care. i forget who it is that said they see almost stock valuations as becoming untethered to u.s. economic conditions, maybe it's because it's multinational, but it has this feeling of a disconnect. is that too strong, do you think? >> to a certain extent, you have to give it so much credit at its ability -- a company's ability to pass on that inflation, for instance, to the consumer, use operational leverage. ai has been a play that is just beginning. the u.s. is in the forefront of that. so there are structural reasons for it to continue. >> commodities would confirm the story of decent gdp, strong inflation, that mix of things. do you think rising commodities, rising bond yields, is this

telling us the same story? >> sit a combination of stronger demand and some inflationary pressures. but yes, there's been noise to inflation, but it has been coming down. i would be concerned if we had a year of data show thing is not only sticky inflation, it's reaccelerating. we're not quite seeing that. >> we've seen a little bit in the first quarter but probably not enough. so i guess we just heard from b of a's technical strategist. he's saying maybe it's three and a quarter on the ten-year as the next big move on the year, the unemployment rate starts to rise. is it possible that we're coalescing around a version of events that has sticky inflation, are we going to turn around and be telling the macro slowdown story that we keep waiting to tell? >> you should never say never on these things, but you would need a pretty big shock to see something like that. when you look at economic data,

earnings, when you look at essentially pmis, as well, there are parts of the global economy that are starting to show signs of life instead of the downside. so i would have to see something pretty large outside of what's happening right now to see that. >> i like your point about the way that markets have behaved, a lot of financial conditions have loosened. it's almost as if we have had a fed rate cut. some of the fed officials have been talking about this, listen, financial conditions are easing, and something they have to consider. >> yeah, i think this is great. the market with an all-time high is great news for the fed, because it gives them cover around we could hike or cut. they were using that language last year, and then they went into, when will we cut? they were nervous about opening the door to we might not cut any time soon. the market is at an all-time high gives them that opportunity.

so i wouldn't be surprised if their language continues to two-sided that we can go this or that direction, even if they're tilting towards cutting. >> so for the back half, where does that leave you? long stocks, long the kind of mag seven for lack of a better word? just simple, keep it simple, or are you doing anything different here? >> i think that overall, the reasons why the market is rallying i think will continue, which is earnings. when you look at different sectors, like financials, like utilities, think about it like value momentum. some of them have started to perform well. they could do well, especially when you see this breadth of market performance continue to wind out. >> interesting. value momentum. thank you so much. appreciate it. >> thanks for having me. coming up, this name is down double digits and having its worst day since 2020 after slashing guidance. we'll tell you what's behind the decline and how the ceo hopes to

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♪♪ ♪ ♪ [ inner monologue ] it was just a regular cybersecurity monday. that's me. i'd seen this before... or, had i?

♪ ♪ what was this ai treachery? i needed some help. good thing i knew someone... or... some-thing. [ a.i. copilot ] glad you called, j. [ a.i. copilot ] it's time for an upgrade. awesome. ♪ ♪ [ inner monologue ] my path became clear. ♪ ♪ i knew what i had to do. because they never stop. no time to waste. this isn't sci-fi. this is precision ai. ♪ ♪ welcome back. american airlines was the mystery chart we showed you before the break. it's the worst name in the s&p with today's 15% decline, and

having its worst day since the pandemic lows in 2020 after slashing its capacity growth and cutting its forecast. the carrier now expects second quarter eps between $1 and $1.15, well below of its previous forecast, and it expects current quarter revenue to be down as much as 6% from a year ago, just a month ago they expected no more than a 3% decline. american is parting ways with its chief commercial officer who led several changes to the booking strategy, which included gutting the airline's sales department. here is the ceo addressing the missteps this morning. >> we're seeing softness in bookings relative to expectations. that we believe is in part due to the changes that we have made to our sales industry strategy. we've got to put some more carrots in place to make sure our product is available wherever customers want to buy

it. >> more carrots on the plate. american shares are down to their lowest levels since last november. underperforming united and delta over the past year. united reaffirmed their estimates today, but didn't give revenue guidance. now over to tyler mathisen for a cnbc news update. >> thanks, kelly. israel's military says it has taken control of a strategic corridor that runs along gaza's border with egypt. it comes as a top israeli official said earlier today the country's war with hamas was likely to last through the end of the year. north korea flew hundreds of balloons filled with trash and manure over south korea today. south korea's military said rapid response teams were recovering the balloons across the country as of wednesday afternoon. it follows a promise of retaliation from north korea after activists in the south sent leaflets over the border criticizing the north korean regime. criminal charges against world number one golfer scottie scheffler, they've been dropped.

