and to me this stock could potentially double if i'm right about china putting more liquidity. >> you were talking about it earlier. i know a lot of the u.s. companies were pleased with the recovery baba has a lot of multi-faceted company well beyond the consumer and that is the part we talk about a lot. we take a look at what's going on in the market and the dow jones up by a half of a percent and the nasdaq composite just about flat and hanging out there to the upside and 3.8. that does it for halftime. let's kick it over to the exchange it starts now. ♪ ♪ thanks, courtney i am jon fortt in for kelly evans. a big week for tech, meta all on deck to report this week and we will drill down on the one name in the group and the fast positioned in a.i. he'll join us with how much

upside he sees ahead it's not just tech we have one name in semiconductors, housing and telecommunications we'll tell you what to watch and how to position and fighting a.i. plagiarism. meet the recent college grad who built the program in his college dorm room. he's since partnered with more than 40 education companies and he has some familiar financial backers, too he is live ahead, but we begin with today's market. hey, bob pisani at the nyse. a lot going on >> what's amazing is this rally that is indeed broadening out. it's not tech stocks anymore july has changed that whole dynamic. look at this dow industrials here 11 days in a row is quite amazing and the dow is not just a industrial index that represents a lot of different industries that are benefiting from the broadening out. s&p 500 near a new high, 45.65 and the nasdaq for once is

lagging. that has been the case all month as tech stocks, not falling, but not leading the charge this time new high list, i'll tell you what you find interesting about the high list. no tech names on here. you have bank stocks and consumer names like walmart, consolation and lowe's a few pharmaceutical names like abbott and no big tech names and that's been the story of this broadening out another way to look at the broadening out energy stocks which had been terrible performers for most of the year are all showing leadership and chevron had a pre-announcement and independently of that oil is near $78 halliburton has been moving up and hess, occidental and the entire energy not doing very well going into july all outperforming. so give you a sense of where the sectors are here this is what i mean when i say broadening it means banks are leading the charge it means energy is leading the charge the russell 2000 small cap has underperformed all year. suddenly and it is now outperforming and the s&p is up more than 2% the dow transports were at new

highs recently up 4% for the month. metals and mining. these are a cyclical sector and you'll notice technology is not on this list it is, in fact, lagging for the month. speaking of earnings, of course, we will have techearnings as jon mentioned coming up here and of course, the big one is alphabet, microsoft, texas instruments and meta, seagate and stmicroelectronics and we know a.i. has led and cloud is strong the question, i think, for a lot of people is can this a.i. revolution broaden out it's got to be a bigger story than just microsoft and nvidia, obviously, and that's what a lot of the tech bulls are hoping for at this point. the secondary and tertiary names will also make positive comments along those lines. jon, back to you >> we'll see there and while energy and banks have the gas in the markets today, we are going to go back and see if we should be hitting the brake on tech. one of the big tech names reporting tomorrow is microsoft. that stock is up more than 40%

year to date currently trading at a forward p-e of 32. a.i. excitement, one of the big reasons why as bob mentioned, my next guest says it will be a big catalyst going forward and he's bullish because of it and he has an outperform rating on microsoft and he's arguably best positioned to become the new a.i. position and let's bring in timoney horan of oppenheimer p-e is 32. i don't know you tend to luke your p-es like your professional athletes, it's getting a little up there. why is this the name for a.i >> hi, jon good afternoon we have it trading closer to 26 times next year on the calendar year and it's complicated because of the calendar year microsoft basically is becoming the platform and the operating system for artificial intelience and they have by far the best infrastructure and they have two

or three operating systems and they also have a billion subscribers globally that are using their suite of products so they can reinforce learning on the a.i. and leverage a.i. faster and better than anyone out there. >> andy jassy at amazon would beg to differ. he made the case to us just a couple of weeks ago. there could be an argument out there that microsoft was first out with the a.i. wow, challenging google in search and since there, we heard from alphabet from google and we heard from amazon. they're making the argument that they're going to do just as well in a.i does that have the risk of taking some air out of microsoft sales valuation wise if they do, in fact produce? >> that was a great interview, by the way thanks for doing that. we think basically the problem with amazon and google to a degree is they've been making their own chips and they're somewhat competing with nvidia and they did not optimize the

