>> okay. >> asml. if you think the market is going to bounce here, that has a lot of juice in it. if you don't, don't buy it. >> josh brown, what you got? >> pfizer breaking above its 50-day moving average for the first time in 18 months. pay attention. >> thank you for that. we will certainly pay attention to these markets, and i will take you through the last hour. "the exchange" is now. ♪ ♪ >> thank you very much, scott. welcome to "the exchange." i'm kelly evans, and here's what's ahead. ism jolts this morning. atlanta gdp look at yields and oil, all flashing slowdown signals as we count down to the jobs report this friday. is the market right to brace for bad news or is it pricing it in just in case? our guests are still bullish in the short term. we'll talk about where they're finding opportunities. and optioning to cash in, may come down to his options on hand.

we'll explain what trade he could make to avoid regulatory scrutiny and how much he stands to make. and our analyst has a direct but underappreciated beneficiary of ai. he just upped his price target by 50% in the last two weeks. before all, that let's go over to dom chu with the market action. dom is making a comeback in terms of the headlines. >> for sure. to your point, things are relatively stable in the equity markets. the dow industrials just about flat on the session, up four points on a basis of 38,575. the s&p 500 is at 5271. it's down about 11, 12 points, one quarter of 1% declines. we were modestly higher, up just one whole point, just one point. and down roughly 26 at the lows. so predominantly a lower day so far. but just fractionally so far.

the nasdaq down about 0.2%, 16,796. one of the tech trades we are following more closely is on the semiconductor side. no surprise, give than big tech conference going on in taiwan is still ongoing. earlier today, intel and the ceo introduced the new chips, they're ai oriented processors. earlier in the session, we did see some gains. nvidia and advanced microboth made announced on their ai chips. and kelly mentioned those signs of a slowdown. on the commodity and rate side of things, rates first. the ten-year treasury note yield is down seven basis points to 4.33%. what's interesting is at this point right here, just a few

weeks back, we were up roughly 4.62%. so we dropped around 30 basis points in just the last week and a half or so on this particular move. and by the way, you've got to go back to may to the lowest levels we have seen. people are bidding up bonds. you don't do that when you fear inflation or think things will be robust in the coming months and years. so something to watch out for. of course, the opec announcement this past weekend about easing up on the production cuts, putting more supply on the market start thing fall did take prices down lower. we're seeing them lower again by about a percent. crude at $73.35, but it's been on this down angle, as well. so are all of these signs, kelly, that maybe people are not as worried about inflation now? it remains to be seen. back over to you. >> just as we get comfortable with one narrative, the market gives us another. dom, thank you very much, dom chu. if we round up the data from the last two days, it's all

pointing in that slowdown direction. fewer job openings and the atlanta fed's tracker has slipped below 2% for q2, which would follow the 1.3% first quarter gdp growth. if we are seeing a slowdown, analysts warn the stock market is trading much too expensively. but despite all that, my next guest is staying bullish. joining me to discuss is andrew slimmens from morgan and stanley. talk me off the cliff, andrew. >> well, i think the first thing you've got to remember is the market was up nearly 5% last month, so no better -- we need a little bit of the heat to come off the market, a little bit of a fear of a slowdown. but as much as you can point to things like the jolts that say oh, the market is slowing, i can point to a bunch of things that suggest well, maybe that's not happening. i understand a little bit more defensive nature today, but boy,

consumer staples, which people run to if the market becomes really slow, they haven't done relatively to cyclicals. dom talked about the bonds, but the yield curve tends to uninvert if the economy is really slowing, and that's not happening. it's actually getting more inverted. so i think there's definitely reasons to not jump into the, oh, my gosh, the economy is collapsing or really slowing meaningfully. although i do concede, we're due for some rest here given how strong may was. >> yeah, and i think the point for investors is, is the market simply price today rich? you can argue that 21 times for the s&p is too rich, no matter what. it's kind of on the bad side of history there. but the idea that aren't earnings are going to be vulnerable to a slowdown? we talked about this a couple weeks ago, is it a nominal

