good friday morning. welcome to another hour of "squawk on the street." i'm carl quintanilla with sara eisen. setting the agenda for today, pimco's emanuel roman headed for jacksonville next week. hawaiian electric continues to grapple with the fallout from the devastating wildfires in maui. we'll talk to one of the company's largest shareholders about how they plan to move forward with this. rosenblatt with new target on nvidia. we'll talk to the analyst hyped that call as the bulls continue to say this recent dip is a buying opportunity. hour and a half into trading. take a look at the markets. a down week overall for stocks.

we've seen a lot of breakdown. for instance, the russell 2000 index of small caps below the 200-day moving average. there's been pain in the transports and some of the cyclical areas of the market and technology. although, carl, a little improvement with the dow going positive here. nasdaq still the laggard. down more than 2.5% for the week. utilities, staples, energy, industrials, real estate, financials now all green. so, maybe some buying here. sfwloot vix above 18. interesting the market today, despite all the negative sentiment on the week is being led by consumer names. walmart is up there, target, dollar general, ross stores we talked about in the 9:00 a.m. hour. the best s&p at the moment. >> that's off-price retail has been the best winner of the week, tjx. let's dive deeper into the economy where the focus has been on the bond market. yields rising substantially. the ten-year hitting multiyear highs as we continue to see signs of resilience in the

economy, suggesting a higher for longer narrative from the fed. it's an interesting setup for jackson hole next week where we'll get more clues on where the fed is headed. here to weigh in is pimco ceo, emmanuel roman. good to have you here at post 9. >> thank you for having me. >> what a week. what explains the rise in yields we've had this week? >> i think, as you said, people say rates are going to be higher and higher for longer. and i think that's now what the market is pricing. i think the market also priced one more raise in rate and i think people look at the yield curve and say it's very, very inverted and now it's less inverted. and you have normal behavior of the bond market with a lot of attractive opportunity. >> you see a rate hike? >> one more as the most likely

scenario in september. but once again, you have to be very modest about your prediction and i always say the fed will be very data dependent and depending on what we see in the labor market, chairman powell will act accordingly. >> when do you see the first cut? not for a while. you have to put yourself into the mind of the fed, what's the insebtive to cut too quick? not a lot. so, we think they'll be careful and they'll keep rates high for a while. >> second half of next year or even further out? >> even further up. once again, it will be very data sf dependent. if there's a recession, they'll be quicker to act, but i think they have a lot of dry powder, which is a good thing for the fed. >> he did suggest if not a cut in march, maybe a signal that

cuts could be imminent is not unthinkable. >> absolutely. and rich is our chief economist so who am i to disagree with him. >> is the house view within pimco, is it wide? >> no. i think we very much agree on this. i think what surprised us is the economy has been quite strong and the labor market remains quite tight. i think that's something we'll watch quite carefully over the months to come. >> do you think we've seen the highs in yields for the cycle? >> my crystal ball is a little broken, but we're very close to a high. and i think the way we think about it is, rates are very attractive. what's the exact high in terms of where the ten-year will be? honestly, we don't know. over the next 18 months they should offer excellent value for investors. i think that's the exciting part when you're sitting where we are

in the bond markets. >> that's what i was going to ask. you said 18 months. there's this narrative going around we should all get used to higher rates and the abnormality is what we saw in the last 15 years, post financial crisis of super low rates. do you see us getting back down to that kind of regime or are we stick up here near 5% on the two-year for a while? >> our view, and rich was explaining this last week quite well, is we think inflation will go back to the high 2s, and accordingly you should see rates come down across the curve. that's one of the reasons to be excited about bonds. if there's a recession, it will go faster. >> how are you thinking about -- cantrell does great work, and it's been a summer of discussion, but how do you think that plays on you the in the rate world as we near an election? >> there will be volatility. and i think that as one of the

mantra that i've learned a long time ago, volatility is your friend because it gives you more opportunity. you also have a banking system where no one quite knows how much capital banks need and you will see seller of assets, which should be good in terms of purchasing large portfolio of bonds from values for general banks and people who need to free up capital. so, i think you'll see this dynamic going on for the next 12 months. you also see rates stabilize and cost of hedging goes down. i think that's one of the things maybe people don't realize is the very pool of money outside of the u.s. haven't quite come back to the u.s. bond market, but they will. and it's really about the net yield for them once you hedge the currency.