cloud structure like microsoft has. a.i. has the large language model at this point and this is where all a.i. innovation is occurring as we speak and the more usage you get the more reinforced learning you get and it basically becomes a positive, virtuous cycle it's going to be very, very difficult for others to catch up to microsoft at this point because they're also applying it to all of their own applications and they're the largest provider in the world and they have a co-pilot and they'll sell co-pilot as an add-on to office 365 for $30 a month which is a staggering number and they'll roll this out very, very quickly. microsoft also has relationships with essentially every enterprise customer in the world and those enterprise customers are coming to microsoft and asking them to help them monetize their data because open a.i. has the best model and i have to go with the best model >> it was very interesting, i heard from a cisco executive

over the weekend excited about how microsoft was pricing that a.i. tier because it sort of gives the rest of the industry permission to go after some margin there and into communicate that there's value, but there's more to microsoft especially in this quarter than a.i. that's a relatively nascent effort you've got azure growth rates to be concerned about we have this pc cycle that's been challenged, but we've heard from the likes of intel that the inventories are more under control. how is that going to play out in microsoft's quarter and are investors going to pay more attention to those present metrics than to the a.i. future? >> great point this is a widely anticipated quarter and there's a lot going on, but it's a bit of an easier quarter for them and it was the first time in my history and in the last seven years of following the stock and they had a weak fourth quarter and the comps were a little bit easier and their guidance on azure was

relatively strong and we think they're gaining quite a bit of share from aws at this point on the pc side, things are looking easier from the year over year comp and we believe that a.i. will drive a year from now, but it will drive another p.c. upgrade cycle to help support a.i. you're right an awful lot going on and we'll look to see if they're gaining share in search and that is also driven by a.i. at this point also, but azure, we suggest it is going fairly well and it is critical for them on the market share relative to aws for the whole industry at this point >> you know we'll be following those numbers closely on c nbc s they break on overtime >> thank you >> two-year notes, rick santelli with the market action >> jon, this is the first of a three-tiered auction process that will start with twos and end up with seven years and the

combination will reach 120 billion. today's 42 billion in two-year notes and i give it a c+ with demand the yield deduction 4.823, and pretty much close to where the one issued market was training if you look at all of the metrics they're pretty much at or slightly above average and the ones that aren't are very close. there wasn't a terrific auction. it was pricing a bit messy, but do understand yields have been rising most of the session along with the green that we still have in the equity markets tomorrow we'll have 43 billion in five-year notes and finish with sevens, but maybe the most important issue of all is how short maturities have really ratcheted up and as you see on that chart, 507 is the key, high-yield close for two-year note yields and many traders continue to monitor that until two-year note yields challenge that level no matter how high they snug up, many believe the highs are still in the rear-view mirror back to you. >> all right, rick, thanks

>> let's get back, once again to the techtrade despite most of the sectors sitting at or near the 52-week highs and most names still have not taken those all-time highs from 2021 retracing almost all of the 2022 losses less than 7% from those records. our next guest says that level can be seen as resistance and there's some medium-term reasons to be positive on those technicals and let's bring in the cnbc contributor for more. hi, katie. as much as things are soaring, technically, it looks like there's room to run? >> the uptrends are definitely supported by positive, intermediate momentum and we've seen real meaningful improvement in long-term momentum, as well, even in the sectors and the things that don't look like the qqqs and other sectors that have downtrended ahead of their