slowdown or real gdp slowdown? companies can still earn profits, but maybe that's not a situation that can sustain forever. >> i think you're right, i think it's a nominal slowdown. just stress testing that thesis, i look at, okay, what happened after q1 earnings reports? well, q1's earnings report cumulatively beat 2024, 2025 bonds estimates went up. the reason why that's so important, kelly, is if we're thinking about, well, the market overpriced, where is it going to end the year, what's my return from here to year end? you have to remember at year end, the forward earnings are going to be 2025 earnings. that's gone up. so it's almost at $280 today and you stick a multiple, maybe 21 is too rich. we started the year at 19.5, somewhere in that range. i think there's upside. it doesn't mean we can't have

pullbacks. i think there's a bigger pullback come thing summer. i think it's too premature, but i look to earnings estimates. i guess the reason i do that, kelly, is last year it was a great lesson for me, which was i kept talking to companies, and they would say yeah, our business is pretty good, but wall street keeps telling us the economy is going to really slow down or collapse. and boy, oh boy, it was -- that's what i'm hearing today and why the earnings estimates haven't collapsed. >> it almost feels to me like this year is the opposite. it's definitely right. all of us are worried about a slowdown that a lot of companies are not so sure, but look ahead to this year, and you look through the beige book and a lot of the sentiment surveys. i know it's election year, maybe that's affecting everything. but it feels like there's this malaise. everyone on wall street is saying everything is fine and everyone else is saying, we're not so sure. >> well, don't lose sight of the fact that the market had a nasty

2022 and only bottomed a year and a half ago. and that's -- i think the fact that so much money has poured into the money market because it's yield ing 5%, 6%. that is sim toe mattek of slow expectation of returns in equities. the only way that is unleashed is multiple years of good returns in market. so bull markets are born on pessimism and grow on skepticism. i think we're still in those stages, because people still think it's better to invest in money markets than equities, even though the long-term return of equities is double. to me it's a sign that sentiment is very, very fragile for investors still. >> right. that's why we could have been asking people what analogy would you draw? is id mid '90s, late 'ninths? i'm a believer in the ai stuff, it's for real.

it feels like it's bailed out the entire economy and given us another spurt in productivity and real gdp growth and all these good things. i don't know if you would be a stock picker in this environment and what exactly you would do if you sort of balance, okay, believe the ai story, but it's expensive, obviously. you know, the market itself is -- you mentioned that you think we could be seeing a slowdown this summer, at least a hiccup in stocks. so what's the investment strategy that ties that all together? >> sure. so first of all, i do think a hiccup is coming this summer, because if you look at the year over year inflation comps, they get a lot tougher starting last summer, which means this year is going to be tougher. so we could take a couple of months of not improving cpi to worry could inflation be leveling off and the trajectory is no longer lower, and could that come at a time when we get some weak economic data, and

then the stagflation. i don't think that's the case, but i think that's a risk this summer. i think if you think about last month, nvidia did so well and really was the standout that there are a lot of other stocks that have very good fundamentals that just didn't perform as well because people were so focused on ai. so i always like to find companies that are, you know, beating numbers, raising guidance, and take advantage of when the market focuses on something else. and i think that's what happened in may. >> progressive, amazon, google, is that what you're talking about? >> exactly. those are all companies that if you look at the last three, six months, their numbers are going up. they're doing better than what wall street expected, and so i think those are types of -- you know, insurance, we know what google and amazon does. i think those are great stocks to buy, because they have not

performed as well recently, relative to the ai trade. the one thing that i would say about the ai trade, however, is be careful with when someone says is expensive. a year ago, i heard people tell me that, that nvidia was expensive. but if i went back and put the real estimate of what they earned, it's six times earnings. >> was it six? >> six times. soz >> so if we went to last year and used that price, that's insane. >> that just tells you that people aren't so good at predicting earnings. so watch the trends versus the absolutes. >> would have been one to have cheapest stocks. just better than all -- i love it. andrew, thanks for joining us. good to see you. appreciate you making your case today. thank you for your time. andrew slimmens with morgan slanty. tom lee is out with a new bullish call, saying the s&p

