that's distinctly different than what we have known about these companies the last several years. it's up to about $62 billion. look for them to increase the buyback. their peers have done it and been rewarded. >> we're going to have a few weeks away from mega cap earnings. that will be interesting. i'll see you on "closing bell" at 3:00. now to "the exchange" which begins now. ♪ ♪ and we'll pick it up. thank you, scott. welcome to "the exchange." i'm kelly evans. here's what's ahead on a very busy hour. nvidia is down again with the company's annual shareholder meeting wrapping up. we'll bring you the latest. and micron is on deck to report after the bell. we'll get the story, the action and how our trader says to position. speaking of tech, it's one sector our market guest isn't buying for two reasons and one is contrarian. he'll tell us what he's buying instead and what opportunity hasn't been this cheap this long since the great recession.

the last time the howard hughes ceo was on the show, he said it would be a golden age on home building, but the stock is down 25% year-to-date. today, another disappointing data point on housing. he's back with an update on what he's seeing on the ground. let's start with these markets and dom chu with the very latest. >> still holding steady. the dow is just about flat, up about 32 points on a basis of 39,145 or thereabouts. so pretty much flat. the s&p 500 is at 5466, down about two to three points, pretty much flat, as well. i'll tell you the highs of the session, we were up six points and down 18 at the lows. so, again, well off the lows, but relatively mixed. the nasdaq up 0.2 of 1%, to 17,752. one place we are seeing a bit of market action is what's happening with the transportation index.

t remember, fedex is up roughly 14% or so, by far the best performing stock in the s&p. that's pushing this etf up against its 50-day moving average. the only reason it's important is because it's been about april, we've been contained by this blue line. so we'll see whether or not there's a breakout in play for this etf or if it gets rejected at that level. so we'll keep an eye on the transportation etf. one more place to watch the stock of the day, it's general mills, one of the worst performers in the s&p 500. big brand company, cheerios, blue buffalo pet food, that company is down 4.5%. it was a mixed report. earnings better than expected, revenue fell just shy, and some key metrics fell short, as well. consumer based consumer, perhaps

another tea leaf in that long strength of them about the health of the u.s. consumer. >> dom, thank you very much. dom chu. nvidia is wrapping up its a shareholder meeting, capping a volatile week of the stock, down 12% from its record. here's the latest headlines. >> this was the ceo's opportunity to lay out the company's longer term vision in what he calls it's the start of a new industrial revolution and provided an update on the ai platform that will come to the market before the end of the year. he didn't really provide an update on the timeline, but he has very, very high hopes. >> the blackwell architecture platform will likely be the most successful product in our history, and even for the entire computer history. >> he went on to outline the role that nvidia's gen ai

products are playing from health care, where it's working with amgen on drug discovery, the cloud players, meta, microsoft, google among others. he added that nvidia is taking a collaborative approach on privacy and regulation, working with state and federal agencies to address these issues. the stock was trading at $124 a share, now at $123 and change. >> we appreciate it. we're going to talk about some micron, as well. they're the next big chip stock to report. tim seymour is here with the trades. tim, welcome to you. sema, what more can you tell us? >> micron is getting some love. all eye also be on the company's memory chips and expansion into the ai universe. their price target is $175, they upped it from $150.

investor also want an update from the ceo on its dealings with nvidia, the production of the high-band width memory to advance artificial intelligence. the stock has climbed of 60% this year, putting the valuation into question,although it has sold off in recent days. so that will be key, kelly. >> we appreciate it. tim, the street seems bullish on micron, but you're not a fan. >> i'll add a sell meeting. they certainly have a product and in terms of the revenue growth, off of some cyclical lows in '23. this was the ultimate cyclical semiconductor and so '23 to '24 was getting better either way. but the excitement around hbm, i get it, but i understand where i don't think they'll stand alone like nvidia does on the ai chip

