to 11%. marvell technology off by close to 12%. broadcom down by 10.3%. we've also seen treasuries pick up a bid. and those yields come down as a result of all this to 453 for the ten year. that does it for us today. but we will be right back here with you tomorrow. right now it's time for squawk on the street. >> good monday morning. >> welcome to squawk on the street. i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. the deep sea freakout is in full display as china's free open source model throws into question the entire ai build out. nvidia briefly was set for its biggest one day drop in five years. a ton of earnings and macro definitely on deck for the week. a roadmap will begin with nvidia, broadcom and the chips in general plunging on as the broader market also is lower ahead of the open. on news that this chinese company has built a lower cost and possibly competitive ai model. plus.

>> we also have the fed. >> on deck. despite rate cut. >> demands from. >> president trump, the fed is expected to remain on hold this week, and we're keeping an eye on shares of at&t. they're rallying in the premarket. fourth quarter. profit was up sharply. the company's bundled 5g fiber plans, boosting holiday quarter subscriptions. but it's all about one thing this morning, carl. >> that is for sure. this morning selloff sparked by this chinese ai startup called deep sync. if you haven't heard about it by now, it has surged to number one on apple's app store. it has surpassed chatgpt. its success with a less expensive model has taken a toll on shares of nvidia and other chip makers. jim andreessen calls it the ai sputnik moment. >> right. look, i think you. >> can certainly. >> make any. >> claim you want. i think that what matters to me is in the end is numbers. >> and it. >> do you pause your. >> nvidia orders? do you. >> just say, you. >> know what. >> i've spent. >> a lot on nvidia. now i can hold back. >> or is it some sort of a

prisoner's. dilemma where if you hold. >> back. >> then maybe ellison goes and buys? i think that nvidia. >> is really the target. here because it costs. >> so much money, and it. >> just doesn't seem to be able to. >> command that kind of money if this is that good. but david, i'm going to leave you with something that i think is really important. please. what? >> please leave me with something that's. >> really important. >> well. >> i mean, this is a. >> chinese product. >> it is. so what. >> i put into my very helpful deep c is. >> what famous picture. >> has a man with grocery bags in front of a tank, and it initially says the famous picture you're referring to are tank man. unknown rebel june 5th, 1989. within, i'd say maybe about as fast as saquon got that first touchdown. >> it says it. >> takes that back. >> and says. >> sorry, i can't help you with that. and then secondarily it says, sorry, that's beyond my current scope. let's talk about something else. so against the idea that you're spending too much on nvidia is. >> yeah is a censorship that i don't really. >> think that american companies can trust. >> by the way, a warning to everybody who's downloading it

as well. read the terms of service. just read them carefully. i believe they may have access to all of your gmail and be. >> able. >> to crawl all over it. well, you may want to get rid of it. that's got to be an issue, as we, of course, continue to talk about and debate tiktok as a national security threat. just keep in mind now, that said, when it comes to deep seek, listen was december 30th when we first heard about the performance of this chinese ai model. deirdre bosa has done great reporting on it since then as well. it was the 20th. it was the inauguration day when we got these latest numbers. so even though we heard this was on the 20th and sort of built as that last week went along, you had the stargate announcement of $100 billion, maybe as much as $500 billion. you had zuckerberg on friday say 60 to $65 billion in capex. you had nadella reiterate 80 billion for azure. so the numbers, to the extent that these leaders in technology were at least somewhat aware of this, did not get impacted. and

you've got a lot of panic this morning and over last night. first i heard about jevons paradox was last night i have to say. and now good luck. >> good luck escaping it. >> today, 12 hours since then i've heard about it 17 times. i was like, whoo! last night i'm like, who's jevon? come on, man. and it's like, well, this economist back in 1865, in great britain talked about the coal industry and said, hey, listen, if you have an improving efficiency with a natural resource. >> occam's razor. >> you actually get a lot more usage that is being used by the bulls this morning as a reason why nothing will really change. >> yes i know, isn't that funny? the performance. >> of deep seek is real. the efficiency is real. how they got there less clear. >> we don't know how many chips they really use. >> we don't. but we don't. >> know exactly when. >> when andrew had on the guy from from scale of i anthropic. no no on on friday scale i sorry he said 50,000 gpus from nvidia

h100 we don't know. >> and not. >> the powerful ones. thank you alexander wang. but we do know that there are model training involves reinforcement learning, lighter weight techniques called group level policy optimization versus proximal policy optimization. they skip supervised fine tuning. they use other techniques such as multi-head, latent attention, mixture of experts enhancements and multi token prediction. and by the way, they also distill down from using openai because a lot of people have done searches where it thinks it's chatgpt. >> right. so let me come right back to you and say, do you think that those people you mentioned at the beginning, do you think of mark zuckerberg, larry ellison, were they unaware and therefore didn't need to make a commitment to spend, or is this just show you they were totally aware and they're dismissing it? >> i don't know the answer to that. i don't really know the answer to that, jim. i can't say with any, any know. >> and that's what's killing me. >> today, you know. >> i can't determine it. >> but from a stock market perspective, i mean, take a look

today. it's obviously it's going to be power. it's going to be the data center companies. vertiv is getting crushed. >> the bill to go build out. >> right. because there is this question as to whether you can do a lot more with less and therefore you need fewer chips and less power. or is jevons paradox going to be proved correct yet again? >> well, exactly. i was wondering that myself when i was looking at ge for nova and constellation energy group. look. hey, carl, i think that in the end, again, it always comes back to can nvidia make its numbers. and i think it's harder. you know i like nvidia but i think it's harder. we haven't heard from them but it's quiet period. who are the winners i mean marc benioff has gone out multiple times saying he's the winner. he's going back and forth with mark this weekend. and what mark is saying to me is, don't you see the value is in the data, the value is not in the hardware. so if you sell down salesforce, that's like a second day rally. what are the second day's rally? it's very interesting. apple not going down qualcomm not going down makes no sense whatsoever. but there are adherents of qualcomm. what i find most interesting is that the fellow

travelers to these are are the nuclear stocks that have been up a lot are the palantir are the memes are the crypto. is it so it looks like they're all, you know, one stock and that is not good right. that's not good because that says you have hype and froth in here that has to come out no matter what. >> that's where correlation spikes. >> yes. >> i'm familiar with those those types of elements, those periods of fear. yeah. where there's less differentiation. there is. you know you mentioned apple kind of trades defensively on days like this. >> it does it trades although it's got very high you know plus 30 multiple. >> they're not in that. they're not spending the money. they're they're that free rider we talked. about in terms of they don't care where it comes from. they're just going to use it for their customers in terms of whatever the advances are in ai. >> then there's the fellow travelers. broadcom, marvell nlds recommended. >> that's all data center though. >> that's all data center. broadcom of course we know has far more than data center. but today no one cares. that is. >> the move up in broadcom over

the. >> last year. ordinary move up because there have been so many reasons to buy the stock. but marvell has had in the piece today talks about just huge numbers. but all of these could be pushed back. look there is no doubt i mean, i sent a note to people this weekend from the club, look, this is the seminal thing, but i think what really, i know this is going to sound like the old days, but what do you do when you have these situations? you buy bristol-myers, right? that's what people are going to do. >> you know, stacy rasgon, an analyst i turned to a number of times when it comes to, yeah, he's very good on the chips. i mean, quick, you know, again, nobody's questioning the performance of the actual model. no. it's real. >> yes, but not for any for science, but not for anything. i mean, i tried to do a couple of. i tried to get it to give me netflix's performance from 2010. right. and it says, i'm not. i can't do that. okay. well, i mean, honestly. >> i measure these things, believe and are are recognizing the efficiencies that have been gained. again, we don't know how much money they've really spent.