phases so there are very redeeming qualities and the short term momentum has fallen a little bit and that's something that we've had an eye on from a technical perspective and it's not at the point where we're seeing decisive sell signals and we are at the point where we are shying away from adding new exposure at current levels and we're at a medium-level hold here and not a weak hold and not a strong hold, but ahold. >> what are the levels that we're watching from here that will get you off the dime one way or the other >> well, for the qqqs as mentioned, there is resistance and it's not until the 2021 high and that's something close to 8% or 9% above and that seems very aggressive, quite frankly, as an upside objective based on where we've come from. so because the support level and reusing with the rise in 50-day moving average is generally speaking as gauges of initial support because those are somewhat far below that doesn't create the best risk reward even with the resistance for the qqqs

about 8% above so we're in this mode where we're not adding no exposure with that in mind and we usually like to see the reward to risk better than two to one, and we don't have that at this time and that goes for not only the qqqs, but areas like the semiconductor sector as measured by smh. smh still has the support of positive momentum, as well, but it also faces resistance from 2021 it's right around 160. you can see it is a very strong level, but through that, of course, it would be a nice breakout we want to be there just in the event that it can break through. other names to watch, frankly, microsoft into earnings with the resistance around 350 essentially being tested a breakout would be bullish, but if it fails to break out in response to earning that would be a setback >> the smh is so interesting right now because nvidia has been this major story of the year powered by a.i. and jensen

wong's vision there and then at the same time you've got intel which is in this very difficult turnaround pat gelsner is trying to get that done. they report thursday this week all of that is sort of wrapped up in there. you have names that have really high valuations and some that are being given up as, you know, yesterday's story. >> it is really interesting and it does make the case for active management because you can find different tops of setups which you can argue that intel has created and also these strong uptrends and new all-time highs and the likes of nvidia. we think some kind of barbell type of strategy and another example would be the cloud computing stocks of crm or the etf which is clou. those look like long-term turnarounds, but short term they're starting to lose momentum and we don't know if we have a great entry here, but if

we own them we want to have the balance with positions that have the long-term upside momentum and ideally those like nvidia that are at or new highs and reducing exposure as we see sell signals arise. i don't remember what all is in these indices. but when i'm thinking about cloud stocks, sas and adobe software which had dropped quite a bit after the announcement of the figma acquisition that's come back a lot and then you've also got names like hashicorp that are recent ins. but some wind has come out of the stock sales there so similarly, you have bifurcation within these indices that are probably a little bit unusual. >> well, it's interesting. when you're seeing these stocks react to earnings, if you see gaps down, this is a negative development and something to respect and at least keep an eye on if you're positioned there, but we are also seeing a lot of breakouts and breakouts have

been seeing good upside and we have many of the names to report earnings and see if they can clear resistance on the chart as a case to hold them and yet, we are also watching very closely a couple of metrics from a technical perspective to dictate reducing exposure and that one would be the 20-day moving average. it's a really easy thing for folks to watch from home when the 20-day moving average starts to roll over we have enough of a loss of momentum behind that security to dictate at least a reduction in exposure it doesn't mean you sell the whole thing necessarily, but avoid a significant pullback, and if you look broadly speaking, the qqqs and the smhs, they all have the support of the 20-day moving average and when that changes we would be dynamic in our positioning >> katie stockton, appreciate it >> of course. coming up, the market fully expects the fed to raise interest rates on wednesday, but

what about the meeting after that steve liesman is here with a look at how many more rate hikes might be in store. plus, verizon, real estate services firm on deck with results. you have the action, the story and the trade ahead on earnings exchange as we head to break, let's get a quick check on the markets with the major averages in the green. the dow outperforming up 200 points and the s&p up about a half a percent "the exchange" is back after this ♪ ♪ bc ehae"n s "thexcng o cn more than just an investor, you're an owner. our financial planning tools and advice can help you prepare for today's longer retirement. hi mom. that's the value of ownership. sweat isn't sweet. it's salty. lmnt. more electrolytes. zero sugar.