>> that would be good news because we're selling a lot of bonds. >> that's true. >> there are some questions now about issuance and whether there will be demand from places like china and japan to buy all those bonds and other investors. >> i think there's plenty of demand and a matter of fine, the right price and the right opportunity. i really would not -- i would really think about the amount of money that can move very, very quickly at the right price to buy bonds. i think we'll see that over the months to come. >> interesting. meaning if there is a decline in yields to come, it could happen quickly? >> quite quickly. >> not a slow degradation? >> quite quickly. >> and i think the right thing to think about is the expected return of a bond portfolio which yields something like 6.5% to 7%, once you put corporate bonds, once you put mortgages. it's quite attractive by any historical standard. if you think of a world where

stock delivers 5% to 7% over the long run, all of a sudden fixed income does look quite attractive compared to this, given the fact it's the lower part of the capital structure. >> what has that meant for your business? have you seen the inflows go up? >> it's been a good eight months. of course, if we're right and we see many more people coming back to fixed income, it will be quite good for us. it would be more importantly good for investors as they will see significant returns on their portfolio. >> how do you think about those who argue we're in the early innings of a new default cycle and this maturity wall will come eventually for corporates if rates stay in this neighborhood, is that dangerous? >> i think you can always see moderate default cycle. if we have a recession, i'm sure you'll see elevated default, maybe more in certain industry, but the reality is that it's hard to imagine given how strong the economy is a hard recession.

i think the most likely scenario, that's what rich was saying last week, is you'll see a couple of quarter of a mild recession that will be declared a recession but we may not feel it as much as we felt it, let's say, in other large recession. i'm thinking 1991. i can date myself to 1991. >> it will just feel better. within fixed income and with these high rates, where do you see the most opportunity? is it in corporate? treasury? >> they are a lot. the mortgage market looks quite attractive. some of the investment grade looks really attractive. i think you can look at it and say the private markets where you have yield above 10% looks quite attractive. there's avery big market, which is in private fund. that looks quite attractive. and at some point in time, real

estate is going to be quite attractive. pimco has a big real estate arm. i think we will position ours to try to benefit -- >> commercial real estate? >> multifamily and at some point commercial real estate. at some point in time. it's going to be a long cycle. i think you want to think about this and you also want to think about real estate lending as a way to leg into this business at the right price and with the right assets. >> china, are you on the lookout for some kind of lehman moment? are we back to watching evergrand and country garden, the first thing we do when we wake up? >> it's very hard to tell. the one thing i think we see from data is that china is in deflation and that the economy is quite slow. it's very hard to figure out what's happening to the real estate market but it's weak. how weak it is and in terms of technical default, we don't

know. >> is it a risk factor for u.s. assets, the china growth? >> if the chinese growth is even weaker than what we think it is, at some point in time it would slow down the economy quite a bit and be a factor for a rye session and i think that makes sense. if we see that, that may very well be the fact. it's not the most likely scenario. the thing which is really surprising is i think the economy is doing better than most of us thought nine months ago. and the u.s. consumer is quite strong and so far it's performing quite well. >> what about europe, i'm wondering what bond opportunities look like there. facing weakereconomic fundamental. >> much weaker. as a frenchman, i'm always bearish on europe. i hope you forgive me for this, but on the relative value basis, the u.s. looks much more attractive than europe.

and i think the problem with europe is you need to have a business model in terms of the competitiveness of the european zone, in terms of how to compete against asia on one hand and the u.s. of course, the one thing that is affecting europe is the war in ukraine and the high commodity prices and how this is going to unfold with very little progress to speak of over the past 18 months. of course, at the expense of many lives lost. >> it's kind of unfair to compare because they do have that right in their backyard. although, ex-ukraine, we had larry fink on and one of the points he made in the u.s. we have loud, uncomfortable discussions about policy and the future of the country but we talk it out and something happens. as opposed to europe where tasks go undone for long periods of time. >> that's right.

and i think a very fragmented europe where for 30 years you had a very strong link between germany and france and this link is becoming much more difficult to maneuver in terms of having a pan-european policy in terms of getting the right goals into the economy. >> do you see many more rate hikes there, especially from places like the uk? >> you'll see a few more. the uk has its own particular problems. the inflation numbers in the uk looked better than what we expected but we think the economy will be challenged. as a strange thing to say, we're having our first forum at pimco outside newport beach. we're doing it in september. i think we're quite excited about what we're going to see there. and we're all going to europe and every single investment professional is going there to see europe on the ground. >> wow. >> do they want u.s. assets?