>> and we don't know how many. we don't know how much nvidia they really have. >> i mean, here's raskin talking about listen, our reaction is not panic at all. we acknowledge deep seek may have reduced costs of achieving equivalent model performance by let's say ten x. but we also note that current trajectories model cost trajectories are increasing by about that much every year anyway, so it can't continue forever. >> which can't continue. remember blackwell, which is the current iteration? blackwell is about video. okay, it's just about video. and video is incredibly important because video is the ability to make it so that robots work. robots do not work on the current one, and i think robots are the next frontier. so i don't think that necessarily that a well, i mean, he's now he's talking a lot in germany now that that elon musk, who may be focused on many different things that elon musk says, i don't want to buy nvidia's chips. >> interestingly, i think we're going to get a progress report on grok, which is the ai model from elon musk related to x ai,

but also part of x itself, the x platform. >> i know. >> that we've talked about the supercluster in memphis. that's the biggest in the world as far as i'm aware, 100,000 going up to 200,000. >> they need. >> video 8100. so but we're i think we're going to get an update on that this week at some point. i know we have tesla earnings. it's not same thing thursday. but let's see what they have to say. and i'll be curious to hear what musk has to say as well. >> obviously. look i want to hear what jensen said. now how many of us have what we need? >> jensen? what has jensen said? have you had any? >> well, i went to jensen's people. i did not go directly to jensen. you're like my wife. i mean, it's the middle of the game. i am, i am. don't you think it's time to text jensen? i said, do you mind if i watch to see whether we win the game first? >> i'm like. >> let's just see if we can get this. >> converted tv. right. >> about jensen, call jensen. >> no. why didn't you call jensen in the game? you were more worried about jensen. he said you go to see josh harris game was worried about jensen.

how about the game? >> the game was over ten minutes left in the fourth quarter. why didn't you call? >> she said on the way home. i should i should call. >> well. >> we don't have that kind of relationship. >> we are going to get to ask meta and apple at least and microsoft this week on earnings. >> there's a lot of people we can ask. >> it's going to permeate. >> it's going to permeate the calls without a doubt. everybody's going to be asking right now though. so what do you i mean do you take a shot here and buy nvidia down 10% or brogden down 10% or down 14%? >> i don't have the i do not have the knowledge to be able to make that decision. it's better to own that i look, we came before i came up here. we said and we said do we can we just make a determination? or is the determination that we don't want to let anybody down? so we can't make that? and i feel like whatever you do, maybe, you know, betwixt and between at the opening, but sometimes you have to admit, like if you were at the hedge fund, you just say, you know, i'm not sure what to do and it's not a cop out. i'm not sure what's. >> speaking of hedge funds, i mean, this thing came from a hedge fund. yes. which i know we're going to hear more about, i'm sure from you wish.

>> i sure wish i did. i like my note this weekend. i said i'm very concerned. i don't know what's working like. >> the guys at jane street decided to create an lm instead of investing money. >> well, i just know. when in doubt, do you go against zuckerberg? do you go against ellison? i come back and say, i don't know, it sometimes is better to say, i don't know. >> it is an important gut check at the moment. speaking of eunice yoon, let's turn to her in beijing, who can help us understand some of the personalities behind this model, eunice, and maybe shed some light on the theory that this is some kind of psychological operation? >> well. >> a lot. >> of. >> people here are feeling very good about this company. now, the state media has been describing. >> this as a major win. >> for. >> china. >> not only. >> on a technological. >> front, but also. >> over washington. >> the state media commentary has been very. >> interesting. >> saying that china is a dark horse. >> in ai. >> and xinhua, the. >> state news. >> agency. >> has said that china ai now thwarts. the us technological curbs. now, in terms of personality. >> a lot. >> of the focus here has been on

the founder of deep sea. his name is liang wenfeng, and he is the co-founder of a hedge fund called high flier. and a lot of the description has been about his rise from a small town, a rural city in the manufacturing belt of guangdong, and then studying it. his father was a primary education teacher and then eventually rising to running this hedge fund and then backing this highly successful ai company among the chinese entrepreneurs. he was among several american, sorry chinese entrepreneurs who met with the premier, li chung, last week. one other interesting description of deep seek here is that it's being described as the pd of ai. and of course, you guys are very familiar with pinduoduo or didi, and one of the ways in which pdp was able to really make a name for itself is that it was able to cut prices so much and really bring costs down among the retailers

such as alibaba as well as jd. so people are are really talking about here how this company, deep sea, has been able to do something similar for ai guys. >> yeah, i mean, eunice, one of the big conversation points around here has been so much for the un not sending the highest end chips to china. it hasn't mattered. they've been able to figure it out somehow. is that part of the conversation as well that you're hearing? >> yeah. no, definitely. that's why i was, you know, in the state media, a lot of it is we've been able to achieve something that wasn't really expected by thwarting the us curbs. so you don't necessarily need, you know, like as much technology as as maybe people had expected. >> well, eunice, look, i want to believe that there is the united states is still ahead. and i know that that's really one focus, not really our focus with the chinese pass us the sputnik

moment, but are we even sure? and do we know whether these people have 500,000 gpus or 5000 gpus? why should we trust the stories we're getting? >> well, that's a good question. i think a lot of people here are also wondering about kind of the details of this company, because it's come onto the scene quite quickly. people are wondering where the money is from. there have been some questions about whether or not some of it was government. then, you know, if you look at the research, it looks as though it's a very private company owned by the founder himself, as well as two other friends. so there are a lot of different questions about exactly how this company has been able to do this. but, you know, still, we're just gonna have to wait and see. >> you appreciate it. on another day, we might be talking about the manufacturing pmi there, which fell to a five month low. but this is the story of the day for sure. eunice yoon in

beijing. take a look at the premarket. everything we've just been discussing is getting reflected in the futures which are off the session lows, turning into a bit of a macro event as well. with the ten year down below 4.5 for a moment, that will be your year to date that wilnice to meet ya.o date low squawk on my name is david. i've been a pharmacist for 44 years and i'm from flowery branch, georgia. when i have customers come in, i recommend prevagen. number one, because it's effective. does not require a prescription. and i've been taking it quite a while myself and i know it works. and i love it when the customers come back in and tell me, "david, that really works so good for me." makes my day. prevagen. for your brain. you were employee 25 in vodafone italy. today you're the ceo of

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with new investment products backed by superior risk management, asset management and a time of disruptive change. financial well-being accessible to all. columbus today for tomorrow. >> a new administration, new fed strategies. could the trump agenda impact inflation and the fed's next move? fed chair powell's crucial remarks and message to investors. power lunch wednesday two eastern cnbc. >> all right, a little less than eight minutes before we get to a very tumultuous opening bell, i think it's fair to say. >> even though i would like to have a shake shack burger right now. >> well, i think we'll have one during lunch. they're going to do the honors. ringing the ringing the bell in about 7.5 minutes. but let's get to something away from deep seek and the implosion going on about some of the hyperscaler spending

plans potentially talk so fi. >> right now. so fi is anthony noto. he's made a major turn. the stock used to be much lower. the shorts were all over it. he just delivered consistent consistent. he's flipped the model to be a little more financial service and a little less banking. he does report this morning. now people are going to say, wait a second. it must have been a miss. no, the actual quarter was good. it must be the forecast. only one line. the ebitda was light. people were looking for nine, you know, 90599 5 million. and they came in at 845. my problem here, david, is why would i sell it over a forecast and not the fact that it's doing quite well? and the answer is deepsea. in other words, it's getting caught up, not up, because people. >> not because it was. it's had such a great. year and a great move. >> obviously. >> it's the kind of the secondary of like, well, wait a second, have we overstayed our welcome in a red hot stock? and i think, david, the red hot stocks today are trading as a unit. and sofi is being caught

up in that. now do i want to buy sofi. it's just that such a big move. that's the problem. we've had stocks that have such big moves. why do we just come in today and say, you know what, i'm going to buy it down ten without any particular answer. and so what people are going to say is i want to see what happens during the day, that i feel that way myself about a lot of these, like a ge or nova, which i've really liked for a long time. but do i want to step in right here with the ge venmo and say, this is it? i don't feel capable to be able to say, this is it, sofi ivanova nonetheless. >> you can see what we're looking for in terms of an open that's a little less than six minutes away, by the way, you can catch us anytime and anywhere by listening to and following the squawk on the street opening bell podcast. we're back in just a minute. >> take the bull by the horns every morning with jim's top ten. the biggest headlines, earnings reports and jim's hot stocks right to your inbox. sign up now mind.

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american ai ecosystem look, in general, it's known that once open source is caught up or improved over closed source software, all developers migrate to that. >> that's the ceo of perplexity with our deirdre bosa earlier this month on the dangers of deep seek and the open source model for the ai ecosystem. jim, some say that's the bigger debate this morning is what it means for open source. >> yeah, i know that. again, that's to not to i don't want to front run mark zuckerberg. but what he's saying i would say that we do have tremendous chip allocation problems here. and i know that david. we if you have open source, would you think that you do not need as many chips? >> not necessarily, but necessarily i mean, again, we don't fully know. i would say meta's yann lecun, who is one of one of the great ai scientists, did laud this accomplishment at deep sea and obviously also said

it's an endorsement and a victory for open source, right. they used open source. they certainly seemed to, though, have also piggy banked to a certain extent on the back of open ai. they did use a lot of creative ways to go about creating the weights and the models and the different aspects of it, in terms of how they sort of reinforced it. a lot of questions, not a lot of answers and a lot of selling that's going to take place this morning, jim, as a result. >> what do you think about the idea that that that marc benioff is right, and that there's going to be a move from hardware to software, and software is more, more valuable because data is more valuable. the hardware had become is therefore commoditized by the open. >> source. >> commoditized. >> to the extent that everything gets cheaper, you're going to be able to do more. >> that's my point. >> it's going to be a switch now. i mean, watch talking his own book. but i would point out that, i mean, you watch servicenow to make a judgment to