will hit a record 5500 by the end of this month and says there's a fundamental case to be made. to find out what it is, skim that qr code or go to cnbc.com/pro-pick. gamestop, the shares sliding 4% today. it was up 21% yesterday after a screen shot was posted of a gamestop holdings on reddit remealing a $116 million bet. gamestop is up 60% since he reappeared on an x account in may. and e-trade is considering parring him from its platform due to concerns of stock manipulation. jacob frankl weighed in on the legal risk of "squawk box." >> if he is telling people in a public forum what he's doing, i don't know that it would

constitute manipulation. on the other hand, if he's having private conversations, let's move the price of the stock to x, and he's going to benefit, maybe there is no change in beneficial ownership. that's something that the s.e.c. specifically looks at when it talks about stock manipulation. in other words, is a person using multiple accounts to drive the price up of the stock? >> interesting. let's talk more about what those options are to cash in without attracting regulatory scrutiny. we talked to chris murphy for that. everyone's buzzing about this, chris. walk us through it. >> sure. umm, thanks for having me. it's obviously a unique situation. everyone knows or at least speculates on what his positions are, from what he put out there. so, you know, yet if you were to start to sell out of those calls, people would be confident that's him. obviously, he has a huge amount

of followers. so that would be a signal to the rest of the market that, you know, he's selling out. so it does put him potentially assume thing is him, in a spot where, you know, everything that he is doing in the options side of things is going to be seen and understood by everyone who is watching this. >> in other words, when you look at the options market, is it clear that he's doing what he says he's doing? there have been those big purchases that appear to be from him. >> well, you know, when the purchases were happening, you have no idea who's doing it. we have a market intelligence desk for our clients that tracks all of the trades, and we saw the blocks trading, and might have joked to ourselves, maybe that's roaring kitty or something. but nobody knows who it is. the only reason people do is because he's putting out this information. but you do see the footprint of the trades both on the way in, you see large blocks of options trading. and then potentially on the way out, exception we have not seen any of the sell blocks trade

yet. >> that's what is interesting. if we saw those blocks said and everyone goes, he puts out these tweets, cashed in and is playing his audience. but that's not the story the market appears to be telling. >> yeah, it is, you know, 125,000 calls. that's not easy to get out of all at once. so he would probably have to trade in smaller pieces. but then everyone starts to say, it's time to get out of this thing. because it's such an army of followers, it is going to be somewhat difficult to get out if he just tries to get out through the options. >> let's go back to what the former s.e.c. guy said this morning. this idea of cooperation, a lot of people are speculating, could he be partnering with hedge funds now and he's tipping them off, you know, what would something like that look like? and obviously that might constitute more manipulation if it's happening privately.

if all he's doing is telling us publicly, then there's no problem. >> look, i don't know, that's not my field. if he's doing something illegal, he's doing something illegal. i have no idea about that. if he's buying options and the world sees these option blocks trade, then the information is out there. obviously, you don't know who it is. but someone who is going to buy 120,000 options in any stock, you should at least look at that if you care about that stock, as well. so, you know, gi that is's all i can say about that. >> what would you say the next move would be for him to avoid regulatory scrutiny and just put a nice bow on all of this? >> not sure about the regulatory side of it, but he does have the option of just selling the stock, and so on june 21st, when these expire, he has the opportunity to buy 12 million shares for $20. that's a lot of money. he does haven't that money in

that account he showed to us. so if he does not want to take in that much stock and put up that much money, even though he's buying it at a lower level, he can short the stock, it's around $27 right now. if he has a short stock position at $27 and he's put into the calls at $20, he makes $7 the amount of times he has those options. he can do that. 160 million shares were traded yesterday. so working out of 12 million shares would haven't that much of an impact and no one would be seeing those blocks. >> fascinating. chris, that is why we turn to you, for a sense to have drama that awaits us. thank you for your time today. coming up, as companies race to incorporate ai into their businesses, investors are wondering if corporate america has the infrastructure in place to handle the surge and demand and potential threats of bad

actors. that's next on "the exchange." plus, with a portfolio of more than 260 communities on the west coast, as they have a front row seat to the housing shortage. we'll ask the ceo her top concerns and how they're preparing for rates to remain higher for longer. "the exchange" is back after this. >> this is "the exchange" on cnbc. 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. the next level network. i sold a pillow!