side. i think in memory, there is competition. i think this move in the stock, it's 65% to 70% year-to-date, 225% up since the beginning of '23, when you couldn't get arrested with this stock. if there is any euphoria or hyperbolic move, this is the top of the list. they're going to have to crush it. i understand the they're marketing hbm and the complement to ai. i don't think they're the only ones in the space. >> the ceo of micron will sit down with jim cramer tomorrow exclusive at 6:00 p.m. eastern and you don't want to miss it. tim, as we move on from chips, i want to hit a couple of other reports like levi's. those shares are up 40%, because denim has made a comeback on gen-z. there's others bullish. the street doesn't have a single

sell rating on levi's. it's kind of the next aberc abercrombie, isn't it? >> i think they should have some sales. this is a company that is going to double their earnings profile. they made some investments into some digital dynamics that are very margin friendly. but, again, ai play or yesterday's jeans? i get that denim is happening. we see the impact that apparently denim trends have had on lulu lemon, whatever we're talking about. it's not enough to take this stock to a multiple that just makes no sense. i think consumer discretionary is under pressure. the move this stock has had, again, compare this to a precovid world. i don't think there business has been innovative as much. i would be a seller of this. this is a street saying they're going to double earnings by the end of next year. >> leaning against it. the levi's ceo will talk about

all that tonight with jim cramer. finally, tim mccormick, shares are down 7% as they struggle with that private label competition. this is the story, they lifted prices to combat rising costs. consumers are trading down. citi cited improving trends in the segment, but do you think that's the case? >> i think the valuation is now in a place where it's interesting. the spice girls are back, but the spice trade was like a covid thing that i don't think -- it was a once in a generation story. so i think the case on multiple 24 times is four times below the five-year average. the volume growth focus is margin heavy. but the street has priced this one in. i think the market is giving you an opportunity. >> you would be a buyer here? >> let's put it this way, of all the stocks we mentioned, this is the one that has a fundamental story that matches the

valuation. i understand the cyclical, secular trends that are at work in a couple of the other places, although i don't know if it's in jeans. but i can hold spices at 24 times. it's a company that gave a good guided investor day in terms of how they target volume growth and it makes sense to me. >> always full of surprises, tim. >> that's what i do. >> mccormick ceo brendan foley will be on "power lunch" tomorrow. now other results coming after the bell today, findings from the fed's baked stress fest at 4:30 p.m. eastern. it comes as the cre bank etf and index have only posted one positive week in six. and moody's put them on downgrade watch. but the next guest says regional banks could fair best under new regulations. joining me now is jared, with leslie. great to have you both here. leslie, kick it off for us. we haven't talked stress test in

some time. how significant are these? >> yeah, this is a once a year annual test that these banks undergo. this year, as you mentioned, the regional banks we see a wider list of 32 banks, because the kind of bigger regionals are on an every other year cadence, so we'll get results from some of those, as well, after the bell today. why is this test important, kelly? it's because it's set to level by which the banks need to hold a certain buffer of capital before they can return any of that capital to investors in dividends and buybacks. so the test assesses losses under a severe economic adverse scenario which the fed changes every year. and from there, based on the losses each bank has, they set the stress capital buffer, which determines how much excess capital a bank needs to hold before engaging in any of that capital return.

so it's important for shareholders because of the capital return dynamic, and it's a good gut check on the health of the banking system, as well. >> jared, is this going to give bank investors an opportunity to get into these stocks again? >> i think really it's been a good news announcement for the last decade. the banks understand the test at this point and they do extraordinarily well on this. even with the curveballs the fed is trying to throw with the four new exploratory scenarios here, it's hard to see how this isn't going to be, you know, if not a home run, at least a triple for the banks. >> so would you say there's no event risk? in other words, this kind of -- why do you think the regional banks in particular could be coming out the best of the bunch? >> so the regional banks are in a fascinating space right now. i think most of the real focus

of the federal reserve is on the gcibs, which are those giant banks, jpmorgans of the world, the names we all know. that's where the real focus is. two of the exploratory scenarios only look at that. in addition, a lot of the change is in the new capital roles that the regulators are watching to get done before the election. they really impact those biggest banks the most, and have the least impact on the regionals. >> leslie, let's talk about these exploratory scenarios. it basically means we're going to get more detail on hypothetical problems the banks could face. do you think that would spook people, to look at it in more detail? >> well, the reason they're called exploratory scenarios is because they don't factor into capital level. so it's an additional test for exploratory purposes, but it doesn't have a bearing on how much capital could be returned in the form of buybacks and