that. that marc is marc benioff is a huge believer that hardware is way too important versus what it should be. and he's not an enemy of nvidia. >> at all. >> let's get the opening bell here at the big board at shake shack celebrating ten years in the game. danny meyer up on the podium this morning at the nasdaq at screen spark, an american bitcoin miner. as we start to look for some signs of breath, jim. and how how the market will view everything. x-mag seven today. >> i mean, it is interesting, by the way, that rob lynch move over to shake shack and he's done a great job. but i will say that obviously not the right day to ring the opening bell in the sense of insider focus, but a good sense that he's brought the company to a growth pattern that's far in excess of what we thought it was going to have. papa john's turnaround guy. and you know, david, it's not such a bad idea to look away from one

moment about and go back, say, to healthcare, where the rotation was so powerful last week. >> you talked about it towards the end of the week and you said it was healthy. i'm not sure you had a sense what was coming. >> i said health care was healthy. >> but you did. you did point to. >> the potential. >> so to speak. wow. look at venmo ivanova. >> i know. well, look at abbott labs. they're just. oh, my god, are you serious for. >> a moment? because of course, the question becomes. >> was there that much hot money. >> in this can do so much more, so much more efficiently? do you then need as many data centers do you need to spend? and the gating issue on all data centers. and really for this technology's advancement is power. it's power. and that's why constellation ge, renova, which has run up so much i know are getting hit today. it's you know, it's a example of though of just saying all right let's just get out for now. the multiples have moved up because of course the growth rates were assumed to have moved up. >> well, look, a bunch of the utilities by the season. by the

way nvidia at the low here, a bunch of utilities behind the scenes have been telling me we would like to spend. but what happens if something comes out, carl that doesn't burn as hot? then we would have spent a fortune and we don't want to go ratepayer versus data center. they didn't want to make that trade off. and today i think that the i piece of the eps, the american electric powers, they may actually catch a nice bid. >> to your earlier point, which deutsche actually writes about today. the whole ai industry. deutsche writes, is embryonic, and it's almost impossible to know at this point how it's going to develop and what the leaders, what the challenges they may face in the future. >> you're right. i mean, look, i was on the phone to the people from ge last week, and there's no doubt about it, there's more power demand than there ever has been, and that those orders are those long lived orders. it's not like you can come in tomorrow and say, look, i want to i would like very much to have a natural gas plant. this

takes a long time. >> it takes a while. and again, when you're putting up a data center, you're you're only real. question is what's my access to power? what is the ability to provision that power from the supplier. and then you move ahead depending on what you're able to get or if you're in an underserved area. even better, because or at least in terms of the capacity, not, you know, the demand, not meeting what they have in terms of existing capacity in a particular area. you're going to see data centers go up there. so all of this really i mean, it is hard to imagine it's kind of being put into question. i and again, jevons paradox, i mean, how many times we're going to talk about it. but it comes up now looking at new notes. >> i focus on berdella himself. >> wrote about it overnight. >> all the bulls are going to come back to it, simply saying, that's not what we're talking about here. what we're actually seeing is what we want more efficiency, more creativity in terms of how to use these models and make them work even better, and therefore more money, not less, is going to move into it.

>> well, i noticed the salesforce is stabilized. let's go back to vertiv is vertiv, which the most obviously data center oriented play. and that stock is going to come down. >> it's down 19%. >> and then arista, people forget arista is integral to inside. you know, they white boxing a lot of the technology inside the data center. there are some people who think, you know, that. it's no doubt that that is a better stock than nvidia. i always question that, and it seems a little fanciful, frankly, but i know people who hold that view. i do think that benioff is winning right now in the tug of war of mind. and that's important because i happen to be a big fan of big fan of matthew mcconaughey. yes. who's actually the guy who's designing those commercials. despite the fact that the wall street journal said he was a free rider. >> yes, you mentioned mcconaughey almost every single show. >> do you know that i. >> am. >> in a goodbye video to richard galanti? and in it i say, you know, i want to say goodbye to the greatest people. this was his last day. and in it you say,

i think you've talked enough about richard galante, and it's featured in the goodbye video. is it you said you've talked enough about him. >> well, you did mention him almost. yeah, all the time. >> well. i david, something. >> that you mentioned, mcconaughey. >> something that the late roger ailes explained to me during my time with him, where he really was not that much of a fan of me. he did say that it's 18 times before the public has heard something. so keep going, keep going. apple shares. guys, he's the first time ever quoted in a positive way. >> that's true. rest in peace. shares are up. they are still down 9.5% for the year. we've talked a lot in previous sessions. >> during the course of that. everyone was shorting it ahead of the quarter. >> about the significant decline in apple, a lot of negative notes, some downgrades along the way, questioning overall demand. but it's a beneficiary in some way, perhaps of this. >> because they were free rider to begin with. correct. how did. >> what but maybe gets even cheaper for them to appropriate what. >> they need. maybe you have to that you have to start paying apple to take your eye off. maybe we we've seen it happen.

the justice department didn't like their last. >> deal, whereas obviously oracle shares haven't taken a look at dell. i mean you think about all the oracle's down 6.5% dell is down 6% by the way. again just want to reiterate because it's come up a couple of times. deep sea be careful they have access to your entire gmail. >> i've been trying to. understand trying to cancel it during the break. >> and that is different i believe, than many of the other lms. >> they have everything, i mean, between tiktok and deep sea and by the way, they are chinese. i've not noticed is my waist size. i don't know. >> i think half of the top six apps on the app store are chinese at the moment. this one team who is up there. >> so much for i mean, at this point, what's it matter? just let tiktok. >> say that i love mal. would that help me? i think mal was a great man and should have gotten the nobel peace prize. what would help me at this point? >> i'm not sure. i think. >> it's more like tiananmen square was a great celebration. what do i do? why don't you tell me what to do? >> i don't know, i don't know, i'm just letting you know that

it has access to all of your gmail. that's. there's your phone number, i believe. >> is what i have access to broadcom in my charitable trust. great. >> there's the added wrinkle jim that companies that will be able to argue that they're seeing some roi might benefit. kind of like what larry fink said about walmart at davos the other day. >> that's a really good point. again we you know we have so many beneficiaries now. we have the health care rotation going on. we have the beneficiaries that have really been hamstrung. we have the notion like the justice department said under the previous president, there's been too much concentration that nvidia had too much power. and so suddenly a walmart can go to 100 rather easily. by the way, i question what is amazon's role? did amazon? is they a winner or loser? they spent a lot with anthropic, but so is others. >> they spent a lot with anthropic. yeah. >> have you played around with anthropic. >> a little bit a bit i did initially with claude. yeah. but then i kind of went back to chat. >> three that's claude rains, by the way. >> that's spud rains. you're shocked. loved him. shocking,

shocking. >> thank you. thank thank god for him. i mean, everything revolves around certain scenes and movies. >> it does. i came for the waters. >> is disney somehow a winner? i mean, did you see these things that are just up and you want to say, are you kidding? i look, i do think that it's a moment, carl, where all of us were talking like it was when we first discovered chatgpt and we were playing haiku. the difference here, i think, is, is that if we really think that they're playing by american rules and they're telling us everything, then maybe that's why we keep seeing such a great number of growth number from the chinese economy. >> there's plenty to question, although at this point you also have to significantly question the chip ban and whether it was effective in any way or whether it mattered. you also, you know, necessity is the mother of invention. you know. that necessity that is. >> that what. >> that thing that sacha is talking about when he's talking about, you. >> know, that's the jevons paradox. >> different. oh, i. >> thought it was. this is the idea that by being prevented from having access to the latest

tools, they were much more forced to be more creative and therefore invented something new. and so paradox. what's the point of the ban? they're going to be our equal china when it comes to ai. >> conceivably because they because they misjudged. but the point of the ban was military. >> i know, but now what if they can do this? well, they have a lot of really good computer scientists there in that country, by the way, a la tiktok. and the algorithm there, which nobody was able to really fully replicate. >> now, what does this do to the value of tiktok? and what will the president say. >> that that is another mystery. >> our president is. i mean, so what. >> about another mystery? >> comments about this, right? i mean, is he working on columbia. >> tiktok and whether the chinese, whether the chinese allow there to be a sale the way the trump administration apparently would like there to be? of the global business? remember, it's us and it's the other outside china. that's what the road we went down in the summer of 2020. but then. >> can you imagine a scenario in which we look to ban deep seek,

where that also falls into some nasdaq. >> stuff with with this president? absolutely. >> yeah. >> this president just shut it down. >> the thing has access to all your emails. >> i know i've been very upset about this. i was playing on it all weekend and i didn't realize they were playing me. i mean, you know, it is on the. it is on your pc. they're like, what are they borrowing? >> i didn't download it. >> no. are they going to get like personal things that i've said to my wife, which would be devastating. i mean, in a positive way. >> your your thoughts about the eagles defense, which, by the way, kind of gets buried with this news. people wanted to get your reaction. >> i have my cufflinks. i was all set. i was going to talk about ball and i was going to talk about quinyon mitchell. but instead i don't have to because the chinese right now are saying he thinks that he thinks that the chiefs have a chance. let's just take them apart. i mean, don't they? oh, now look at that. let's see that. david. that's a nice that's a bit of a run there by saquon. >> he's amazing. >> by the way. he his his