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♪ ♪ welcome back to "the exchange." the market is ready for the fed to raise rates this week, but the case for one or two hikes could come down to, believe it or not, simple math. steve liesman is here to explain. >> with some simple math, jon. let me know if you follow. >> it's simple >> get a pen and pencil. as you said, markets have fully priced in a rate hike this week and it's skeptical about the second hike which is forecast by the average fed official of course, we listened closely to the chairman on wednesday to see what kind of guidance we get and there's a reason why the second hike could happen and you can see if you do the market and look at the real or inflation-adjusted rate. the one-year ahead inflation expectation at 3.8, and subtract that from the current funds rate

and that shows the current real rate is 1.3%, a number i want you to know that only turned positive in february which means the fed has only been restraining or positive on the funds rate for five months now the question is where does the average fed official want the real rate to be? we look at their own forecast and we use the outlook for inflation to do so it shows they have more work to do by their own reckoning. the average real funds rate forecast for this year is 2.4% and declining to 2.1 next year the forecast for the neutral or long-term rate at 0.1% and the fed wants to put a good amount of restraint on this economy as you can see from the chart, we just showed the fed has 100 basis points more work to do if, indeed, it wants to achieve tha for the real rate and it is a decline in inflation and the other half from the rise in the funds rate and that's highway you get more higher, real rates

and about half of it from the decline of inflation and another 50 bases points and that would argue for those two hikes being real >> you kind of did the math for us right there >> it's simple addition or subtraction. >> how much do i have to put on the brake if the car is coasting, right? if you think you're relatively flat or going uphill you don't have to brake because the car will slow down and inflation, then you'll have to put on the brake a little bit more. >> how much more is the question >> guys, can you put up the first chart you have, the calculation. minus this and minus that and i want to make sure everybody understands and there's a lot about the whole chart that's up for debate i didn't talk about it, and the first thing there it is, thanks so much, guys. the current nominal rate and we're not going to debate that what do you use for the deflator and 3.8% and the reason i'm using inflation expectations, jonathan is because the fed is so into expectations as i think

why, because as jeff the former fed president put to me, what do we ask of people, what would you save today versus spend today and that decision, he thinks is most closely tied to inflation expectations if i think inflation is going to be x, i need this number for me to save, okay? so that's why. >> ghostbusters. >> it's like ghostbusters. what are you afraid of the stay puff marshmallow man. >> yeah. inflation expectations and boom, there's the inflation, right just another thing, which is if you look at the real rate and the long-term neutral rate of 0.5% and that's also a question. we don't know if that number is a little bit higher or lower and that fed understands what the right amount of breaking is for the economy and that's going to be a matter of debate. there's a.i. and a lot of demand

for capital, perhaps and that means that people need more money and it means the rate for money could be higher. >> if you want to put an end to those hikes don't think about the stay puffed marshmallow man. >> or get the cloudsmith guns. >> don't cross the street. >> the big question for investors is whether two more hikes could derail this rally like a big stay puffed marshmallow man. my next guest does not see that happening because there's too much cash sitting on the sidelines and as investors will be anxious to deploy that. joining me now is the senior portfolio manager. andrew, no more here last month you said despite an overbought market and plenty of reasons for near-term cautions, i have a hard time seeing the market correcting much it hasn't, right so how does the fed play into that from here >> well, eventually the fed will slow the economy enough that

earnings estimates are going to be too high or coming down, but we're just not seeing that yet, and i think a big upside for the market is that earnings growth will reflect from negative in the second quarter to positive in the fourth quarter, and that's going to build salesmen news yachl yot year earnings estimates were too high and we won't really know that until next year. as long as companies report in the second quarter in line with what's expected, then i think the earnings estimate for next year will inflect positive and markets tend to put a pretty big multiple on that, and so i think that's to come in the third going into the fourth quarter. >> challenging market because the stocks have run so far so you say that people should average in cash this summer on a monthly basis. that's what you said in last month's note, right? >> that's right. so last year i was pounding the table in every 5% decline