dividends. so it's like a test for maybe extra credit, that would be the analogy we could use. in terms of the day one performance after these tests, jared is right that ouven times they're right. we have a full screen that shows actually the day one price performance relative to the s&p, and each time in 2021, 2022, and 2023, there were gains in the kbw bank index and gains that superseded those in the s&p 500. so we'll see if 2024 is kind of more of the same on that front. but the tests have become pretty predictable to model in certain ways, and so it's something that people are assessing well in advance of today's results. >> jared -- >> kelly, can i? >> sure.

>> i want to add something on the exploratory scenarios. i agree for the regional banks. i think it could be a bigger deal for the two looking at stag place. the gcibs hold the vast majority of assets, so i do think the market is going to look at those aggregate results and say okay, are the examiners now going to come in for some of these biggest banks and say you need to build capital even beyond what the stress capital buffer says. >> edo you still they will be taken as a way that people say we need more on hand? >> right. it's part of the discretionary part. when the examers come in and meet with management, that's how those results are going to be used. so they won't create the formal capital requirement. but so much of banking can

informal when it comes to supervision. and this is an important part of that informal oversight. >> the last question on this, in conjunction with any new capital rules, what is likely to happen? that's kind of the boogeyman for bank investors, this idea that you have way less earnings power, how likely is that? >> kelly, who's going to win the election, right? unfortunately, that's really what it comes down to. if trump gets a second term, the path forward on capital is going to be a lot better than if joe biden gets a second term. and so things are very election dependant. >> maybe it will come up in the debate tomorrow night. mae maybe it won't. thank you both for your time. we appreciate it. coming up, new home sales, big drop in may, six-month low. and with prices hitting all-time highs, what will it take to get more buying going?

and cigma's ceo was speaking out since the collapse of its $20 billion deal with adobe in december. so what's the path forward now? that's later on in the show. and here's a look at markets with the dow near session highs. the nasdaq up by 44 for a second straight day, despite nvidia's decline. the s&p fractionally lower. back after this. >> this is "the exchange" on cnbc. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot

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welcome back to "the exchange." more disappointing housing data. new home sales in may posted the steepest monthly decline since september of 2022 and fell to the lowest level since last november. this, of course, after rates hit a 2024 high earlier in the month. this data weighing on the builders. the shb down nearly 4%, and with supply ticking higher, is this the start of a cooldown buyers have been waiting for? joining us is ceo of howard hughes holdings, which builds and develops communities across the country. great to have you back. welcome. >> thanks for having me. what is's going on, why did new home sales stall out? >> i don't think they've stalled out at all, and i'm not reading too much into today's report of may home sales. what i paid more closer attention to was the revision of

april. it was up from 634 to 698. and that's three months in a row that we have seen a meaningful, higher revision on the following month's report. in our communities and our largest communities, which have been ranked four and five nationally in 2023, we're up on home heals. new home sales year-to-date. i wouldn't be surprised if we're sitting here a month ago and we see that may revision meaningfully higher than what was reported today. >> are you among the builders offering buydowns? >> so we're selling land to home builders across different home builders regional and national. almost all of the builders are offering buydowns and they're trying to address that afor theability with lower mortgage rates. >> you know, you step back and think about it, home prices are up 45% since 2020, basically since the pandemic happened, up

45%. and mortgage rates are probably double what they were back then. how much longer can this all keep going? is it a permanently higher plateau? >> no. look, affordability is incredibly stretched right now. we see that across single family and multifamily, as well. but what we did see where average sale price is coming down slightly, and most builders reported that was a product mix. that's consumers buying smaller homes, focused on a lower payment and getting back into af affordability. if you look over the past 20-ish years since the mid '80s, new homes have commanded a price premium to existing inventory of about 16%. over the past several months, that came down to 7%. today's results said that's flipped on its head. that new home sales are less expensive on a medium home price than resales. and i think that shows the consumer adjusting to a smaller home, taking less space, and