incentive targets are almost outpacing his base. he's at this point. >> but look i watched mahomes last night and i don't you can't stop him. i mean i don't know even the chinese can't. don't you think the chinese are sitting there. we've done everything. and yet we still can't can't stop. >> mahomes, who's favorite now is in. >> the chiefs by one here. >> by how much. >> one and a half. >> one and a half. >> okay. but you want to take him first. no i don't want either. >> i don't need. >> neither team. >> howie roseman that's what i'd like. is there a way to have them both not win? >> no. there's howie. he's a good friend of my wife. >> nice shot. >> oh, jeez. who's that? that handsome devil. would you look at me there? >> you look. >> so good. humor me. you look so good. so happy. happy. >> he did not criticize me. he did not say. and we've seen that picture so many times. so many yesterday. >> i know, i don't believe that that was like from 1997. no it wasn't. i'm kidding. i know it was taking yesterday. >> if i was a smoker. look at these dogs. he participated. >> far outdone yourself. >> that's. that's tony on the

left and raghu on the right. all right. now let's. >> get back to health care for a minute. okay. which is benefiting. thank you. merck is up 3%. pfizer was up 2.5%. >> based on what? >> they're. i don't know what happened. they didn't want to mention on pfizer back in the know, back in the fall, there had been an expectation, perhaps, that we might see a proxy fight from starboard. remember, jeff smith joined me for an interview. we went through sort of a lot of his points and his frustrations with the company. no proxy fight window closed. no nominations. yeah. that's it. wow. that's it. no proxy fight for pfizer. so they got that going for them. albert bourla, obviously ceo, has been down to mar a lago. certainly has to be trying very hard to make sure that rfk jr doesn't ban any vaccines. right. and i always put up a 20 year because it is up for 20 years, about 11%. you see the tuberculosis. >> outbreak in kansas. >> i didn't.

>> worst outbreak of tuberculosis. do you really think that that happens to be coincidence? >> 14%. >> i think that that was something we beat. tuberculosis. but i guess if you don't take a shot against it, we didn't. all of healthcare is up. i think that rob davison at merck, that's been a one way stock down, even though he's done some terrific things. he's got a great heart drug, but it doesn't seem to matter at all. look at unitedhealth. so there's an example unitedhealth. they win no matter what. and i don't want to pick on them because we know there's a tragedy there. but there are certain stocks that just come back to over and over and over again. carl. and i just think that these are the ones that people say, oh, that can't be hurt. that can't be hurt. that's the unitedhealth story since 1984, frankly. >> finally, on walgreens, too. we've talked about it. >> oh, you know, i think there's some good things happening. >> i know you do. i don't think one of the good things is going to be that takeover or purchase by sycamore. everything i hear indicates. >> sycamore in the box. >> you remember, you know, you're not all dead, but you're mostly dead. it's. yeah, it's

mostly dead. any hopes there? i think for something to occur. >> how is that taking out behind the sycamore? how's that going there? >> it's the latest opioid move. right from the justice department. was actually right before the inauguration. cbs may have sealed the fate there. >> those those lawsuits. i urge. >> any hope that there's going to be an actual purchase. but you're not talking about that when you're positive on walgreens. >> you're saying no. i'm just saying wentworth is a guy who's going to get us out of this. i'm not. i'm not in it. yeah, it wentworth is a genius. yeah, we've seen him. i've seen him pull rabbits out of a hat before. i think that alphabet is one to look at. not down as much. and that would be one that i would be concerned that i spent a lot of money. but then the money's going to go to coca-cola. i mean, we're back in that world, which is that. okay, so we need to be a little more defensive. i urge people to remember that lilly has some. there's a note on friday about lilly and glp. they're much more further ahead than novo. i think novo was a bit of a short

squeeze. >> yeah, there was a good note out of mizuho asking whether or not, because people who take glp ones don't take them for long stretches. if there's some seasonality, like we think of gyms, you start out at the beginning of the year, you get ready for summer, you get ready for the holidays, and you have to start incorporating more seasonality into your models. >> well, i would think that in the terms of persistence that if david ricks were here and he's such a great spokesperson for the industry, but i think he would say it's longer. the persistence is 12 to 15 months. and that there's that is what i asked him directly. i said, listen, i keep hearing the people because michael sembello has had a piece about how the people leave it and he said, listen, that's not right. the piece isn't right. right. and, i mean, i did not want to dispute. you don't want to dispute david ricks. no. he's a money good, so to speak. oh my god. oh my god. constellation brands is up. it must be. is it a solar eclipse? it must be a solar eclipse.

>> on friday, we had the first insider buy in several years. >> bill giles, who came, was the guy who came in from elliott partners. and that was good. but i'm. i just want to note that periodically you get something which says in the event of nuclear war by constellation. so i'm going to have to. >> check things out. by the way, at&t also up nicely this morning after earnings 7% is the gain there. procter up. john stankey has been delivering. you know after quite a few years obviously of frustration on the part of their shareholder base. absolutely good for. >> a fresh three. >> year high. >> it is it is. did a good job. >> 11.9 billion in cash from operating activities. the leverage ratio obviously continues to decline. they're very aggressive in fiber as our as our viewers know. he was on squawk box. >> he was very good this. >> morning earlier very good. and that stock is benefiting. >> david i got to ask you what. >> okay. you want to ask me something. >> or do you think that proctor's up because of the scalloped toilet paper? i don't know. first new innovation in toilet paper in 30 years. >> don't have any opinion? >> first new innovation for in 30 years. really? yes.

bristol-myers. first new innovation on schizophrenia. and procter and gamble. first new innovation on toilet paper. so, hey, name your poison. >> that's amazing. >> that's toilet paper. makes it feel like that you're in a four star hotel. i actually, i feel like i'm in four seasons when i'm in the bathroom. >> and i heard everything. finally, qcso launched that $11 billion tender for. beacon roofing. >> i've been waiting for you to bring up beacon roofing. the beacon. >> roofing is. it's 125. there's no diligence needed. they're fully financed, and they have no regulatory because they don't own anything. >> do you mind the fact that beacon. >> if you get the board to actually say yes, this thing could close in like 20 days. >> because demanding a higher price. they're demanding a higher price. and can i just say that they've done a remarkable job. and before people just say, you know what, i'll take it and run that the ebitda, the ebitda numbers are so low versus the cohort. i think we have to hear from julian francis. i will feel much better when i hear from

julian francis, the ceo. >> he actually knows the name of the ceo of beacon. >> we hear from him. i think it's going to change the game. game changer. mr. roofer, you ever had a roof done? no. they're a fortune. >> will you get that guy on mad money? >> i'm gonna do my. >> damn best. >> darn best. >> okay. >> what'd you think of my wife in that shot, man? >> she's lovely. >> thank you. >> there's. there's room for more than one story today. we'll be watching tonight, that's for sure. meantime, s&p is down about 100 points holding six k. nvidia just barely avoiding its worst single day since march of 2020. and then watch bonds as well. it's going to be a busy week for data. we'll get some gdp numbers. of course the fed and the ecb are this week ten years. actually added a couple points off the low back to 4.54. don't go anywhere.

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>> squawk box weekday mornings, 6 a.m. eastern. cnbc. >> so much news around tech today. we really didn't get to much of the sell side research, but b of a does cut horton today. we expect the challenging environment for homebuilders to persist through the first half. worried about higher cost inflation, rising land prices, higher mortgage rates. jim, we'll see if we get any relief although tenure has come back. take care. yeah. dow's down 112. we'll get stop trading with jim in just a minute. >> are you investing in municipal bonds that will fund roads and bridges. think of assured guaranty as bond assured guaranty as bond insurance as your guardrail. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. our advanced matching helps find talented candidates, so you can connect with them fast. visit indeed.com/hire

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amazing and is something that we get to use every day. >> let's get to jim and stop. >> trading in a bid to stay away from one moment on deep sea. i do want to point out that there's a great ubs note about take two. it's in a different world from e! it's just on a better plane. it's got grand theft auto coming out. and i would say that strauss zelnick remarkable job. this is their year. and if you believe in video games and you don't want to buy ea, you buy these guys. it's for real. >> are you impressed that we're holding some levels 200 days. pretty firm on nvidia. >> i have yes. i have to tell you that i thought that these things when i first saw this, i'm not saying i was in a panic, but i just said, look, this is this could be a lot of people are going to say, this is the

end of mag seven, end of nasdaq. but people are discerning winners and losers. and we have to hear from jensen. we haven't yet. jensen huang but frankly, i thought it would be worse. yes, it is early in the day, but i thought it'd be worse. >> right. meantime, we'll see what surprises you have for us tonight. >> i always like to surprise people. i like to surprise david because a lot of times, david, david's fully financed and he can do whatever he wants. >> he fully financed. you're fully looking forward to the big mad money show tonight. >> fully financed. david, that's a great looking outfit. >> and congratulations on your birds. >> that was. >> that was an amazing, amazing game. >> you had. >> so much to do with it. so really congrats. >> my wife says i said we did great. she goes we i never i didn't see you suited up. i said yeah, i was will shipley i don't know. it's very exciting. >> that's good jim we'll see you tonight. mad money. 6 p.m. eastern time. we are going to stay on top of this tech sell off and die as we get a look at the nasdaq. down. more than 2.5%. don't go anywhere. >> where do.