starting down 15 you've got to add the equities and i felt like an idiot where the market was down 25%. i just don't think we'll get that pitch this year because the number one question i get from people is when is the pullback coming i've got cash deployed and that's consistent, unfortunately, jon, as you know with coming out of a bear market low. unfortunately, investors don't buy equities they sell equities and the data suggests that people have been net sellers since last summer, and i think that will reverse because to say it won't reverse is to say the fear to greed cycle is not there once that reverses, that will push the market higher and that's why they're not getting much downside and that's because the volatility are viewed so low. >> look at the week in july. we had the pullback ask the

market reversed right away i think it is very, very consistent with the bull market and i can see high beta stocks very well ask we're going into earnings season a lot of expectations make me nervous and i question the lack of fund flows and there could be a pullback >> you're saying we could get another leg higher this fall, but then what about after that because fall and especially the end of december has been awfully tricky for the past several years, almost scarily, consistently, things can reverse. so how should investors position for that and what should they watch for? >> i think it's going to be a good fourth quarter because i think the anxiety of too much cash is going to eventually -- investors will capitulate. i have to get more invested in retail institutional and they're under way in equities and i think that cap itchitulation wil

push the market higher not to mention, again, investors brought a big multiple on reflect the earnings higher and next year's consensus was 245, i think you'll get a good number and my biggest worry is the story of post-covid. if you look at covid, investors sold equity into 2020 and into 2021 and they finally capitulated and caught the last few innings and then the market sold off i suspect that this will be the same story this year will be a very, very good year and it will blast a little bit into next year and then we'll start worrying about a slowdown. >> i have to admit, i'm a little concerned because we have taylor swift's eras tour and the barbie summer andrew simon with morgan stanley, thank you >> coming up, xing out twitter

what's behind elon musk's very swift rebranding and how much will it matter to the user base? we will debate when "the exchange" comes right back they ? i'm listening. well, with ibm, you can use software to help you connect and analyze data— from hvacs to elevators to lights. what if we use ai-driven insights to pinpoint inefficiency? yep. and act on it. saving energy, money... ... and emissions. yup. that's a big one. now you've built something better for everyone. that's the sustainability solution ibm and a global real estate company created. what will you create? ibm. let's create. ♪ the thought of getting screened ♪ ♪ for colon cancer made me queasy. ♪ ♪ but now i've found a way that's right for me. ♪ ♪ feels more easy. ♪ ♪ my doc and i agreed. ♪ ♪ i pick the time. ♪ ♪ today's a good day. ♪ ♪ i screened with cologuard and did it my way! ♪ cologuard is a one-of-a kind way to screen for colon cancer that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur.

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>> we are near session highs on the dow and the s&p up about a half a percent and the nasdaq is the laggard up just a bit, 25 points coming up, there isn't a single analyst with the sell rating on nxp semiconductor. is the street too bullish? ahead of those results we will ask our trader next in earnings exchange and before we head to break, let's get some show & tell where we show you the chart and tell you a story chevron's leading the dow after reporting preliminary earnings

results. the company says the cfo will retire next year and that it's waiving the mandatory retirement age. here's what mike told "squawk on the street" about chevron's investment in the permian basin. >> it is the best place for us to be investing our dollars and it's the largest single destination for investment and we produced more out of the permian basin in the last quarter than we ever have and it's up 10% over the same quarter last year and over 770,000 barrels per day and our rfmns san track and we'll grow this by the middle of this decade.

♪ ♪ ♪ a good day for the dow welcome back to "the exchange," everybody. i'm tyler mathisen with your cnbc news update israelis are protesting the passage of a bill imwellitying the power of the country's judicial system. police using water canon to disperse protesters and those that chained themselves out

parliament the bank is letting workers protest with pay and some are going on strike there. >> unilever will comply with legislation that can see its employees on russia conscripted into the war in ukraine. in a letter published sunday, unilever's business operations and supply chain officers said the company would always comply with all of the laws of the countries we operate in. the consumer goods giant which employs 3,000 people in russia has faced calls to quit operations in the country following the invasion of ukraine. and the climate activist greta thunberg was forcibly removed by police from a protest in sweden. thunberg and other activists were blocking the road for oil trucks in the city and she was charged for failing to lead after receiving police orders. her arrest came just a few hours after a look at court finder for disobeying a similar protest