trying to get back into that range of affordability. when the smaller home and the rate buydown, i think that things are a little better. >> that's a great point. one of the things we heard is the sun belt is slowing a little bit. i think you guys have big ex-pocher in arizona and texas. is there now post covid as people return to the office or the shift has already taken place, are these markets resetting a little bit? >> we haven't seen it in arizona or in nevada, and we have not seen it in texas. our communities, we're selling homes at a higher price and land to builders at a higher price and selling more homes this year than last year. so it hasn't materialized. some of the headline numbers are -- i take with a big grain of salt. this past month, we saw an increase of supply of new homes to 9.3 months of supply. on its headline, it could look like doom and gloom. but when you peel back the onion

and realize that 9.3 months is made up of new homes under construction and then standing inventory, which is the bad news, the standing inventory is less than 20% of that. so the increase has been driven by new lots that have been sold and homes under construction that are in all likelihood under contract to be sold. i think that's further validated by the numbers that we saw in may of new homes available for sale at $481,000. that's only an increase of 1,000 homes from april. so i think that solidifies that the uptick is driven by sales. >> i sit here in new jersey where there's not a lot of property where you could build and develop the things you have underway. if you say there's still this interest in the sun belt and expansion plans remain there for your properties, is there going to be enough water? is it nevada or arizona where this is a major bone of contention for you right now? but in all seriousness, is the infrastructure there to support

these projects? >> absolutely. and i'm sitting here today in our phoenix office outside of our property in the west valley, and i know there's headlines around running out of water. i would argue there's plenty of water here. what we need is smart water management. nevada has been a perfect example of what we can do in arizona. the population in las vegas has doubled over the past ten years, but water use is less than it was ten years ago. and it's because we passed smart legislation. howard hughes has helped lead the way in focusing on low flow, drip irrigation, all the things that can take use of water down dramatically. we're down to 80 gallons per person in nevada. >> do i need to rip out of my lawn?

even in my town, they issued alerts saying no one can use water for watering lawns. >> we're not having lawns in our communities here. those lawns are going to be focussed in the community centers, the gathering places for all the families to get together. that's the one that's used the most, people aren't using their backyards and front yards the way they used to. >> we have all this water they use to keep these lawns beautiful. you drive around and there's nobody outside playing in them. all right. david, great to check in with you. we hope to check back in soon. >> always a pleasure. >> appreciate your time today. still to come, the fed's taking its sweet time to cut rates, making the muni income story more compelling. we'll be joined next and she will tell us why she sees the juiciest opportunity in that space. and the landmark deal between rivian and voklkvolkswagen.

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welcome back. the fed still hasn't budged on interest rates, but the next

guest says higher for longer is good for tax exempt investments. courtney, i don't know, they could cut. whether the fed cuts one, two, three times could investors do well in munis this year? >> that's a great question, kelly. i think they can. so the positive news about the fed on hold is we continue to have pretty interesting yields in the tax exempt space. if you think about the yield on a broad based municipal bond, high grade index, it's about 3.7%. if you tax adjust that for those in the highest income bracket, you can get yields north of 6%. i think that's awfully compelling. so whether the fed cuts this year or it's pushed out a little bit, i think it's positive for our market. and i think the big thing here is that, you know, the fed has a high bar to hike.

and so i don't know when their next move is likely to be. i would say we're more likely to cut than hike from here. >> i'm curious where there's pressure on the senior living segment, which is said to be one of the safest parts of the market. >> yeah, it's a good question. i would caveat it by saying there's a lot of different issuers within that sector. so the muni market is known for having tremendous issuer diversity. i would say that's also prominent in the senior living sector. but there's a couple of factors that are pressuring that sector broadly speaking. costs have gone up a lot in that part of the market. so the cost to provide services has increased. so you're seeing a little bit of margin pressure. again, issuer dependant but sector wide. >> it mirror what's going on more broadly. what about with high er age, is

it a population issue? >> it's a good question. i would say there's lots of different issuers within the higher ed sector. but i think that's right. we're also hearing a little more challenging stories in the higher ed space. and that often has to do with demand. so demographics are shifting across the u.s., and some of the smaller, higher ed institutions are facing a bit more pressure. again, i would say it's very issuer dependant. >> where do you see the most exciting opportunity right now? >> yes, this may not sound all that exciting, but i think it's pretty interesting value in aaa housing paper. so you can buy bonds, around a 4% tax exempt yield, which, again, if you think about the benefit of tax exemption, that gets you to 6.5% taxable equivalent yield. for aaa, five-year duration bonds that can do well in all sorts of environments. i think that's a pretty