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>> three and 30 is sponsored by franklin templeton, your trusted partner for what's ahead. >> good monday morning. welcome to another hour of squawk on the street. i'm carl quintanilla with leslie picker and david faber here at post nine of the new york stock exchange. sara eisen has the morning off this deep sink. news has definitely thrown the eye trade into some flux, but we are off the certainly the worst of the premarket levels. and we do have other areas of the market like small caps starting to show some green arrows. we'll talk all about it. >> and we're 30 minutes into the trading. >> session here. some big. >> movers we. >> are watching. >> in this market sell off nvidia poster child of the ai rally. really taking it on the chin this morning on reports that deep seek a china based open source ai model, was able to use less advanced chips to create ai tools that compete with the proprietary models of u.s. tech giants, raising questions about the moat for nvidia and companies like ai. nvidia shares currently down

more than 11%. the entire semiconductor industry is also under pressure on the news. broadcom, marvell down double digits. and it's not just the semis. all of the mag seven, with the exception of apple, are in the red this morning ahead of key earnings this week. much more on the deep cpi fallout and this market sell off straight ahead. >> we're going to kick off a busy week of economic data with new home sales. let's get to rick santelli. hey rick. >> yes these are december. >> new home sales. >> carol expecting the numbers somewhere in the 675,000 camp. those are seasonally adjusted. annualized units. we come in better a whisker under 700,000 698,000. that's the best. rate since september of last year. and a positive revision in the rear view mirror, 664,000 becomes 674,000. this was largely expected. a rebound. but do remember the month of december was not friendly for 30

year. mortgage rates. >> or interest. >> rates in general. if you were looking to finance. >> a home. >> december saw interest rates climb in the ten year and they basically in the 30 year mortgage fixed arena saw mortgages above 7% pretty much for the entire month. for more a dig deeper into this number, let's head east to diana olick diana. >> rick, it's really. >> interesting that we got. >> a beat. >> on this number. remember, new home. >> sales are based on signed contracts. >> during. >> the month, so it's the most current indicator that. >> we get. >> of what's going on in the market. and as rick. >> said. >> we did see mortgage rates. go up over 7% from just below 7% in december. interesting that back in october, when we went from that low in mortgage rates and shot way up over 7%, we saw new home sales come down sharply. we did not see that in december. there's been this talk of a new normal in the market. we also are seeing inventory supply come down from 8.9 months supply to 8.5 months supply. and prices are still holding. $427,000 was

the median price of a newly built home sold in december that was up 2% year over year. so what's going on with the builders are buying down mortgage rates. they continue to use incentives even though their sentiment has gone up very little. they are still concerned about what's going on for their costs. and that was why we got that downgrade that you all just talked about on d.r. horton, which was from bank of america, saying housing demand has moderated with higher rates and input costs are rising, and builders have said they're concerned about tariffs and how they will impact their material costs going forward. but again, there appears to still be more demand in the market. we know the existing home side is still lean. it's an expensive market, but people are buying. we saw it in the northeast and the west where the strongest areas. so a nice surprise for the builders, even though they seem to be pulling back a little bit on their sentiment. and the market is kind of thinking a little less of them with that d.r. horton downgrade. carl. >> diana, thanks. talk soon. diana olick, there is one word driving the markets this morning

and that is deep sea. a china based chatgpt rival, which its researchers claimed was developed for less than $6 million, catching everyone by surprise. global chip stocks. tech stocks plunging on what could be a possible rerating of u.s. tech dominance and a reevaluation of ai in general. tech is now the only sector down so far this year, about 2.5%. our senior markets commentator, mike santoli, is breaking down sort of this question on the trade and looking at power two. another huge story. >> for sure. and obviously the deep set news, which really built up over the course of weeks and seemed to get to a critical level, it more just crystallizes these existing concerns. we all probably knew you were going to hit some kind of wall of when you've invested too much, or maybe the brute force approach to just simply building more data centers was going to give diminishing returns. i do think it's presented itself as a really interesting test of the market's ability to differentiate, and it's passing that test so far this morning drops in yields has usually helped the majority of

stocks. breadth has gone inverse to yields all year. yields were going up. that's pressured the average stock that's reversing right now i showed up you know at 8 a.m. banks massively outperforming big tech over the last few months. that's been the market's kind of preferred mode of just rotating around. now the problem is ai in one form or another is like a third of the s&p market cap. i mean, if you want to talk about where the earnings momentum is coming from. and so it's not the whole reason for the bull market, but it was the main accelerant. it was the main reason we didn't have a 10% pullback last year. there's a main reason you got 20% back to back years. while the average company had like flattish earnings. so i think right now you have to kind of pivot around and say is the rest of the market and the real economy in good enough shape that we're going to be able to support the market here so far? a tentative yes, i think is the way to think about it. bigger question is, you know, whether this is just a recognition moment that the overinvestment risk that people have had in the back of their minds is now going

to fixate us for, for a long time to come. and you have a, you know, cisco emc late 90s thing where you there was a time when you didn't think you could have enough broadband capacity or networking equipment or storage, and then it became, well, the internet's still going to be huge, even bigger than we thought. we don't need as much of the stuff. >> yeah. >> i think that's an important concept because the question of our confidence in these stocks is really important here, in the sense that for so long they've been saying, just trust us. we know we're spending a lot. sure. we can't afford not to spend a lot. the money will come, the realization will come. and also we can't we can't miss out on this. we can't afford to miss out on this. there's no price tag we can put on that. it feels like today that whole idea is being kind of thrown to the wind. and what does that mean for the confidence and the trust element between these big tech companies. >> around the edges? it is, i mean, in the direct hardware related areas, it absolutely is. and the idea that we're going to be insatiable in terms of energy demand and all the rest of it, that is where you have a little bit of an unwind. i think

there's probably a moment where if microsoft said, look, we're kind of at our limit, we think we're going to be able to kind of make these gains in other ways. the market would be fine with that ultimately. >> well, they may have already kind of. >> exactly. >> they have a certain extent, given they were not a part of the stargate partnership. so, i mean, 80 billion is plenty. and nadella obviously said that last week in terms of their spend on azure this year. but to your point, michael, they are not part of stargate. and a and openai needed even more. >> exactly. and so maybe, you know, you're kind of viewing that from the other angle of somebody says, we've had we're in deep enough at this point. what's been fascinating about this? i've been talking about this for like a year. the formula was everybody buys as much nvidia gpus as is available. okay. and for this year, the numbers are $200 billion in nvidia revenue, most of that coming from this data center demand. 100 billion of that falls to the bottom line of the bidding. the market puts a 32 multiple on the 100 billion. there's your $3.2 trillion

market cap. meanwhile, the company spending the money also get the credit in their valuation for spending smart. and they don't get penalized for all this. so it was like this feedback loop of just sort of everybody getting credit for doing this. and that inflated the market. now, is there any shame in nvidia trading down to a 28 multiple right now on that 100 billion? no, of course not. it's fine. it's still a generous thing. so that's what we're doing. it's just adjusting how much we're going to pay in the moment. given the uncertainties of how durable the spending goes. >> to your point, the power suppliers, i mean, whether it's constellation or ge or nova, they're down more. or were they flying higher in terms of multiples? >> i think relative to probably underlying demand. and this idea that look, you talk about multiple years, you have to make assumptions about how fast things are going to get built, especially on the nuclear side. yeah. right. and so i think the deep sea thing kind of rubs at this concern that's been out there, which is if the main constraint is how much gpu

capacity you can get your hands on, how much power it takes and how to cool the data. if those are the constraints, maybe there's ways to try to work around the constraints instead of just like ponying up the money to kind of power through them. >> mike, thanks for that good explanation, and we'll talk a lot more about it throughout the course of the week. at least the buzz about deep sea started growing last week, if you remember. it even captured the attention of some leaders at the world economic forum in davos. take a listen. >> we should take the. >> development out of. >> china very, very seriously. >> what we found. >> is that. >> deep sea. >> which is the. >> leading chinese. >> ai lab. >> their model. >> is actually. >> the top performing. >> or roughly on par with. >> the best american models. >> if the united. >> states can't. >> lead in this technology, we're going to be in a very bad place geopolitically. >> here, with more on the state of the ai arms race, is xia, the ceo of ai consulting firm santo and senior policy advisor at the goldman school of public policy at uc berkeley. appreciate the time this morning. the street is really at a loss on some of

these questions, specifically about this $6 million figure. some elements of the street research today just sort of discounts it outright. do you? >> i definitely don't. >> i mean, the. >> major introduction that came with deep sea r1 is not a massive novel breakthrough in a new type of ai. it's a novel breakthrough in the way that ai is trained, the environment through which deep seek has had resources and funding to be able to create ai models of their own, has necessitated that they become more innovative, that they develop new techniques to do more with less. and what we're seeing at the heart of this innovation is a training technique that used to require two separate ai models that were usually about the same size, that you would need to scale up and train at the same time in order to be able to build something like openai's one. and what deep sea does is it makes it so you only need one and a little bit of another model, which exponentially reduces the