prosecutors in louisville asked a judge today to dismiss the charges. he was facing three misdemeanor charges and one felony count for assaulting a police officer with his vehicle. the incident happened during the pga championships a couple weeks back, as scheffler was trying to rush to the course ahead of his round and was being delayed by a prior fatal accident. kelly, back to you. >> tyler, thank you. coming up, new data from jpmorgan suggests the housing market may be nearing capitulation, and that could be a big boost to the home builders. the analyst behind that report joinstous explain and break it down next. and cnbc is celebrating asian american heritage month throughout may. here is the zoom founder and ceo. >> as an asian, i have a firm root in family and traditions and culture that has been developed over thousands of years. my values are in education, hard

work, and being the changemaker and bringing the change in this world. when that's combined with the freedom, independance, innovation and fairness of what's available in america, it creates a very unique condition for somebody like me to be a changemaker. (fisher investments) at fisher investments we may look like other money managers, but we're different. (other money manager) how so? (fisher investments) we're a fiduciary, obligated to act in our client'' best interest. (fisher investments) so we don't sell any commission-based products. (other money manager) then how do you make money? (fisher investments) we have a simple management fee, structured so we do better when our clients do better. (other money manager) your clients really come first then, huh? (fisher investments) yes. we make them a top priority, by getting to know their finances, family, health, lifestyle and more. (other money manager) wow, maybe we are different. (fisher investments) at fisher investments, we're clearly different.

>> >> welcome back to "the exchange." home builders seeing some red today as the ten-year is above 4.6%, pressuring mortgage rates and demand last week. diana olick is here to explain. >> after a brief pullback for most of pay, mortgage rates are on a tear again, hitting what had been several weeks of strengthening mortgage rate. the afternoon rate rose to 7.05% from 7.01%, with 20% down. last week, that was the first increase in four weeks, and while it might not seem like a huge move, that is a weekly average, and rates s had fallen back in the high 6%. so total mortgage fell.

applications for a mortgage to buy a home fell 1% for the week and were 10% lower than the same week one year ago. home buyer demand hasn't reacted all that much from the recent drop in rates, because affordability is just so bad, and supply of homes for sale is still very low. there is more supply than there was a year ago, but most of it is on the higher end of the market. mortgage rates jumped sharply to start this week, according to a separate survey from mortgage news daily, raising to 7.34%. kelly? >> youza! diana, thank you. while mortgage demand fell, the number of renters reporting that they intend to buy is at its highest level in six months. according to jpmorgan, with 20% of respondents say they spend to buy a home within the next six months, up two points. 27% of homeowners intend to sell their home, a three-point

increase from april. both cohorts showed strong preferences for newly built homes. will that mean a boost for the builders? they had a pretty nice one. joining me to discuss is a senior home building analyst at jpmorgan. good to have you here, michael. welcome. >> thanks for having me. >> it jumped out to me that maybe more people are thinking about selling their homes. any idea what that's about? >> i think both home buying intentions and home selling intentions often increase once rates stabilize. and i think while rates have crept up this year, you know, at the same time, you look at the last two or three months, they've been in somewhat of a range. ultimately, what we found over the last two years even is that following a move in rates, it's not necessarily where rates end up, but just the stability allows buyers and sellers to get back into the market and make a decision. >> because i've noticed more for sale signs around, and i've been