>> no, no. we want to have a debate and an internal debate about where the economy is going in europe, but for the first time we usually have it every quarter in newport beach. for the first time we're having it in europe. we're excited about it. >> that takes me to our last question, i guess, as we're running out of time. what's hiring like at pimco? are you in aggressive head count reduction mode or increasing? >> neither, neither. it's extremely boring. we're flat. one thing we're incredibly excited about is technology and what artificial intelligence is going to do in terms of productivity and what it will do over the next five years to our organization and is every reason to be excited about this. and i think that's something we're investing quite a bit about. we have a partnership with openai and it will hopefully give better tools to our client, make us maybe better investors

and more productive. i think we should embrace this with an enormous amount of humble pie in terms of what may or may not happen over the next five years. >> i'm curious what that partnership looks like with openai and bond trading. >> we care deeply about trying to analyze a lot of data very quickly and be able to synthesize numbers, words very, very simple and the ability to crunch all of these things is actually incredibly powerful. it's the semantic of generative a.i. and something that makes us better at our job than you would otherwise --. >> is that about the client interface? is it about actual trading? is it about back office productivity? >> i think all of the above. i think you're absolutely right. it's all of the above. i think you'll see that's one of the reasons, i think to be positive about economic growth is i think it's going to make a lot of people like us more productive in terms of what we

do. but it's also the ability, for example, to recall every single conversation and sort of be able to see trends in values, desperate form of news whether it's sound like we're talking right now, to video, to written material -- >> analysis -- >> exactly, exactly. >> for the whole organization is up to speed on everything that's been talked about -- >> we're trying, we're trying. we're trying with a lot of room for improvement and it's a long process but i think we're quite excited about it. >> i think that's why a lot of people think wall street analysts, there will be fewer of them because it's easier to just make those models with a.i. >> i think you'll see a.i. be a tremendous tool to make analysis. >> thank you. we got a lot done there. appreciate the time. manny roman, the ceo of pimco. still to come this hour as maui continues to pick up the pieces from the wildfires, questions remain about the

future of hawaiian electric and its role, if any, in the blaze. plus, we'll talk one of hawaiian electric's largest shareholders how the company can move forward and the plan for recovery. we're back in two minutes. the dow has recovered a little bit. it's up 38 points.

a lot of attention being paid to palo alto networks reporting after the bell on a

friday. many analysts and investors are wondering if the company has bad news to hide. the stock is up big this year but down 20% since it announced its earnings date, which caused a lot of chatter. what i can tell you, according to my reporting, is that palo alto said in the press release that it is going to update the midterm guidance assessment. basically, wants the analyst to have the weekend to digest the new information and agust their models on a three-year basis. the other thing i can tell you is palo alto has a sales -- its big sales kickoff on sunday, so maybe it wants the freedom to talk to 5,000 people and potential clients about information that's happening in the business. and then the other thing is, they've had a three-day board meeting this week. so, there is this curious case, carl, of why friday afternoon, but it could be explained by some of those scheduling things. no doubt, investors will be paying very close attention. >> yeah. this is more conversation than i've heard in a while about an earnings time slot. we'll see what happens later on today. meantime in the wake of

those devastating wildfires in hawaii, the state's largest power utility getting absolutely crushed although up today. take a look at shares of hawaiian electric. down about 65% month to date, clawing back some of those this morning. facing lawsuits for its alleged role in the fire, accusations of mismanagement and reports the company is in talks with restructuring firms. joining us with his outlook, is tim winter from gabelli. i guess the headline today is the company argues restructuring is not the goal. is that the reason for today's bounce? >> well, yes. first, thank you for having me on. good afternoon. i'd like to -- as a firm we would like to extend our prayers to the victims and families of this tragic event. as well as the people in maui and people in hawaii. the stock is going to continue to be volatile for some time, trading on the news and clearly