amount of computing power that you need to be able to train a model, because you need less ai to be able to train the ai. and so i think that this technological advancement could create cost cutting measures that are as severe as down to $6 million. now, the question is not if deep seek is going to displace current existing ai leaders in the us, but the question is more so how soon before we adopt these techniques to supercharge our own ai on better hardware? if deep seek was able to build so much with older hardware, how much will we be able to build with newer hardware like that which is committed under under project stargate, that donald trump, president trump? >> just so. so where does that leave the question of whether or not our industry is overspending? overprovisioning to the build out? >> well, i think let's think about it like this. if we are building the ai superhighway, then the equivalent of what deep sea just did was come out with a way to make existing cars two times as fuel efficient. now, of

course, if they're the only car on the market that has that kind of technology in it, then everyone is going to flock to use that type of car, because who doesn't want two x fuel efficiency? that's the similar sort of thinking behind developers and the excitement in the community about being able to use some of these advanced ai tools for a fraction of the cost. however, once those techniques become adopted by the rest of the industry, it will call into question how much more powerful and how much faster we'll be able to move as the united states. given that we already have more hardware. now, for folks who are wondering, well, why didn't we figure this out before? have we been overspending? i think this is a larger challenge and a larger question of what we as americans believe will drive innovation in the market. up until this point, we've been following closed source models that are owned, developed and created and maintained by private companies. companies who claim that as intellectual property. what deep sea showed us is that their innovative solutions happened not only because of their unique environment, where they were forced to build a little bit more creatively, whereas

companies like openai and anthropic have access to a lot of hardware. so they might not have been thinking, how do we do more with less here? but simultaneously, because they open sourced the model they create, they allowed anyone and everyone to see how the code was written, their research paper and their technical report about their model is extremely detailed. they gave more detail than meta has given in any of their open source models. and so because they opened up the knowledge base to be contributed to more people, their pace is moving faster. so the us has to ask, how can we not only compete on the closed source side with all of our proprietary companies? how can we also now invest in our own open source models to compete similarly? >> you know, you made an analogy to more fuel efficient cars. i think data shows more fuel efficient cars lead people to drive more. and there's plenty of people who are quoting jevons paradox this morning, talking about the fact that an increase in efficiency for a particular resource leads to more use of that resource. are you in that

camp as well? >> absolutely. i believe fully that these new innovative techniques will lead to the development of more models, more testing, and will lead us towards agi faster. being able to leverage the same existing compute to do twice the amount of work is the same argument and excitement that we have about quantum computing, that these new computers are going to allow us to do the same type of computational tasks we do now, at a fraction of the cost for a fraction of the resource. this, however, instead of being maybe a technological hardware innovation that we can see, feel and touch is a software improvement in the time and the amount of computing power it takes to train an ai model, something that will be widely adopted. and we've seen these kinds of trends where companies open source something. go ahead, and then another company picks it up and makes it better. perfect example of this is the actual gpt architecture that google first open sourced. but then openai picked up and turned into a product. so we've seen this kind of knowledge pass around in this way. so while this moment may feel scary for

people who don't understand some of the underlying technological improvements long term, it is an opportunity for the u.s. to solidify its dominance as a leader in ai. once we are able to adopt these cost cutting techniques and pair them with our cutting edge industry worldwide, leading hardware to be able to build models that surpass anything we've seen to date. >> what do you think are the implications, then, for project stargate, which of course, you noted earlier, given, you know, $500 billion in investment there, does this change the calculus for the type of infrastructure that should be part of this capex project, the type of spending that the us government and us companies should be doing for ai innovation? >> 100%, i think that we need to separate the two. that deep seek itself focuses on models, and stargate is focusing on infrastructure, and you need both to be able to win the ai race. proverbially speaking, it's not an either or choice. you need both. and what deep seek introduced was an

improvement to the way that models trained. but we still need that infrastructure to be able to unlock it so it doesn't. deep seek doesn't make project stargate obsolete. it actually makes it smarter. once stargate models developed using stargate infrastructure can adopt deep cost cutting techniques, it will make us ai smarter, faster, and more sustainable without compromising our sovereign control over our own technologies. this will allow us to leverage that infrastructure that's provided under stargate to go further than previously anticipated. so i don't think that it means we need to invest less in infrastructure, but it does bring up questions about, well, hey, if we can do more with less, then who else can we give access to? i know a lot of the infrastructure that we've been looking at has been to support some of the development of these closed source models, but what does it look like if we use some of that infrastructure to support new startups, new open source models that can create and drive even further innovation in the same way we just saw deep sea do. >> yeah, already the streets

trying to look at what some of these companies could, could save theoretically on capex, what that would add to eps, and even how that's making up for some of today's price action xii. pretty fascinating. and this is just day one of this particular wrinkle. appreciate it. thank you. >> appreciate you. >> as we head to break here's our roadmap for the rest of the hour. nvidia shares on pace for their worst day in years. more on what to do with the stock and the rest of the semis. >> plus, nvidia is not the only underperformer within big tech. what the headlines involving deep tech mean for google meta. we'll talk about all of it, including the rest of the mag seven plus. >> what's next for the ai infrastructure stocks like the big power providers, they're getting hit today as well as, you know, a lot more. squawk on the street continues after this break.

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talk about easier investing. cost of building ai. nvidia on pace for its worst day since march of 2020. broadcom and marvell also down double digits. wedbush analyst matt bryson joins us now to discuss what it all means for the major chip stocks. thank you for being here, matt, on this important day. so you have a buy rating on nvidia. you cover the semi sector. does this change your rating appetite or what you're going to pitch to investors. does it change the calculus for whether or not to buy these

stocks at these price points? >> i mean, certainly i think you have to add the potential impact to your mosaic. having said that, i think that the promise of ai remains the same and the risk remains the same, which to me is not so much around how much ai costs or what the resources are, but instead it's how do we unlock the power of ai? how do we get to the point where we really start seeing applications show up and displace? you know, people or technology? and i think if it's still about spending more dollars to get there, that companies will still spend more dollars to get there and will still buy the best infrastructure that's that's out there. >> so you don't think this will change the capex prospects for this year or for next year, that it'll still be kind of tens of billions of dollars for some of these big tech companies. >> i think so, because i think

that the opportunities are so large. so if you're talking about, say, displacing search or leaders in search, or if you're talking about things like making autonomous autonomous vehicles a reality, i think the amount of dollars that can be won, if you could do that through ai, are so large that that's what's been fueling investment. and so looking forward, if you can use technology in the kind of equivocal to what deep seeks developed and get to that point, that's great. but i think that what we've seen is companies are willing to continually lift investment because they see that promise. just a generation away and missing out on on being the first company there is such a concern that i think people are still going to be willing to

spend. >> yeah, that's something we were talking about with mike santoli a short while ago. i'm curious what you think it means for the supply of chips, for the export controls that have been put in place to prevent some of these chips from going to china to create something like this. do you think this changes the calculus in any way? does it make those export restrictions tighter, or does it loosen them in the hope of, you know, maybe having more of a communication between the two nations? >> i think it's pretty unlikely that we see export controls loosened. it seems like. painting china as the villain is a relatively popular scheme in politics, and i don't see that changing. i think from where we are in terms of export controls. remember that a lot of the technology that deep seek is using was obtained prior to export controls being put on, or restrictions being placed on

china or tightened. and so i'm not sure if things get get tighter either, since a lot of what we're seeing now kind of comes out of what what had been a year or two years ago versus what current restrictions or the current restrictions that exist. >> all right. we will see. certainly an interesting story, one that's not going anywhere anytime soon, matt. appreciate you breaking it down for us. >> thanks. >> meantime, quick check on stocks as we go to break. s&p really still circling around s&p six k right on the nose at the moment. down 100 points. dow is benefiting of course from the other parts of the market showing some strength down 61 biggest laggards on the s&p today. you can probably guess what some of them are but they're heavily concentrated in technology chips and energy. stay with us.