jon, back to you >> thank you now it's time for earnings exchange we have the akd, the story and the trade on npx semiconductor, verizon and anywhere real estate first up, nxp semiconductors and shares are up 35% this year. flat into the print, though, the company reporting a 17% year over year bump in automotive revenue last quarter, so investors will be waiting to see if that momentum continued throughout q2 which china exposure is also going to be top of mind as economic recovery overseas remains slow, but nxp has topped estimates 18 out of the past 20 quarters, recently boosted its dividend by 20% and let's trade this name and more with founder and managing principal ryan bellinger ryan, okay nxp, what do you say >> good afternoon. i think nxp has had a tremendous run here in the last 18 months

or so. it's almost back to where it was in january 2022, those highs that it had and so any of your viewers have been continuing to hold the name, that's great for them they've almost got all of the way back and they're collecting the 2% dividend which is nice, and as you mentioned, they continue to beat on revenue very consistently on earnings per share basis and they're less consistent so we're more skeptical of that on this trend, but i think nxp has a lot of opportunity i think investors just need to know what it is and what it isn't. >> okay. >> next up we have verizon shares down nearly 8% this month after "the wall street journal" reported both at&t and verizon led thousands of lead-covered cables in place in addition to any updates on that situation, the street will be looking for guidance on verizon's consumer segment after it launched the wireless plan a couple of years

back the telecom giant will set the table for a dividend this fall too risky here, ryan, or an opportunity with the stock down so much? >> yeah. i think there's opportunity here it has been a tough run for verizon and it is paying 8% and one of the only stocks that's actually beating cash. you get 5% so finding a stock that can pay a better dividend than that is nice. so i like to hold on to this, and you can hang out and you're still collecting more than you would. the problems with the cables will be tough. this is an unknown and the market does not like uncertainty. so we'll be watching to see what they say in their call tomorrow morning to see if they address it and what impact they think it might have on future earnings because it's a cash flow business which is very nice. >> finally, location, location anywhere real estate shares is up 5% ahead of second-quarter results and the real estate

conglomerate had a testify first quarter, though, reporting $138 million loss and 31% drop in closed transactions with the franchise group and anywhere has pledged to cut $200 million in spending by the end of this year, but with housing supplies still sitting near record lows is there more tough sledding ahead, ryan? >> yeah. i think this is probably a name you want to avoid at the moment. i'm not saying there's anything wrong with the business. i just think secularly, this is a tough place to be. the housing market is not only in the bad market. it's in a really bad market and interest rates have gotten to the point where it's really unaffordable to move if you're in a home with a mortgage rate at 3% that's locked in. why are you going to move unless you have to move, and i think that's what a lot of people are experiencing as a result, there's not a lot of supply in the market and as a result, these brokerages can't turn over houses and they're not

trading them as often as they were the stock went from $2 to th$20n one of the greatest real estate cycles they've had in the last couple of years and at this point you have to wait and see if the housing market can thaw out a little bit here because for the time being i just don't see people moving around as much as they used to. >> it was at 13 last fall and it's gone from 450 in march up to about $7 plus right now you think that run, since the spring was overdone or has it come down enough it's not as if people are extra excited about the stock. they are today, it's up 6% >> i think it's speculative. it's a small name, relatively and under a billion market cap this is what happens in small-cap stocks and if you're an investor that owns this, you have to know you could be in this for a very long time or things can go your way for the next couple of quarters and you can make a few bucks

so as a long-term hold i'm not sure this is where i want to be, if you want to speculate, be my guest. >> so you're saying you might want to flip it. ryan belafnger and we will dive into anywhere with ryan schneider tomorrow do not miss that elon musk rebranding twitter to x? that's just his latest for the, quote, everything app. what is next we will discuss. "the exchange" will be right back