curious about that. but now with rates going back up, has that snuffed that out? >> right, right. we have seen, as diana mentioned, the purchase applications drift down a little bit over the last two or three weeks. more broadly speaking, though, we continue to observe a more steady level of demand as we have talked to our public home builders. we hosted a conference two weeks ago, and just about all of them pointed to demand remaining solid through mid may. and that's also consistent with earnings reports over the past several weeks. >> your coverage is a little bit different. you've got some of the builders, a lot of products and suppliers and that kind of thing. not a up the of overweights, actually among the companies that you cover. is that right? >> so, we maintain a positive sector stance on the home builders. we try and have a roughly even distribution of overweights,

underweights, and neutrals. we do have several overweights on the home builders, as well as a couple on the building product names. you know, we try and distinguish in terms of our stock selection more on a relative basis, the names that stand out in terms of attractive relative valuations versus their fundamentals. >> sure. >> but broadly speaking, we do have a positive view on the builders themselves. >> kb, dr horton, you're neutral an all of those. you're positive on toll, taylor morrison. why do those stand out, just company specific? >> right. so i mean, the way we approach our stock selection is a little different from many of our peers on the street. we try and stay away from themes, per se. often times, we're investing in one theme ignores valuation or returns and other key metrics, and you get a little too caught up in just one factor. we try and stay with an approach

that looks at relative valuation against relative fundamentals. pulte trades at a discount on a price-to-earnings basis. only a modest premium on price-to-book basis for dr horton. so, we like that relative valuation. again, in the context of a more positive view for the group. and certainly our neutrals do still in fact convey that we would expect them to go up roughly in line with the average upside that we still see about 10% for the group right here. that's what has been so interesting about this trade. it's lifted all boats. you've been able to close your eyes and just buy the builders, broadly speaking. and people are still seeking that new product. is that, plus the fundamentals going to be enough to drive continued upside? is 10% the ceiling where the stocks could move from here, or

more of a floor? >> i appreciate that. i think a couple of points. one is that our price targets are december 2024. so that's essentially only over the next six months. we're looking for low double digit earnings growth this year and next. as you look into next year and over the next three or four months, certainly you gearing to have price targets roll over to year-end '25. you can think about another -- if you extrapolate the current multiples and apply another 10%, 15% eps growth, you can see that where our price targets are today theoretically. i would also say that you're right, this is a group that trades together. i often tell investors 75% of your work whether or not you want to buy a home builder, period. year-to-date, toll and pulte have been among the best performers. whereas you have other builders that are slightly negative

year-to-date. >> michael, great to have you on today. thanks for your time. appreciate it. >> thank you. still to come, from executive shifts to a $6 billion funding round, the ai arms race is well underway. and the divide between two of the biggest names in generative ai is growing rapidly. we'll dig into that and what it means for some of tech's biggest and most promising companies, next. ♪ ♪ or... some-thing. [ a.i. copilot ] glad you called, j. [ a.i. copilot ] it's time for an upgrade. awesome. ♪ ♪ [ inner monologue ] i knew what i had to do. because they never stop. no time to waste. this isn't sci-fi. this is precision ai. ♪ ♪

welcome back. a flurry of deals for openai, they have been busy, as the gap widens between the pursuit of mon teization and safety. let's get to deidre bosa with that story. hi, deidre. >> kelly, let's go through some of those deals. first, the content deals that openai announced with the atlantic and box media. that gives the company more credible sources to train its

algorithms. as we have seen google's ai come under scrutiny. and then pwc, a major leap into the enterprise space for openai. a clear signal, openai means business. it comes on another week that we continue to see insiders raise some red flags. for the first time, a former board member speaking out on sam altman's ouster. helen toner was one of the board members behind the coup and she pointed to a toxic atmosphere, psychological abuse, sketchy safety abuses and accuses altman of outright lying. one of the more fascinating and shocking revelations that she talked about was learning about the launch of chatgbt in november of 2022 on twitter. she says that the board was not informed in advance. yet, since then, the new board has consolidated power under sam altman, and the drive to commercialize his only gaming