interesting opportunity in today's market. >> courtney, thank you very much for your time. we appreciate it today. >> pleasure to be with you. let's get to tyler mathisen now for the cnbc news update. tileer? >> thank you very much. an illinois man accused of killing seven and injuring dozens more. in 2022 at a parade in chicago, rejected a deal to plead guilty to seven murder charges today. it was a stunning reversal in the courtroom. just days before the second anniversary of the attack. prosecutors said the shooter admitted to the attack, firing from a roof top along the parade route. former gop congressman adam kinsinger enforced joe biden ahead of thursday's debate. he said trump was a threat to every american value. a critic of the former president, he was one of two republicans who joined the january 6th committee with liz cheney. he also voted to impeach trump for inciting the insurrection.

and alex morgan was left off the olympic roster in paris. she was the most notable absence. having been named to the squad for several friendlies against south korea earlier this month. it is the youngest roster for the u.s. since 2008. kelly, back to you. passing of the torch. >> tyler, thank you very much. coming up, our next guest isn't buying tech for two reasons. including that he still sees a rate hike on the table. and check out amazon, hitting all-time highs today, enou to gh join the $2 trillion club. back after this.

welcome back. markets are still keeping a slight hope of a july cut on the table ahead of friday's pce number. you see that 10% probability on the left of the screen. but my next guest says given how persistent inflation has proven, he wouldn't be surprised to get a hike. because of that, he's avoiding tech and playing defense. joining us is phillip columbo.

going out on a limb here, phil, why? >> so i've been saying i thought markets would perform well because earnings have accelerated this year and in 2025. we're probably close to the end in terms of this fed hike cycle. however, as we've seen inflation has been persistent and sticky, especially on the services side. and we're a services economy. we have an economy that continues to perform well as we are seeing, and you have bits of stimulus still coming into the economy with the different acts that were passed. it may be tough to get services down. inflation is the number one threat for low income households, retires and for the overall economy. i think the fed is right by holding off. the problem is that you may hold off too long, or at some point make a mistake, and that's the biggest risk we are all exposed to as investors. >> a lot of people have cut quarterly. so you're not among them. i imagine that's why you're not

a big fan of that trade. >> yeah. so kelly, i look at opportunities where we've got fair market value. that's something that i'm looking at continually. if you look at the tech sector, which has done well, and will continue to do well over time, it's just that they're overpriced for what we are looking for. it's like buying real estate at a one or two cap. nobody would do that. that's where we are at with technology. but there are other areas of the market that look attractive. >> i know people that buy one cap or two cap and say prices never come down. so you're looking at reits and utilities, some specific stocks like nike. do you think stock selection and specific stock hold seldings is way to go here? >> we have a very narrow market in terms of performance. if it broadens out, if you look at utilities right now, that whole sector is trading as cheep

as it did in 2008, 2009. but you think about that sector, we think about technology, there's going to be an increase in electricity demand, that can rise two to three times over the next five year. and entergy is one did that can thrive. energy, they're working with companies like amazon, google and meta. you have some of the lowest electricity rates there. they're putting together a $33 billion investment over the next five years and trading at a 15% discount just got an increase of 6% most recently of the dividend. for me, i think that the risk/reward makes more sense. >> i'll just point out the irony you don't like technology because of rate hikes, but you like reits and utilities that do the poorest in that situation, but it's all about valuation. so it makes me wonder, is this

even about the fed at all, or are you just looking at valuations and sticking with what you think is undervalued? >> the best advice is that the timing of interest rates and the economy and markets is really a waste of time. the best thing you can do as an investor -- looking at real estate with market caps, makes sense at 6%, 7%. same thing with investments and businesses. you're investing in a business that you do the work, what is it trading at, lots oh of free cash flow, and you're patient, which is the edge that we all have as an investor, that makes the difference, over three and five-year period. that's how we look at it here. >> all right. phillip, thanks for your time. >> thank you, kelly. take a quick break. after that, bank of america is sticking with bullish outlook on rivian. news that ev maker is partnering

with volkswagen, and banwe willg into the details, next. we are so excited to welcome you to our community. today is all about you. (♪♪) (♪♪) (music playing)