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or plan to be. side effects include nausea, vomiting, and diarrhea which can cause dehydration and may worsen kidney problems. (woman) i can do diabetes differently with mounjaro. (avo) ask your doctor about once-weekly mounjaro. twitter is now x, maybe? elon musk rolling out the rebranding this morning and also announcing that x.com now redirects to the twitter website as part of his long-held ambition to create an everything app that combines messaging, social networking andpages and that is the focus of today's

tech check with deirdre bosa i don't know if this is sticking what will people say i'm spending time with my x? >> what would be thor e verb of? the idea is a wise one they've been able to collect over a billion users and it's a lot harder here, jon you know this well and the way that the internet has developed and our payment systems make more difficult and it's not as intuitive as it is in a place like asia that doesn't have the legacy credit card and systems that we do so there is a major question around whether musk can actually succeed in doing this, but the idea of it is great. you have a walled garden and you can put user, sellers and advertisers in one place the algorithm is travened better

than having separate apps and i just doan know how likely that is and that's the biggest that will efrj that they'll have here. >> it hasn't exactly blown the doors out and neerlth has didi's and it seems this conglomerate approach has happened through the ages yahoo had the -- i forget what they called them at the time and bringing those platform it is together and google and facebook taking instagram and facebook and whatsapp and mess eenger an putting them together with payments it's been a user interface issue that people with apps do a specific thing. >> all of the companies that you mentioned, yahoo! , google, facebook they all started to the desktop. so they were developed when companies were still building through a computer and through a pc whereas the like of wechat grew in a mobile internet era

whereas the companies here were more narrow. facebook existed on your computer, so they'll put it on a phone, so there wasn't as much opportunity, but i really do think there's the payment and it's the biggest sticking point and i would urg that grab has succeeded more than here because the payment system allowed them to and it's largely free you is all kinds of fees here in the u.s. that don't make a good incentive for the companies themselves to put on a super app. >> i wonder if elon ends up competing with square. jack dorsey again and who knows how they feel about each other now and apple and the banks as if he doesn't have enough to do. >> if he can i don't know if they're scared. >> i don't think tim cook is scared. >> me neither. he doesn't scare easily, that guy. very, very chill i admire that. all right. deirdre bosa, thank you. still ahead, humans deserve the truth. that is the ethos behind a.i.

detection site gpt zero and we'll talk to the ceo about the service's explosive growth in the latest round of funding next and a quick programming note, cnbc and boardroom are partnering to bring you "game plan." a one-day event hosting some of the biggest names at the intersection of sports and business including kevin durant and stan gronky and it's happening tomorrow in l.a. to purchase tickets scan the qr en.c on the screen or go to cnbc evtsom we'll be right back. (vo) it's time to switch to verizon. sadie did. and now she has myplan. the first unlimited plan that lets her choose exactly what goes in it. now she gets to pick only the perks she wants and saves on every one. and with an incredible new iphone on us, no wonder sadie is celebrating. introducing myplan.

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welcome back it's no secret that generative ai has become wildly popular while it might make some tasks easier, it also raises some serious concerns about ethics, copyrights, even job security. my next guest identified these problems early on, spent last year's winter break building a tool in his princeton dorm room that detects ai-generated texts. his product is now used by schools like nyu and purdue, has more than a million registered

users since its launch in january. joining me now is edward tian, co-founder and ceo of gpt zero edward, welcome. so you're a journalism minor along with your computer science major. i love that. how much did that factor into your desire to figure out what's accurate and genuine and what's not? >> it was absolutely everything in terms of i was on the computer science side doing research with microsoft, with princeton's natural language processing app on detecting ai, but at the same time i was a journalism student, i was taking classes with amazing writers like "new yorker" writers and everybody was like wow, we've got to figure out a way to preserve the value of writing. and i previously worked for the bbc as a journalist too. and we were like oh, man, this is going to change the industry. it was definitely a combination of the two >> so last week, end of last