welcome back to "the exchange." another technical glitch hit markets yesterday, you can see it there. it sent some stocks, including berkshire hathaway, on a wild ride, and a similar thing happened last thursday, happening s&p and dow quotes. as companies rely more heavily on tech, one would expect these to happen more frequently. here's what he told "squawkbox" today. >> we have focused and really become the leading firm in consumer cybersecurity. how we protect you, your family, you know, online. your kids, your parents. so it's unfortunately, it's a tsunami of challenges for every single one of us today. >> my next guest knows a few things about that, providing

infrastructure tech for nvidia and carnival cruises. joining us now is the ceo of pager duty. great to see you again. welcome. >> great to see you too, kelly. >> i don't mean to put you on the spot, but is nvidia one of your clients? i would love to hear what they're turning to your company to do right now. >> nvidia is a customer, but most of the fortune 100 and half the fortune 500 companies are customers of pager duty. every brand out there is relying more and more on technology to deliver their customer experience. and at the same time, we're seeing globally an increase in what we call tech debt. legacy systems, infrastructure, that new innovation is layered on top of that creates more and more fragility in systems every day.

>> so my understanding is that you guys are on the consumer, that customer piece, trying to make that a flawless experience really, and what are the major threats there? >> yeah. so think of us as infrastructure software that helps companies improve their operational resilience. we use ai and generative ai to protect events coming in, diagnose them, and get the business and that technology to recoverry as quickly as possible. so that customers don't feel the burn and so that customers don't suffer revenue losses or labor cost issues as a result of having to deal with these unstructured, unplanned major incidents. they can be caused by cybersecurity threat, but we can't prevent these incidents from happening, and on average, they can cost an enterprise up to $400,000 a minute in either lost revenue or increased cost when they happen. so the more we can do to detect theseevents coming in, prevent

them from becoming major incidents, using the intelligence of generative ai and machine learning, to help customers respond more effectively and prevent it from happening over and over again. >> in light of the major hacks we've seen with ticketmaster being the latest, we asked one industry specialist, is cybecy cybersecurity failing to do its job, and he was saying we need to do better. is that right? >> i think we can always improve in every part of the industry, but the reality of the matter is, the complexity is proliferating at a pace that humans can't keep up with. so you need to rely on technology to help, again, not just try to prevent these incidents from happening, but when you identify them, being able to manage and orchestrate your resources more effectively, so that you can limit the losses or the impact associated with these incidents when they do happen. >> can you give us an example

for us nonspecialists trying to understand this technology, how exactly are you using generative ai? what is that experience like, where does that software come from, how can you trust it or train it, and what are your plans with it? >> sure. so like many companies, pagerduty started with machine learning and analytical ai. we collect a lot of information through apis that connect to over 700 of the most popular software sources. we're able to see signals coming in that provide an early warning system that something may be going wrong or something may be abnormal within your technology ecosystem. that can be in your infrastructure and your networking, in your application layer where customers are engaging with you. we then use ai to help responders who are notified that these issues are taking place to give them an update of what's

happening, to revive them with up to the moment information on what's happening within the ecosystem, as well as what's happened in the past that they can learn from, so they can quickly try and drive change or improve the health of the environment to stop that incident from happening to get all systems back to sort of go or in a recovered fashion. and then generative ai can do things like very quickly pull the after action report, pull the post mortem that helms teams learn so they don't repeat those mistakes and so that they can address or fix the contributing factors that caused the major incident, or find, you know, the open gaps in their security environment. that means that every time an incident runs on pagerduty, the system is getting smarter, and can get more and more preventative over time. >> do you think -- can your ai stay ahead of the bad ai? it seems like that's going to be one -- pitting one against the

other. >> the reality is that no software is perfect, and there will always be issues. it's about increasing your operational resilience so that when you do or are confronted by a problem, you can respond more quickly. you learn from it and prevent those same issues from happening again. >> and you have a new ai system come thing summer. we look forward to seeing these innovations. jennifer, appreciate your time today. >> my pleasure. speaking of tech, cisco shares are higher after the company announced a billion dollar global investment fund for ai startups. nearly $200 million is already committed. shares are hovering near their lowest level in nearly a year. the ceo will join jim cramer tonight at 6:00 p.m. eastern. still to come, emails obtained by cnbc shedding light on the so-called musk mandate

and raising concerns of a conflict of interest. we'll bring you the details and look at another high profile founder dealing with some of the those issues. here's a look at apache and schlumberger, falling to 52-week lows today. crowd oil hitting a four-month low as opec plans to increase supply and concerns about surpluses are now on the mart. ckft ts.ke