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welcome back. shares of rivian surging as much as 30% today, up 20% after pairing those gains somewhat. all this after announcing a partnership with volkswagen. big excitement around this, phil. >> kelly, when i talked to rivian's ceo yesterday, he called this a win-win. a win for rivian and a win for volkswagen. let's break down the deal. some are saying, i'm not sure this is a win for volkswagen. the volkswagen group will invest up to $5 billion in rivian and form a joint venture focused on software for electric vehicles. and then you have rivian gaining capital, much-needed capital, so

it can make it all the way to the beginning of production for the r-2 model, smaller, mid-sized suvs. but that production is not expected to begin until 2025. they unveiled this earlier this year. a couple of models that they believe will annoy them to tap more into the main stream market opposed to where they are with their r-1 models right now. but that doesn't come until 2025. they're going to build a plant in georgia where production of the r-2 will ultimately be moved to. so between now and then, rivian, when you look at sales and deliveries annually, they have grown deliveries but production is going to be capped at 57,000 this year. so that bar right there on the right will not go a lot for 204. and then '25, and the growth will be limited there. so as you look at shares of rivian, they lost $1.4 billion,

more than $39,000 per vehicle in the first quarter. so they still got to pair their losses, and that will be a focus no doubt of the investor day tomorrow that rivian will be hosting. as for volkswagen, their ev sales were down 3.3% in the first quarter. they have made it a goal to dramatically increase their ev sales worldwide. but they have struggled on the software side. they struck a similar deal to what they have announced with rivian, with x paying out of china. this is all about getting more efficiency much quicker when it comes to software. the reason, kelly, why shares of volkswagen are not moving higher on this deal is that in the world of autos, joint ventures or partnerships like this between a couple of automakers, where one says we're bring thing expertise and another says we're putting in some capital, they don't always work out. now, this may be the case where it does work out, and volkswagen

does gain software expertise that can help them move much quicker when it comes to electric vehicles. but the history of these deals within the auto industry is one where lots of fun fare when they're announced, then you look back and say, did that really produce the gains that everybody expected? we'll have to wait and see. >> i don't know if you would say this is a fair comment, but is it fair to say these types of joint ventures rarely work out instead of sometimes don't? >> they work out best when it comes to manufacturing efficiencies. in other words, you have a couple of automakers who are saying look, we're going to be working on drive train units together, which we used to see more of that in the '80s and '90s, when everybody was saying why are we doing the same thing when we're just trying to get greater efficiency out of our engines. that's where you saw the real growth in terms of these deals working. when it comes to deals where one is supposed to bring a certain level of expertise and another

is bringing let's say capital or their different level of expertise, sometimes it works. but there's no guarantee of that. you've got two companies, you have to see if the cultures get along, et cetera. >> i still think of the ford rivian example from recently. phil, thank you very much. coming up, european regulators are blocking adobe's takeover on one of the biggest acquisitions oh of a software startup ever, after a $12.5 billion tender offer. we'll talk tdyn el that's next on "the exchange."

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♪ welcome back. the fast-growing design startup is hosting its annual conference today in san francisco just six months after eu regulators pushed back on adobe's planned acquisition of the company. deirdre bosen joins us with the exclusive with dan field since his first ceo interview since that deal termination.