momentum, which could complicate openai openai's relationship with its biggest backer, microsoft. enterprise is microsoft's bread and butter. pwc will give openai 100,000 licenses. you can imagine those licenses going to microsoft in another kind of land scape. so guys, i wanted to end on this chart here. i thought it was interesting. it's microsoft versus google. since last november when the openai drama broke out, microsoft has been slow to monttize it's co-pilot, raising the question of this pwc deal. would openai represent more competition ahead and are some of those reputational risks having an impact on microsoft? because it is openai's biggest backer. >> that chart is great, deidre, because in that moment, if you rewind the clock, we would have thought microsoft is going to well outperform google and they trailed them. google has done twice as well. do we know more about -- i wish that i could get more tangible,

you know, visuals of what it's like using the openai product versus co-pilot. this is what this is all now going to come down to, isn't it? >> it is. i think maybe different use cases. in the deal with pwc, pwc is using chatgbt to create they ca pwc. and they will also resell it. so you are essentially getting the same a algorithms and same apis from microsoft and open a iflt. because openai is the foundational model behind microsoft's products. so it is interesting. i would think a lot of companies would like to go with microsoft, keepen would vendor. but the idea that they are choosing to go with openai is an interesting turn in the race. of course microsoft will still benefit because they have a large stake. but you have to wonder if the competition is heating up. >> very weird that it is almost competing against itself. and microsoft claims the takeup

of co-pilot is actually better than a lot of previous software products and yet shares are not showing maybe all that much enthusiasm relatively speaking. deidre, thank you. coming up, salesforce hasn't missed estimates once in the past 20 quarters this despite their era of efficiency. near term options in foot locker an 18% move in either direction. we'll get the action and tra enis chge.de 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? don't worry, we have at&t internet back-up.

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welcome back. time for today's earnings exchange. we have two consumer names and tech stock on deck. joining me with our trades is courtney garcia from pane capital management. welcome. and let's start with salesforce. they will report first quarter results. goldman noting a historically weak period and a miss shouldn't derail their path to 10% prescription revenue growth. and shares up more than 25% the past year. what is your take?

>> yeah, this could be a weak quarter for them. seasonally tends to be a weak first quarter. there could be headwinds on foreign sales. but they are a company that you don't want to discount going into earnings. they have beat every time the last two years by an average of about 1%. and i think looking forward they do have a lot of positive signs here. they have over 90% customer retention rate and ability to up sale current rates. and they have a whole span of products at this point. but i think the big story is artificial intelligence which there is an appetite for. but at a certain point customers will expect that and that will ultimately be something that will be very capital intensive for them. so i think seeing where they are going with that in the future. and if they indicate anything on the earnings is what you will want to watch for. >> and can they do it in a cost efficient way, how good is sign

tine a i einstein ai and so forth. and meantimewe'll move along to dollar general. used to be the darling but not so much these days. they are watching the family dollar closures. i think they brought back the old ceo who had done such a great job in the past. would you be a buyer here? >> i would stay on the sidelines. they have faced a lot of pressures. whether issues with shrink, goods getting stolen, issues with inventory and issues with their staffing. i think a lot of -- i just have not yet seen a light at the end of the tunnel. and they are putting a lot of -- going forward they are remodeling a lot of their existing properties and also opening a lot of new stores. but it is very capital intensive especially when it is expensive to borrow money. so i would stay on the side line

sidelines. >> and foot locker is down another 30%. they have a shifting relationship with nike. sales growth decelerated again last month. what do you do with this one? >> i would again stay on the sidelines here. i think there are a lot of structural long term issues that you see. mainly the fact that they are so dependent on nike. they are going away from wholesale and more into the correct to consumer. and then they have a lot of exposure to malls which is reducing foot store traffic. so i think they have to make big changes to bring them the revenue growth in the future. hopefully they have a good story for us, but at this point i don't think that you will see that. you saw shares down almost 30% after the last earnings where they really disappointed on holiday sales. so i think that we have to see have they picked things up. i'm not helpful enough yet. >> even nike hasn't done that great. it is not their time. thanking you, courtney. that does it for us.

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good afternoon and welcome to "power lunch." with kelly evans, i'm tyler mathison. stocks are lower. dow down by 350 points or thereabouts. s&p 500 by about half percent. and the nasdaq off by a quarter percent or thereabouts, 45 points. remember all the excitement when