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welcome back to "the exchange." stocks are kind of mixed right now. the bigger action is in the ten-year yield. the dow up 73 points, a little off session highs. we were in the red part of the session. the s&p and nasdaq are negative. we've slid about 30 basis points on the ten-year in the last couple of weeks. elsewhere, cruise lines are leading the s&p with carnival and royal caribbean in the green. royal caribbean, in fact, i'll give it a star, hitting an all-time high today despite the

macro we've been talking about. bath and body works is the worst name in the s&p, plunging 13%, overshadowing the earnings beat as the company expects to earn 36 cents a share below the analyst expectation of 38 cents. shares are still down -- or up about 3.5% since january 1. and bath and body works continue to see customers carefully managing their spending, and these pressuring basket size as a result. so it's the worst day for them since the pandemic lows april of 2020. and the lowest absolute level in about a month. elsewhere, the india etf is down 6% on its worst day since 2021, as prime minister modi suffered a setback in the election, with voters leaving his parliamentary majority in doubt. and it would be a blow to modi's dominance which has grown since

he gained power a decade ago. let's get to tyler mathisen now for a cnbc news update. tileer? >> thank you very much, kelly. sean diddy combs is selling his majority steak in revolt. this, as he faces multiple lawsuits over sexual assault allegations. last month, he issued an apology after cnn aired video, which appeared to show him kicking, hitting, and dragging former girlfriend cassie ventura. the former er sbe prefor to shohei ohtani pleaded guilty, admitting he stole almost $17 million from ohtani to pay off debts. and before closing arguments in a massive pandemic fraud trial were set to begin yesterday in minneapolis, a juror was dismissed after reporting someone tried to bribe her with $120,000 in cash promising even more money if he voted to acquit

the defendants. the judge questioned the remaining jurors about any unauthorized contact and sequestered them for the remainder of the trial. kelly, back to you. >> tyler, thank you, tyler mathisen. coming up, with interest rates staying high and construction costs not coming down, are apartments the right place for apartments to be right now? we'll ask the ceo of a property trust abt atne. outh, xt

welcome back to "the exchange." we had been in one of the biggest apartment construction booms in decades, but things appear to be cooling off and quickly. the journal reporting today that higher rates is slowing rent inflation have left developers sitting on empty lots, with building starts in april -- lowest rates since 2020. joining us is the ceo of west coast developer essex property trust with diana olick. diana, kick things off. >> thanks so much for joining us, your first time on cnbc since taking the helm last year. you heard the stats.

we know that apartment construction was overbuilt in the last two years, and yet we're seeing occupancy holding steady at 94%. give us the fundamentals you are seeing in the market right now. >> sure. i'm so glad to be here, and thank you for having me. it's an interesting dynamic, because you would think that with supply where it is right now, you know, the multifamily fundamentals is very strong. and it's really for two primary reasons. even though there has been building, there is still an acute housing shortage. and in certain markets, you know, the supply has ramped up. but for the most part, especially in the west coast where we are, the supply is about half a percent of total stock. so that's very low. we need to build a lot more than what we have. but the second component is affordability. it is much cheaper to relate than to own. and so people, consumers are still choosing the more affordable option. >> and that's, of course, we

have interest on mortgages at near record highs, near the cyclical highs around 7.5%, driving people to rent. if we see the feds start to lower rates and mortgage rates come down and more people get into homeow ownership, is that going to hit the rents? >> i do think that in certain pockets where there's already significant supply. it will be more vulnerable to mortgage pricing. for example, on the west coast, because there's such shortage of housing, and on the flip side, what we're seeing is a strong demand. what is happening with our markets in certain parts of the u.s., you have growing industries. so for example, artificial intelligence. they're hiring a lot more people. 85% of those companies are on the west coast. but that job growth is the key driver for new household formation, which will drive demand for new housing. so what we're building right now is barely keeping up with the demand that's necessary.