that's a positive indicator. you know, we have to look at what we know and what we don't know. there's certainly a lot that we don't know. there's currently no evidence that hawaiian electric's equipment has caused this, even though they're being accused of it. the negligent standard is a little higher in hawaii than california. nonetheless, the uncertainty is causing crisis of confidence, as you mentioned. we've had credit rating downgrade. the stock is down. but we also know that hawaiian electric consists of three utilities of bank, a generation company. maui electric is the smallest of the three utilities. it's about 10% to 15% of rate base. management can't say with certainty that they can ring fence maui electric but it's certainly going to be illegal to fence. we know the bank can be isolated

and separated. it's worth $8 to $9 a share. yes, management is not interested -- they believe they have sufficient liquidity over the near term to get through this. there's no maturities near term. i think one of the important things is to try to understand how they're working with the state. people of hawaii have have great pride in their state. they're being part of the community. and to the degree the state can work with the company as they look to restore confidence in this crisis as well as restore service and rebuild and come up with policy going forward will be really a primary determinant of the value of the company long term. >> do you think the bigger problem is the criticism that the company is facing for not turning off the power despite the weather forecasters'

warnings for these winds, the potential liability there? is that what investors are focused on? >> well, yes. investors see lawsuits in other states. a jury award against pacific corp for a major amount. we have this uncertainty. we have the credit rating downgrades. the accusations are going to be there and allegations until the investigation is complete. clearly, that's what's causing the crisis of confidence. >> we also remember tim, like pg&e in california, even though it was found to have followed the safety standards, was just saddled with so much liability related to the fires it was forced into bankruptcy. so, that's fresh. >> right. as a big picture looking long term, let's use california as a template, yes, pg & e faced

significant liability. the state and policymakers passed legislation, wildfire legislation, set up a wildfire fund, $20 billion wildfire fund. they set up a policy where the companies have to file wildfire mitigation plans and get safety certificates to be part of it to restrict their liability. they've raised the liability standard. since pg&e, and we are a holder of pg&e, doubled its share prices year to date as are the oracle cal companies, sa international as well. i think if we can step back and look long term and big picture, you know, utilities are partners in policymaking with regulators, government and the customers. so, you know, we need to -- they need to come up with a long-term solution that benefits everyone. so, i think, you know, bring

up -- >> yeah. not to mention the broader discussion of what it's going to take to modernize the grid over the next seven or eight years. we'll have that discussion, i'm sure, at a different time. tim, it is a tough story. appreciate your help today. thank you. >> okay. later this hour, renewed nvidia optimism and a fresh street high. rosenblatt's tech analyst joins us to defend his $800 price target for the stock. speaking of chips, watching amet, shares are higher today. much like nvidia analysts pointing to a.i. as a major idowth driver. nvia results coming next week. stay with us. inically shown to p grow thicker, fuller hair with just one capsule a day of advanced hair complex. conquer hair thinning... ...and fall in love with your hair all over again. only from nature's bounty.

welcome back. here's your cnbc news update. a new report chinese and russian spy agencies are preparing cyberattacks that could disable u.s. space satellites in a conflict. u.s. officials say intelligence agencies in beijing and moscow are targeting american private

space companies. they issued a new advisory to the company this morning saying the attacks could come in the form of hacking computer networks, moles placed inside the companies and foreign infiltration of the supply chain. white house national security adviser jake sullivan reaffirmed today the u.s. will approve sending f-16 fighter jets to ukraine following training. ukraine has been asking for the jets for more than a year now to help defend kyiv against the russian invasion. it is unclear when the transfer will take place. some daring runners pushed their bodies to the extreme in the world's coolest marathon this week. competitors took off from the north pole starting line in near freezing 35-degree temperatures. american melissa crossed the finish line first in the women's division. sara? >> thank you. after the break, advisers capital management joanne feeney

is going bargain hunting. she'll give us a few names in the retail and rtaesurant space she thinks will outperform when we come back. e erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

our next guest sees rates staying longer for higher with top picks like lennar and home depot and bullish on cost-friendly brands like tjx and walmart. joining us is joanne feeney,