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alive. >> the next release is. >> scheduled to. >> take place. >> thursday, followed by another saturday. >> israel gave the. >> green light today for some 650,000 people to return to the heavily battered north gaza region today. it's the first time since the early weeks of the 15 month war. >> president trump is. >> reportedly planning to sign. >> three executive orders to. >> alter the military. >> the first. >> would ban transgender service members. another would gut the military's diversity, equity and inclusion programs, and. >> the. >> third would reinstate service members who were discharged for refusing to get the covid 19 vaccine. >> the supreme court. >> turned down a challenge today to mississippi's lifetime voting ban. for people convicted of a wide range of felonies. it is one of the toughest restrictions in the nation. >> the high. >> court declined to hear a lawsuit brought by six men who lost their right to vote, even though they completed their sentences for various felonies. that's the news right now. leslie, i'll send it back to you. >> all right. contessa. thank you. markets not the only asset

facing pressure today. equity markets, that is. check out bitcoin fighting to hold on above 100 k but down more than 3%. and after a break. a big tech tear down. what to do with names like meta and alphabet as they prepare to report earnings they prepare to report earnings this week we'll disc what's at stake when administrations change? ey understands the geopolitical, economic and regulatory impacts companies face. new president in the white house, new heads of agencies, new members of congress, all with their own policy priorities. the 2024 election will shape the future of business in unforeseen ways. now is the time for us to do modeling, assess legislation, and understand the impact on organizations. from election day to the first 100 days and beyond, ey brings you insights on the issues that matter: regulation of ai, the fate of billions in tax credits, global trade impacts on your supply chain and workforce stability and security. the congressional outcomes will matter a lot

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talk about easier investing. generics. >> now only $1 per tablet at wrexham.com slash 30. >> dow just about 20 points from going green. it's being led by salesforce, which kind of points to some of the research today. looking at what may happen if, in fact, the cost of goods for software companies gets a little better, making ai adoption a little more accretive. one of the bright spots in this incredibly disruptive story regarding deep tech. meantime, some s&p gainers you've got at&t and earnings story and some defensive names as well. conagra and kraft are some good examples. big tech is a key part of the sell off today. apple is the only mag seven name in the green ahead of results out this week. meta microsoft and tesla

also report in the course of the week. barton crockett rosenblatt securities senior analyst managing director joins us now. has a buy rating on apple and a target of 262. barton good to see you. what a day. thanks for the time. sure has is the tone of conference calls this week just changed entirely? >> i think it has i mean, you. >> know. we had. >> a friday. >> where mark zuckerberg. >> was talking about. meta spending. >> over $60 billion on. >> ai driven capex. >> and now over the. >> weekend, we have a story that. >> raises questions. do they need to spend 60 billion or can they get a lot more for that 60 billion than they anticipated. >> so they'll be. >> up wednesday night. and i think that'll. >> be a real litmus test of. >> what smart. >> players who've had a couple of days to really dig. >> into what deep. >> sea has announced. >> what they. >> have to say. and, you know, in my mind, the setup is very positive for those guys who are leveraging ai to develop capabilities but don't need to make money from selling kind of

ai driven large language models. and meta is in that camp. i mean, it's llama is an open source llm. apple is in that camp. they're leveraging other people's ai investments and would benefit, frankly, from a lighter weight model with greater functionality and end devices and amazon as well. they haven't really developed their own llm, but they would benefit, i think, from improving capabilities generally. so this could be an important kind of test of the substance of what we've been talking about this morning on deep sea. >> can you envision zuckerberg doing a 180 or trimming capex just 72 hours after the last numbers? >> no, but i could envision some discussion of the substance of what deep sea has announced. and, you know, if there's any statement that suggests it's substantive, you know, then we could start to think, well, do they need to spend as much as he put out, or can they get a lot more than they bargained for from that spend? >> one of the key topics we've

been talking about this morning is the open source nature of deep seek. and of course, llama has similar attributes. is there anything they need to do that can help them kind of be, you know, benefit from the open source nature in the way that deep seek is, is doing in china? >> well, look, i think that the first thing, you know, some of the press reports have suggested that meta is doing is, you know, assigning teams immediately to try and reverse engineer what deep seek has done and see what they can learn. you know, you'd expect that, you know, from a company with this type of resource. so the fact that it's open source suggests that not only will meta people be doing this analysis, but the open source community will be and frankly, you know, deep seek and llama both being open source. they can learn from each other. so you know this sets up for the end game of services and capabilities improving faster. if deep seek is real, the innovations will spread rapidly to scaled players like meta and

i will be more impactful. menti, that's a rarity, at least so far this year. barton given, you know, a lot of concern, i guess overall in terms of the demand and shipments and the like, are they a beneficiary at all of what's going on right now? and you know, what is your sense in terms of how we how we end, how we set up heading into the earnings release there as well? >> potentially. yeah, i mean, if this is real, you know, potentially, you know, you'd think that apple would be able to learn what the innovation is and improve the capabilities of their, you know, of their models that they're putting on their end devices. so greater compute for the end device should help the feature set that apple is able to introduce. that's obviously a very long term idea. you know near term they have to navigate the pressures that, you know, seem to be apparent in the december quarter kind of iphone sales backdrop. the good news

is, is that a lot of that has been digested by the market. and then i think what is to come is even more important, which is their ability to rejuvenate iphone sales. as you launch a new model in the march quarter and se four, and as you ramp up those ai capabilities that you already have under, you know, under development, you know, starting with the ios 18 four in april, which will give you exposure in europe, will improve siri and give you chinese language support. so a lot of important, you know, markers to come that should help the appeal of iphones. >> finally, barton, there is this lingering theory. we mentioned that the deep seek release came on trump's inauguration day. a lot of this news is hitting just days after the stargate announcement, that it's some kind of way for china to try to get into our head with some misleading metrics. how is the street supposed to wrangle with that? >> well, you know, i think that that's something that we just have to sit back and let the

people with real skin in the game with real resource like meta, do the deep dive and tell us what they come up with. so, you know, hopefully, you know, deep seek and the teardown features prominently in what's coming up on meta wednesday night. >> and it's going to be a busy week. barton we might even talk to you in the coming days. thanks for the help today, martin crockett. >> thank you. >> coming up, i stocks not the only names getting hit. so two are power generators like vistra, constellation and more. what investors need to know after the break. >> nothing stands still. not technology, not the market, and not franklin templeton. we've been. >> a firm in. >> motion for over 75 years, always innovating. today we're a leader in public and private markets, digital assets and custom tax management,

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the deals you want, and the service you deserve. can i get that logo bigger? or we'll make it right. that's the at&t guarantee. broken. that's where ambition can play a really powerful role in driving the kind of change we experience at fortune brands innovations i fundamentally. believe if. >> we. >> don't disrupt, we will be disrupted. there is a clear need. >> for products that are going to make. >> people. >> safer, that are going to make environments better, that can be good for business. >> good for. >> people and good for. >> the planet all at the same time. >> welcome back to squawk on the street. i stocks not the only names getting hit today. power generators as well like vistra energy, constellation and others which are some of the ai infrastructure plays. as you know vistra constellation energy, ivanova. the three worst performing names on the s&p at

the moment. >> well, here with us with his outlook for the energy sector, natural gas and a lot more is doug rachlin. he's a senior portfolio manager and head of neuberger berman's energy transition and infrastructure strategy, manages $3.25 billion in assets. doug, good to have you. >> it's good to be. >> here, david. >> you know, you say that the opportunity set is the best you've seen in three decades that you've been managing this strategy. why is that? >> yeah. >> so i've been managing. >> the. >> strategy since. >> the summer of 1996, and i have not seen better opportunities than i see today. and there's a couple of reasons. one, you know. >> i talk about ai data. >> centers and. >> the. >> effect of natural gas. >> i also. >> love to talk about propane, because when you think about energy dominance in the united states, propane, they the our country. >> is responsible. >> for 46% of the world's propane exports. and enterprise products is the leading independent supplier to the world, with a 15% market share right behind them. energy

transfer and target resources. >> i would bet those three are then in your portfolio. i would be right to guess that i assume. >> you better believe it. enterprise products and energy transfer for a really long time. target resources. we just began buying in a material way in the fall of 2020, when the sector was down on its knees because of covid. target has is a 12 bagger since the fall of 2020, and it represents 21% of our separate account portfolio today. >> is that too much? do you too much weighted in one stock. >> so, david, as you as you know, i teach a class at tufts. i'm a visiting lecturer, a class called investing psychology and human behavior. and we spend a few weeks on charlie munger, warren buffett. we talk about concentrated investing. and i think charlie munger has this, you know, famous quote is that, you know, you want to invest with your highest conviction, and you should not just be playing all the stocks in the market. and he actually uses an analogy about the racetrack. the

better gamblers at a racetrack are the ones that seldom bet. well, you bet big when you have an edge. and target resources has been a monster of a stock. but here's what's amazing as far as today's opportunity and why it's still a very large holding. the ebitda in 2020 was 1.5 billion. today it's 4.5 billion. okay. yes, the stock is up 11 fold. but the multiple the price to ebitda still remains about 11 times, which is very reasonable. and they are generating a substantial amount of free cash flow today. >> well, one reason why you're able to outperform significantly the alerian mlp index. i want to get to the news today, though, because it may be changing in terms of the complexion of some of these trades. the belief has been data centers are just going to be built everywhere in this country. they're going to be powered by all sorts of things, but a lot of natural gas. and you own a lot of those companies that transmit or transfer the natural gas, the pipeline companies. any concerns at all