>> kelly has a question forangex is an ai play, because all the employees being hired -- my question is, are you cheering for interest rates to go up or come down? >> boy, that's a really tough question. what we have expected is that the fed has announced they were going to lower interest rates at some point and kept pushing it back. it's not a bad reason, because the market is strong, the economy is strong. and so for those reasons, it would be tough to see an interest rate decrease at this point, especially with the continued inflationary pressure. but at some point, it has to occur. what is about the cost of capital, especially when you want to get into new development. you're not necessarily going to the big banks and lendors. is there money on the sidelines looking to get into more apartments? >> well, there's a large amount

of capital interested in apartments. however, the focus is really more completed projects. so what we're seeing is that whenever -- transaction volume across the u.s. has been quite low historically. so when an apartment becomes available, for sale, there's a significant number of buyers, ranging from economic and international, large institutional owners. and so for those reasons, you know, we're just going to see the dynamic continue. >> and there's a lot of talk here at the reit conference, we were just talking to the ceo of vft, about office conversions to apartments. we're seeing that in new york city, some on the west coast. will that add too much supply if we see all of these distressed office buildings becoming apartments? they're starting to get more creative in changing that supply. >> that's a great question. what we're seeing is that in

certain cases, specialized cases, that could work. it's so hard to do, though, because the office place, the physical, you know, building makes it prohibitive. because where the elevators are, you need to have a certain distance to the wall. so large office buildings by nature, you can't convert them. and it's really expensive. you have seen one on two on the west coast, but certainly not at the volume that people have anticipated. so we just don't expect that to occur. >> we're seeing big jumps, in fact, a 20% jump in single family built for rent only. companies like american homes for rent, invitation homes and others, building entire single family rental communities. does that eat into the demand for apartments when people might be able to rent a single family home at the same price? >> there will be that competitive supply pressure certain markets. where supply is leading cause of pricing, rental pricing disruption.

but in our markets, it is so difficult to even just get a large track of land. and so on the west coast and downtown seattle, and those markets, it's virtually impossible to put up large amount of supply. >> thank you so much for joining us. kelly, back to you. >> i love it. a lot of different angles. you know, the ai play is an interesting point she made there. thanks for bringing that to us. coming up, ai companies have strong financial incentives to avoid effective oversight that's what openai employees wrote in an open letter today. we'll dig into that and a nfctf interest from two of the industry's biggest names. details, next. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. ♪ (suspenseful music) ♪ why not? did you forget something? ♪ (suspenseful music) ♪ my protein shake. the future isn't scary.

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welcome back. elon musk ordered nvidia to ship thousands of nvidia's ai chips that were reserved for tesla to

his startup xi and his social platform x, instead. musk has confirmed that, posting on x that -- >> but elon musk isn't the only ceo with side ventures under scrutiny. let's get to deidre bosa in today's "tech check." what do we know, deidre? >> there's sam altman, his sprawling empire is raising questions of side dealing, conflicts of interest, and the safe development of generative ai. a former board member said one reason the board lost trust in altman is his failure to tell them he owned the openai startup fund. there are at least three others with investments in more than 125 companies. the journal reports that a growing number do business with openai itself, either customers or major business partners. that puts altman on both sides of a deal, raising questions is this the best deal for openai

and the responsibiible developm of the industry or the best deal for atman. a group of openai insiders published an open letter calling for better protections for whistleblowers. musk likewise, he's juggling his public and private interests, leading some investors to wonder is he doing what's best for tesla or another venture, like x or xai. and how are the boards keeping their founders and ceos this check? critics argued that tesla's board has a lack of oversight. openai's board just underwent a major shakeup, eplacing most of the members that ousted altman last november, replacing them with ceos and executives that have corporate and public company experience. proponents are willing to look the other way if a founder like musk or altman are shipping -- paradigm shifting technology as