$6.2 billion under management. it's good to have you. how are you positioning broadly for the second half in terms of exposure after a strong first half and now some wobbles here in august? >> yeah, hey, sara. you know, it really depends on the client because, obviously, we have some folks that are in retirement more income oriented. we are looking for high quality clients. as you pointed out, one area we are excited by is the bargain-hunting consumer. whether that's a target or tj maxx. those are good opportunities, or mcdonald's because they bargain hunt when they go out to eat. especially this environment, with inflation, coming down but having taken a pretty big chunk out of the purchasing power of the especially mid to low income consumer. >> tjx is widely appreciated after this week. target maybe less so, even though it had a decent reaction to earnings.

a lot of bearish sentiment around market share losses and what happened during pride month. why do you think it's good value? >> clearly, they had some missteps in managing through culture sensitivities out in the market. you know, that was hopefully something they learned from and won't be repeated but more fundamentally when you look at the offerings target has for consumers, the quality of the product, the attractive price levels, the variety of products in the stores, it's just a solid retail play right now when the consumer budgets are being squeezed. what we've seen so far, as disposable income has risen the past several months for the u.s. consumer on average, it's mostly because people are getting jobs, more labor participation. the average consumer is still struggling to a great degree. they do want to go and bargain hunt. we think target offers a lot. and they have a big back-to-school opportunity ahead

of them. >> i wonder when you say they're being squeezed, how that fits with what we're seeing on household balance sheets. we're seeing uptick in delinquencies but low by standards and clearly excess savings still exists. is part of your thesis that that goes to zero at some point and behavior really changes? >> yes. carl, there's two ways to really look at the consumer. one is the individual household and one is the aggregate situation for the u.s. economy. at the aggregate level, more people have become employed. so, aggregate purchasing power has risen. more people employed even though inflation has been high and rages have just recently only begun to keep up with that inflation. the average household has struggled. they've been squeezed on purchasing power. in aggregate, more people are employed so the aggregate spending opportunity and, you know, potential is still pretty strong. you know, now we've got folks going back to school. that's an opportunity for retailer like a target. and we have yet to face, you

know, higher student loan repayments coming relatively small in aggregate. again, for some households, particularly in the middle class, that squeezes their ability to spend on discretionary items. that's why we like the bargain hunting opportunities loo like target, tj maxx and mcdonald's. all of those offer pretty decent dividend yield for our clients in retirement trying to live off their portfolios in the midst of what remains a pretty uncertain environment in a macro environment. >> i wonder if you're looking for names that are pretty much north america exposed or if china or international exposure is a liability at this point? >> yeah, it's really mixed, carl. you don't want to pick a country and say, that's the country to go to. what we do in our international strategies is look for particular opportunities all over the world. investigate them, select them and try to control for country-broad risks. in the balance strategy, which i

helped to run, we do go for some international stocks. for example, walmart mexico offers an opportunity to own stock of a company that's gaining share where there's a lot of opportunity to offer better prices for the mexican shoppers and also offers a pretty nice dividend yield. >> thank you for joining us with some of the strategies that you're working on for clients. joanne, appreciate it. >> you bet, sara. >> joanne feeney. new reports providing new details about the timeline for this instacart ipo after slashing its internal valuation by more than two-thirds. is that a name you want to own? we'll talk about that after the break. we're watching estee lauder after guidance came up light. recovery in travel retail business in asia is a concern. the stock was hit pretty hard into earnings. got further slammed on guidance and now come back down 1.6%.

♪ (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. instacart, the country's largest online delivery platform planning a september ipo and could publicly file those plans as soon as next week in a highly anticipated boost to the market. that's the focus of today's tech check and deirdre bosa is back. hey, dee. >> carl, this has been a long time in the works. we've been playing this game of will they or won't they ipo for years. we may be one step closer.

the company could file publicly for an ipo. last time it filed confidentially and later pulled that filing. the key difference is a public filing would disclose finances, operations, key stakes. essentially make the business case for public consumption more than a decade after this app was launched. public markets, however, have not been kind to gig economy companies. o instacart, however, may be different. while others have struggled to achieve consistent profi profitability, instacart has reportedly already achieved the milestone of net gap income in a quarter. the key may lie in its advertising business. while uber and doordash are moving into the space in a significant way, instacart has been in advertising for years. it's a higher margin business and take a look at this screen right now. it has built its leadership around the advertising unit with wins and losses along the way.