about this deep sea news and what it's going to do to the sector? doug. >> okay. so first of all, natural gas prices hit $4 last week. they hit $4 because we're finally having cold winter weather. okay. it's nothing to do with this ai data center hype of a build out. okay. also really important, over the next four years, our lng exports are set to double. today we are exporting about 13 bcf billion cubic feet of gas. okay. by the end of 28, it's going to be 25 bcf. and with trump in office and his executive order, which lifted the biden pause on lng export, build out, lng exports could hit 35 bcf within the next decade. okay, that's a huge increase, especially in light of that. we're only producing 103 bcf here in this country. okay, so by the end of 28, 25% of our natural gas production may be going for exports. >> okay. so do i just want to own natural gas or how do i want

to actually play that. if i believe that theory is undiminished by this latest news in terms of at least questioning whether we need all these data centers. >> so we are midstream energy investors. so we primarily primarily focus on volume and throughput. that being said, it's not lost on us that there's a high likelihood that natural gas prices will get support. and that leads us to antero resources, another one of our favorite names. we own antero midstream, which is the midstream arm of antero resources. but antero resources today is trading just above 37 bucks. okay. if natural gas stays above $4. and on friday, jim cramer mentioned he believes it's going to $5 if it's just stays above four. we believe antero resources has the potential to go up 50% from here. and if it hits five if there's $5 gas, it's going to go a lot higher than 60 bucks. >> you manage this, as you said, your fund for a long time. you've seen some rough periods as well. what gives you the most concern right now in terms of

the how confident you are in your thesis? >> so our. >> always our largest concern is the macro economy okay. and it's not just the effect on energy, it's on all of the segments. so be it. the 2008 financial crisis, be it covid. okay. so you know, you know, geopolitics and more importantly, how it impacts the global economy. because again, we are mainly volume and throughput. so the economy is healthy. we're going to continue to see growing consumption of energy products and especially natural gas and natural gas liquids. >> and propane. >> and propane. we cannot forget about propane. >> don't forget. >> about propane. it's been a main driver, like i said, for enterprise products and energy transfer and target resources. >> doug, always good to see you. >> appreciate you taking seeing you too as well. thank you david. >> doug rachlin from neuberger. >> got a quick programing note as we go to break. don't miss the ceo of sofi in the next hour. breaking down some of the quarterly results we got this morning. and the guidance shares down almost 8% as the broader markets try to trim some losses.

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strikes next. so go on, check it out. it's over at ford patriots.com. >> global chip and tech stocks dropping sharply on what some are calling a possible rerating of u.s. tech dominance. and this reevaluation of the ai build out all of this due to a chinese ai model called deep seek, which you're definitely going. to hear about sooner or later. that said, there are some skeptics steve kovacs here at post nine to talk about sort of the views are all over the map this morning. >> yeah, it's. >> either a genius move and deep seek was able to do whatever they. did with just a couple million dollars versus tens of billions of dollars, or maybe they're fibbing about it and they didn't actually pull off what they pulled off. i want to i brought you guys this post from linkedin that yann lecun put up. he is the chief scientist of artificial intelligence over at meta. and he's kind of talking about this open source thing. we were talking about this earlier, leslie, how it's very possible that this was built on top of previously existing open source models. it doesn't necessarily

mean they're being surpassed, but they did this, like very smart thing and built this deep seek system on top of these existing open source models. and what that tells us is if you're like me and you try all these chatbots that have been coming out, whether it's claude from anthropic or chatgpt from openai, i personally don't notice much of a difference. they've been super commoditized. meta llama is incredibly impressive based on how much they put into it, based on how quickly they were able to get it out there. apple intelligence not as good. at least the reviews aren't as good, but they did do it on their own. they did do it in a cheaper fashion than some of these other hyperscalers we talked about all the time. and then let's spin it forward. we're approaching earnings seasons for all these hyperscalers guys, and we're going to start hearing questions again about why you're spending this so much. when we see people on the other side of the planet doing it maybe for a lot cheaper, we think we're to my point, we're not sure. but this is where this fear is coming in that, oh my god, they were able to do this. we're talking about

$500 billion investments from openai and oracle. and here we have this chinese player, 6 million bucks or whatever. that's that's insane. that's scary. >> i mean, but we're and we're going to get progress reports. i mean, it's not like anybody's sitting still. gpt is coming up with what, 0.3? >> i literally can't keep track of. >> all the numbers. and then musk i know you cover as well. grok is going to be reporting some numbers, i think some new stuff as well. >> and they just put out their first app, by the way. so you, you know, grok is growing that huge data center that elon musk was able to build that seems puny now compared to the numbers that we're talking about with stargate, with stargate, with what mark zuckerberg said a few days ago about increasing their capex. so this is the money is there, to quote nadella, on our air. again, he's like, i'm good for my 80 billion. we know they're committed to actually spending some real dollars here. the question is, is someone else going to come in and say, we don't need to spend that much? >> but if we think about kind of the policy implications of all this, we've been restricting exports of nvidia chips, the most advanced nvidia chips, in order to prevent this type of

competition, whereby if this were and again, there are a lot of unknowns. but if this were built on an open source llama product, which has been open all along, i mean, how do you control for that? and then how do you protect the answer? if the goal is to protect usai, how do you do that? >> the answer is maybe you can't. and the other question is, and again, we don't know if they were using these cheaper and less powerful nvidia gpus that they are allowed to use, or if they kind of smuggled in the best gpus that we don't know either. we're kind of going off rumors and speculation here now of eunice yoon, our colleague over in china. she was sitting there cheering over there. they're loving this reaction to this chinese homegrown startup that created that look. look what it's doing to nvidia. look what it's doing to broadcom. look what it's doing to micron. >> although the bright spot that a lot of folks are pointing out today i mean snowflake's in the green. yeah in the green. crm's doing well a lot of comparisons to what linux did for software and eventually for the cloud. >> yeah. and by the way, so much of what computing that we use

every single day guys wouldn't be possible without linux, without people building on top of linux. and that's what they're extrapolating this from. they're saying, okay, wow, they were able linux was able to do this and enable software from, you know, the screen use on the back of your delta flight to choose what movie you want to watch, all the way down to an android phone. that is what the idea. maybe this has cracked that code that you do not need to invest that much. that is. that's where the fear is coming from. still plenty of reason to be skeptical. i'll believe it when i see it, but it really does. i mean, i've been playing with deep sea all week and it it works well. >> it really. >> does work. no security concerns. >> yeah, definitely. i put my phone number in there. i put my social security number in there. right. that's what you're supposed to do, right. >> and kovacs going to disappear tomorrow? yeah. >> no security concerns, of course. and like, when i sign up for it, i signed up using the apple sign in, which kind of scrambles your email address and things like that. i'm very with tiktok. i'm super scared of some of this kind of stuff. so take some caution. don't don't just tell it everything. also, you should keep there is a censorship thing here too. you

can't ask it about tiananmen square. you can't ask it about the chinese communist party. i just posted this to blue sky, by the way, that even gemini can't even do some of that kind of stuff. you as gemini, who the president of the united states is today, it doesn't know. so, you know, there's still a lot to be done here. >> there's no doubt, though, that the chinese developer community is ecstatic. yeah, they're ecstatic, but they're also very good. yeah, they're very good. they got a lot. >> of and they have the government backing them too. yeah. and you know and was played by the rules. >> no steve. thank you. thanks guys. steve kovach in the minute or so we got left for you. i did want to take a look at shares of at&t, one of the big movers this morning on earnings. we're going to get an avalanche of earnings. we've talked so often about of course some of the biggest companies in the world that will be reporting during the course of this week. but at&t, in the midst of a bit of a rebound for some time, you can go back there and see the performance of the stock over the last year, even the last couple of years, leverage ratio coming down, cash flows going up, the fiber strategy. john stankey, the company's ceo, would say is being proved out in terms of the

gains they're making. and then there's walgreens. i reported on it earlier. remember, there had been talk about a sycamore bid potentially for the company. the latest opioid litigation they were hit with, and any number of other reasons it's termed been termed to me as mostly dead. you can see that is being reflected to a certain extent in the current stock price. we got a lot more live market coverage for you, with the s&p down 1.5% and the nasdaq some 2.5%. money and the nasdaq some 2.5%. money movers coming up. let's start with the eyechart. what makes you think i can read? you can talk... and you booked an eye exam online. (nervous laugh) okay, um, good points. top line? this is a quality, comprehensive exam. come again? you asked me to topline it for you. okay. bottom line? well, the bottom line is this an amazing value. what? get two pairs of glasses and an eye exam starting at $89.95, or two pairs of progressives

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excuse me, which way back? uh, follow him. and the fed's next move? fed chair powell's crucial remarks and message to investors. power lunch wednesday two eastern cnbc. >> good monday morning. welcome to money movers i'm carl quintanilla with leslie picker here at the new york stock exchange today. these fears from china's deep sky sparking the sell off in the market. although you can see we're trying to wrestle with some early morning lows nvidia and the chips have dragged down the nasdaq. what is the outlook for the sector and is now a buying opportunity, or just the beginning of an even bigger bubble? we'll talk about it. >> and it's not just the tech stocks under pressure, energy names also falling as the street starts to rethink the amount of energy that coulde