they are with tesla and openai, butthese questions arise around conflict of interest. kelly? >> a lot of us are still trying to figure out sam altman, is he trying to be an elon musk? i guess that would point to, does there need to be more controls in place or not? where -- who is he? what are his goals? >> the irony is that sam altman and elon musk have beefs with each other. elon musk left openai because he thought that sam altman was turning it in the wrong direction and now calls it closed ai, because they work on closed large language models. who is sam altman? that is the multibillion dollar conversation. you know, something that is talked a lot about here, i'm trying to think of whatky share now, he certainly has a sprawling empire and he's seen as, you know, a genius, in some

ways more favorably than others. but take what happened over the last six months. you had 90% of openai employees saying they were going to leave and go with him to microsoft. now you have a small group of openai insiders saying they don't like the direction he's taking the company. as this, ke polarizing. that's safe to say. polarizing figure, like elon musk. >> that sums them both up quite well. deirdre, thank you. we appreciate it. coming up, first solar gained 29% between may 21st and may 22nd, after ubs called it an overlooked beneficiary of ai-driven energy demand. since that call, shares up 39%. we'll talk to the analyst behind it and g t oeram hetheth nese likes next. >> announcer: "techexec" is sponsored by comcast business. powering responsibilities.

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since his initial call in late may. joining me is john wyndham. great to have you. welcome. and i don't know a lot of us knew first solar and the u.s. solar play, that worked for quite some time until we kind of hit the post covid hangover. how much of an ai beneficiary do you think it could be now? >> yeah. appreciate you having me on. really in our view first solar benefits from three of the largest macro economic trends going on right now. that'sfirst the decarbonization of electricity. two, the reshoring of u.s. manufacturing jobs, and then three, maybe the most overlooked, is their direct exposure to growth in electricity demand, particularly as related to ai. and just to give you some evidence of how that's been playing out, the three big trends, first solar order book is up 350% in two years. even though the stock and a lot of clean energy stocks traded sideways to down around some pessimism around higher interest

rates and the impact on their earnings. we're projecting first solar, made less than $8 a share in 2023 to earnings grow to $36 a share in 2027. there's tangible financial estimates on their benefit from these three big factors. >> but don't you think people are coming around to that now? do you think you're still out of consensus how much their benefit? in other words, is that benefit already priced in? >> yeah. i think we're a lot less out of consensus than we were before we published the report two weeks ago, really on the 21st of last month. really what we had seen in the market was maybe a misunderstanding about how these large tech companies actually meet their 100% renewable goals and spelled it out to people a little bit on how they charge a lot of their operations directly off the grid, but then do their sustainability offices will then go procure renewable power equal to their consumption. that actually underpins a lot of the direct financing of utility sales solar in particular in the united states. i think the market was just

missing that link. as we highlighted that, to the market, i think it got a really good reception and investors are interested in digging more into the idea. >> the shares are up 55% year to date now. trading at 267. your price target started at 252. you know, not even a month ago. it's now at 350. is that right? >> yes. and it's really when we think about our price target, really with first solar in the near-term, it is a multiple rerating story. as i think greater number investors appreciate their direct company in the growth in electricity driven by ai. longer-term, however there is earnings upside for a lot of hardware suppliers and solar supply chain largely driven because we're short solar projects in the united states and so demand takes off, we're building up a backlog that should be able to drive longer-term earnings growth for these companies. >> influence is another beneficiary.

why? >> fluence is one of the only pure play storage names in the market. tesla is the largest provider of utility scale storage. but, you know, the short of it is essentially that as we add more renewables on to the grid, it greats large predictable price changes intraday. the easy way to think about it the sun comes up during the day, solar power comes on, prices go down. then at night, prices go back up. well, if you buy fluence battery system and connect it to the grid, that's driving a lot of demand. much smaller market cap company than first solar, i think might actually have more leverage to up the side on this whole idea. >> wow. and considering there's been significant upside for first solar already, that is saying something. john, thank you for explaining it to us. we appreciate your time. >> be well. >> john wyndham with ubs. that's it for us. we'll see you with "power lunch"

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