one of the highest ranking facebook executives and took over in 2021. she pulled over some other high-ranking facebook executives and. there was also a former amazon ad chief in charge of overall revenue. tha the company managed to gain a wall street-friendly face in nick giovanni who became cfo after years at goldman sachs, leading tech companies through that ipo process. all of this to say instacart may even have the profitability in place to finally tap public markets. certainly pressure has been building internally from employees who haven't been able to cash in on its rise. this is one of the oldest unicorns out there, more than ten years. the big question that remains is, are the markets and investors ready. leave out the magnificent seven, most of tech is below 2021 peaks. instacart has slashed its own

valuation a number of times. the key is will those numbers we'll see in the ipo prospectus that could happen in the next few weeks, will that back up what's been hinted that this is a different kind of gig company, largely resting on that advertising and enterprise promise. >> i'm curious what growth looks like for instacart right now. they're in this awkward moment where people think covid was as good as it gets for online grocery, not just instacart but everyone doing online grocery and now it's back to in-person. >> how sticky is that habit. i still order my groceries online. but that's key. i live in san francisco. a lot of folks order their groceries. how many americans still are ordering post-pandemic? it did see incredible growth, reportedly throughout the pandemic. the key is what does that look like now? we can look to uber eats and doorbash as maybe a hint. we see their food delivery businesses have held up pretty well.

they're moving into fwroeshry. how much of that market have they taken from an instacart? you would argue instacart missed its window. these numbers would have looked better during the pandemic when we saw doordash and airbnb go public. now the pandemic is over and people are getting back to normal. that's what many are curious to see. me definitely. >>. >> that was a crazy time. we'll see what this does for the market overall if and when it happens. dee, thanks. >> the other thing is what's happening with market share because kroger and target and walmart are all investing heavily in online grocery, click and collect grocery. those are the big ones in the room. nvidia, rosenblatt giving a new street high, $800 price target. the analyst behind the calls joins us when "squawk on the street" comes right back.

nvidia has been finally feeling the heat this past month despite this year's massive runup. this week the street has been banging the table saying nvidia has further to climb heading into next wednesday's earnings. barclay's calls it their best deal. morgan stanley reiterates top pick. and then rosenblatt grabbing our attention this week amid a slew of price target hikes, going to

a street high $800, implying more than 80% upside. the analyst that joins us this morning from rosenblatt. definitely got our attention, hans. not just the target but how you're looking at valuation of stairstep in earnings over the next couple of years, right? >> yeah. what happens here is they probably unconstrained to have the opportunity of earning the next calendar year as much as 20 bucks. the following year it could be mid to high 20s. the issue is they're constrained and probably going to be constrained for the next year and a half. >> what's your sense right now about what's getting pulled forward and whether or not they are from a demand standpoint actually stealing from the future? >> we have too many data points supporting this is real demand and it's across a broad range of a.i. players. we have a conference next week called the age of a.i. we have a bunch of privates coming in.

they're saying the same thing. amd is seeing the same thing. this is the real deal. this is an everything cycle. it's never been seen before. you can't compare it to a 3g infrastructure cycle. it's the real deal. and the kicker here is that nvi able to sell these hopper product for two and three times above the previous generation that's amazing. >> i feel every analyst is bullish on nvidia right now, hans. you're not alone. they would lay out the case you made. the average price target is in the 500s. why do you think this is an $800 stock worth $2 trillion? where's the gap? >> we have a fundamental view of the cycle. this is the mother of all cycles and this is secular. this company has an earnings power that is amazing in the next four or five years half their business will be software subscriptions and royalties.