week there was an agreement brokered by the white house, informal agreement between the likes of microsoft, meta and others to abide by certain principles and actually reveal when things are ai generated that seems difficult to do, though how do you see it? >> yeah. it's a very difficult thing to do the other key point is the really big ai companies incentivize themselves to invest in building this safeguard because their business is not detection, it's generation of ai and what you see is some of the ai community actually coming to outside startup like us, gptzero and saying maybe the big companies aren't incentivized to do it, maybe we need a third party to be able to build these new technologies >> i can imagine a scenario where either built into a device's operating system, built into a browser, you have something that changes the color of something when it was

ai-generated to sort of, you know, using that intelligence in the background to let you know that perhaps this piece of text was not generated by a person. why is this important, say, for investors to think about, not just in the stocks that are going to do well at ai but information flow and accurate information is so important to investing. how might ai jeopardize that >> well, it's definitely critical for investors or anybody to know because let's say you're trading off your bloomberg terminal and now recent investigation used gptzero to identify over 500 sites using ai-generated news. now, these information and pieces are more prone to making up facts if you trade off false facts, that's costly to your business that's critical. so then there's an incentive for people to know the truth not just a moral incentive but also a business sense as well. >> so what is your moat, what is

your vision for what the core i.p. is for gptzero? i mean, this is a tool, it's gotten popularity, but how are you thinking about the way you want to build the company on top of and beyond that >> yeah. well, what we have now is integration everywhere in terms of we work with microsoft to integrate into microsoft word, we're -- we have an extension to be able to detect texts that you consume on the web, on your e-mails. but the future is not just the detection side what we're building is a live tool for people to prove that they wrote something and verify that they wrote something. and a tool for frankly the future a lot of people are using ai to write, but instead of just letting people write wildly with ai and not setting at all, how can we make a new platform that incorporates detection but also verification in terms of i'm sending you information, here's

proof, here's a video, here's everything where -- where chatgpt was used and where i wrote it myself and to preserve the human aspect in writing. that's what we're building >> do you envision using ai to catch ai -- to identify it or even as an interface in a generative way for people to be able to say can you tell me which of these pieces of content have a higher likelihood of being ai-generated and actually being able to answer back in a conversational generative way? >> so right now the generative ai models can't do that. you know, chatgpt is not programmed to do that. however, yes, the same technologies we're going to use to be able to enhance ai detection. in fact, if you look at a lot of our investors, they came from an ai background. altman capital, sability ai because they recognize this whole industry of generative ai actually needs a detection layer

because if you train new models you can't use ai texts to train your new models. that's going to screw everything up so there is a lot of overlap between the detection and the generation technologies. >> a lot like cybersecurity that way. edward tian, thanks for joining us >> thank you for having me >> all right be sure to tune in tomorrow. alaska air's ceo pen minicucci is going to join for an exclusive interview following the company's earnings report. "the exchange" will be right back after this break.

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♪ (upbeat music) ♪ ( ♪♪ ) constant contact's advanced automation lets you send the right message at the right time, every time. ( ♪♪ ) constant contact. helping the small stand tall. welcome to "power lunch," everybody. alongside morgan brennan, welcome morgan, good to have you with us, i'm tyler mathisen. ahead on the program, a week to watch. a big one. another big fed decision on deck last one of really the summer. a pause maybe until the fall but anything can happen.

who knows? all while investors try to digest a huge slew of earnings, everything from big tech to restaurants and industrials. >> plus the crusader against corporations, lina khan making ripples this year with some big antitrust suits under her belt and working to set stricter guidelines for mergers down the line we're going to speak to a former doj insider about the ftc chair. but first a check of the markets which are largely higher today, tyler. we have the s&p up about half a percent. 4561 is the level there. the dow right now 224 points and the nasdaq eking out a gain as well. but of course this is all ahead of a very big week with a lot of market moving potentially catalysts. >> very much so. between the fed and all of the earnings that are coming out ahead it is a big week for mar markets. wall street expecting earnings from some 550 companies. about 40% of the dow