deirdre? >> we're going to get to some of those reflections on that deal. but let's start with today where some 10,000 people today in san francisco, you just stepped off the podium where you announced a bunch of different artificial intelligence features. it's both a threat and opportunity. how will generative a.i. help your design users and programming users? >> it's a great question. thank you for having me. and thank you for coming. we just got done with our keynote. we announced the a.i. features, you mentioned, just to illustrate what we announced, it was things like prompt two design but also all sorts of features that help designers move past road blocks and speed bumps in their creative process. i think that if you zoom out, the trend that we're on for software is exponential. there is more and more software getting created every year, as the world is digitally transforming. and i believe that the trend is actually just that we're just at

the start of that exponential curve. and in a world of a.i., more software is going to be created than ever before. and so i think the important question that we need to ask is, how do designers make it so that they're able to be even more creative and in a world where craft is the differentiator, how do we enable their craft? that's what we're trying to do with our live a.i. features is make it so designers are able to have even more craft and express that design. >> supercharge those powers they already have, which is a common thing we hear in creative and gen a.i. which molds are powering your features? >> we're using open a.i. for our lms and we're using a diffusion -- hosted by amazon. >> why those two? >> they were the ones that were working well for our use cases. the reality is you build this in a modular way where you can swap out models because the only constant right now is change. >> are they becoming

commoditized? can you, kind of, interchange one for another? do you expect to bring on more? >> yeah, i think it does take work to change out things for other models. i think that we're in a period of just rapid development for this field. anybody can see it's not only models are getting faster, but prices are decreasing. and i think that, you know, i suspect that we'll start to see some of these model companies specializing more over time. but right now, it definitely feels like a race to me. so, it's been a very interesting time to be an observer and customer in this place. >> let's talk about pricing. figma a.i. is going to be in beta mode at first, and you're making that free. what is that going to cost you, and how are you thinking about pricing for an eventual broader role? >> yeah. so, the way i addressed this on the stage is i tried to be as honest as i could with our customers to say we're going to eat the cost for 2024 because we don't know how people are going

to use these features yet. we don't know what usage looks like. >> how can you predict those costs then. >> you can see how the usage is in the beta, go from there in terms of where pricing should be. that's where we're at and we'll figure out the costs and clearly communicate those in 2025. >> do you think the subscription model we works we've seen from some of these other chatbots? is that how you're thinking as subscription or per usage basis? >> we'll definitely have to figure that out over time. we've seen both models work in the space. but i think that the chatbot approach is very different from a product approach. >> right. >> and for us, what we care about is making sure that we're not just sprinkling a.i. fairy dust on top but really add functionality deep into the product in order to make a designer's life better. that's what you're seeing us do across our product with a.i. >> there's been news in the jge a.i. this is a darling trying to

revive itself with new funding, new ceo, sean parker. what makes a successful a.i. company in design as a ceo of figma, what are you looking for? >> i think, so a successful a.i. company in general right now, you know, i think it's hard to know. that's just my honest reflection. especially for the foundational tooling. it's a period where, i think we'll look back on this period, likely the same way we look back at the 2000 period. not to say it's just a bubble and it's a crash. but there was amazon. there was google. who are the amazons and the googles that we're going to look back on from this era? there will be important companies built. i think that who those companies are -- that's why we're seeing so many dollars flood in the space. >> right. just last question. it's been about six months since that deal fell through with adobe. it was funneled by regulators.

what's your takeaway? and i wonder, would you be willing to go through with another -- maybe the right deal if a different set of regulators were in place? >> well, i think we're very fortunate because, looking back at an entire period of the acquisition, we kept our foot on the gas. and that's why we're able to, six months afterwards -- like this and announce a ton of stuff on the stage, not just our a.i. features, tons of improvements and also a whole new slide product. and the reason we're able to do that is we kept our foot on the gas. we kept accelerating through that acquisition process. >> you even had a billion dollar breakout fee. is the ipo is eventual goal? >> there's two paths in tech, either m&a or ipo, and we tried one of those. you can probably guess what the other one is that will be in our future. >> okay. >> but i think that right now it's all about an independent

company, how we build for our audience, which is people building products. >> today is a great indication you guys haven't taken your foot off the gas. dylan, thank you so much. kelly, back over to you in the studio. >> deirdre, thank you for that interview. that's it for "the exchange." i'll see you next on p.o.w.er lump. don't go anywhere. tamra, izzy and emma... no one puts more love into logistics than these three. you need them. they need a retirement plan. work with principal so we can help you with a plan that's right for your team. let our expertise round out yours. (♪♪) iconic brands speak for themselves. we are so excited to welcome you to our community. today is all about you. (♪♪) (♪♪)

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