the valuation, we're not even aggressive, using a 40 times multiple. you have to look at unconstrained demand, probably 50% above what people are modeling. if you're using consensus numbers you come up with $500 or $600 price targets. why even bother with these m multiples? this has been our best idea the last several years. >> hans, two questions. one is, would you expect there to be a bit of a sell on the news dynamic after the print next week? and how much attention do you pay to other targets? was the 800 done with the knowledge of what the other street high was? >> we have been the prior high on the street. the data we're getting is is he ma demand is getting stronger and stronger. there's no reason why -- people

fret over the trillion dollar market cap. there's no reason why over the next six to eight years it could be $2 trillion, $3 trillion. this is the real deal. nvidia has created a model nobody in technology can even touch. so this is the issue. in terms of the quarter, yeah, i think people expect a beat, and they should guide up. the incoming calls i'm getting from investors is they want to own this. and i think this is going to work into the print. >> i was talking to mike santoli about your call. and i think the one question we just don't know that would test the bullish thesis is the time frame for the buildout of ai and what the risk is this could be a one to two-year phenomenon? >> we think it's secular. it's not going to grow at a 70% to 80% clip. the semiconductor industry is doubling, maybe tripling, the

historical growth rate of 4%. this is invasive in everything. it's leading to significant additions to content for all kinds of applications for car. 20% in a car will be semiconductors over the next five years with 3% or 4% over the past year. we think this is the real deal. this is not a two-year cycle. it's a secular cycle. things will slow down but will be significantly higher than what people expect. >> we started the hour with a discussion with pimco's chief about the promise of ai as a use case -- >> yeah, he's using it. they have a partnership with ai. >> we appreciate you talking about it, hans. thank you. up next, classic cars are flashing warning signs about the high-end consumer. we're going to explain after the break live fromthe pebble beach car auction. that is, of course, welcome back robert frank is.

welcome back. what can high-end classic cars tell us about the economy? robert frank is at the pebble beach car auction, has some answers today. hi again, robert. >> reporter: carl, pebble beach

show signs of caution. total sales expected around $420 million this year, about 10% below last year. classic car prices are down 7% this year, year to date so far. that's the last time that's happened in a while. experts say the big directors here this weekend are ready to bid, at least so far. >> the biggest collectors in the world are here to either reshuffle their collection or think about buying, and so far the demand is much stronger than expected. >> reporter: the question is a lot of supply, guys. there are over 150 cars up for sale for more than a million dollars. and part of the challenge is we're seeing a big generational shift in classic cars where the baby boomers and older collectors are selling their entire collections, and this new wave of collectors, they like the newer '80s and '90s cars. the result of that is this car

here, this buick, 1947 buick, we're seeing is priced around $70,000 at that point that's created dislocation in the market. we'll see where it all shakes out. the most expensive car this weekend is a ferrari. and tonight we will have an exclusive interview with the ceo of ferrari and will talk to him a lot about what's happening in china, with the high-end consumer in the u.s. and, yes, sara, a lot on formula one. >> better ask him why their number 4 and not number 1 though they have two great drivers. robert, on the classic cars, i wonder how important it is for those valuations as it relates to new cars. is it like sneakers where the most valuable old school names means that's what's cool right now? >> reporter: that's part of it. new cars were so hard to buy during the pandemic as were used cars, all of that spilled over into the classic car market, and

it raised the values for everything. and now we're seeing new cars and new cars easier to get, coming down in price, that may be one reason why we're seeing a little bit of a letdown in price in classic cars. all cars are easier to get right now. >> all right, good point. thank you. robert frank from pebble beach. big news on starboard this morning, jeff smith hinted at when he was on the show about a month ago. remember this? >> i do think there are good opportunities in the restaurant space. i'm not ready to talk about it -- >> we're trying to. trying to make news here. >> we think there are good opportunities in the space. >> it turns out he does because we just learned that starboard disclosing a 9.9% stake in bloomin brands. long term has underperformed. they tell cnbc, quote, we are committed to driving shareholder value and take all viewpoints of stockholders into consideration. what i've learned about the

stake and the conversations, they're very friendly and starboard looks forward to an open dialogue with management and that starboard thinks the stock is undervalued. and they have a lot of experience operationally with restaurants and turning them around. darden is a prime example. there are a lot of comps there because it's a conglomerate. this one is outback. >> friendliness is the mark. have a good weekend. let's get to the judge. carl, thanks so much. welcome to "the halftime report." i'm scott wapner. front and center this hour, another tough week about stocks. a question how far this creeks might go. the investment committee debating your best moves in this still unsettled market. joining me for the hour today our investment committee, kari firestone, steve weiss, josh brown and brian belski here on set, too, happy to have him. check the markets. dow is positive, 65 points. the s&p is now green as well.e i