with the convenience of slip ins. with no bending down or touching your shoes, try glide step skechers slip ins. >> let's do final trades. bryn, what do you have? >> energy transfer. >> all right, farmer jim. >> vertex pharmaceuticals. >> steve weiss, unitedhealth unh. >> axon enterprise. >> wow, i didn't even call your name. all right. thank you. see you on the closing bell. >> thank you very. >> much, scott. >> and welcome to the. >> exchange i'm kelly evans. >> here's what's ahead. >> tech is. >> taking a hit with. >> amd and alphabet leading. >> the declines today. >> alphabet on. >> track for its worst day. >> in a year. >> that's on earnings. >> apple a different. >> story also moving lower. we'll dig into. >> the details there and broadly look. >> at how to position. in the. >> tech trade now. >> plus he was instrumental in tiktok's ban. now he's raising. >> a red. >> flag on deep sea. if you use the app. >> you're going to. >> want to hear this. >> for ceo. >> ivan cerini. >> joins us.

>> in a live tv exclusive with. >> what his firm uncovered. >> and the national security. >> concerns it raises. >> as everyone is still. >> buzzing about deep sea ai disruption. and speaking of tiktok, perplexity is making a bid for tiktok. u.s. ceo says it's a deal president trump will like. is it a long shot, though? we'll have the latest. let's start with. >> the markets, though, and. >> dom chu with. >> those. numbers and how the rest. >> of the market is digesting. >> those tech results. >> yeah, absolutely. >> i mean, there's a reason why the technology. >> trade is the drag today, but it's not that much outside of those specific stories that kelly mentioned with regard to alphabet and amd. we'll get. >> to those in just a second. >> here, but. >> we. >> are near the highs of the session right now. currently, the s&p 500 is at 6046. >> it's up about. >> 8 to 9 points at the highs of the session. we were up just. >> about. >> 14 and down actually 30 points at the low. so well off the lows of the session. right now. >> we are. >> just about three. >> quarters of a. >> percent less than 1% away from record highs in the s&p 500. it's a little over a percent below the record highs

for the dow industrials, which are up about one third of 1%. the real leader so far today up 142 points to 44,697. and the nasdaq composite is at 19,650. i mean, we'll call it flat just down three points on that basis of 19,600 odd. but still that tech trade the laggard, so to speak. so far today one place we are seeing some tailwinds despite the fact that tech is having a somewhat down day. today is the ten year treasury note yield. it currently stands at just about 4.41% near the lows of the session. there is a continued bid for government bonds. in fact, a bid so high that we're back up to the highest prices and lowest yields for that ten year note, going all the way back to roughly december 18th, that i'm going to show you the etf that tracks some of the longer term ends of the yield curve. the ishares 20 plus year bond etf, ticker tlt, which is up 1.5%. but the reason why i'm showing you this is because we always talk about yields in terms of up and down. well, prices have been kind of on the steady rise over the course of the last 3 or 4 months. so keep an eye on what's

happening there with regard to the yields ticking up. again. best levels for yields in terms of lowness since mid-december and then that tech trade it's still powerful, but amd and alphabet's earnings results were a little bit worse than expected with certain aspects with regard to things like data centers, you know, cloud growth and that sort of thing. so alphabet and advanced micro devices, yes, they are lower. it just calls into question. they're still growing very quickly. but how much do they need to grow and how fast to justify current valuations? kelly. that's the big question right now for tech investors and the market writ large. i'll send things back over to you. >> all right tom, appreciate it. >> my next guest says alphabet might be labeled and valued now like an i loser, but he sees an opportunity to flip the script. let's bring in. john bolton. he's a portfolio. >> manager at. >> gabelli funds. microsoft, meta, alphabet and apple are. >> all. >> top ten holdings in this growth fund. >> it's great. >> to have you here. and when other people talk. >> about whether. >> we're going to rotate out of big tech, it's like existential for you because this is your

whole portfolio. so just on on alphabet specifically, what do you make of the market's reaction? >> well, i actually think the market's reaction today is actually it's not that exciting. it comes down to margins. i think alphabet is a stock that tends to trade pretty sensitive to how they do on margins and profitability. it's a company that doesn't provide a lot of investor outreach. and i think changes in margins can really swing the stock. and they kind of missed on margins last night. they also provided an initial 2025 capex outlook, which was quite a bit ahead of where the street is. so i think this combination of softer margins and higher investment markets not liking that. >> it makes it clear that this is a company in transition, right? i mean, the reason why people loved the profit margins was because they just printed money from the internet business where you search for something, you get ten links, tons of ads. and like the that was a high margin business. how high were margins at the peak? >> well, back to your comment on company and transition. i think that's the other key. sorry to divert the conversation here, but i think this is ai is really driving a big transition for this company and specifically at

their core search business. i think there's been a question of how does search fare in a. world of generative ai? absolutely. what does search look like many years from now? because for a long time, investors viewed search as sort of a utility on the internet, something that was always going to be around. a lot of people were always going to use it. ai comes along, people find themselves using chatbots. more and more. search becomes a little bit less important. so we're at this kind of inflection point for google search. now what they're doing with ai in search is this thing called ai search overview, right? >> which i love using. but i notice there's no ads there. >> well, that's actually not totally true. they are starting to monetize that. and one of the key things they said last night on the earnings call was they're monetizing ai search overviews at parity with core search, which i think was really important data point. like you, i like using ai search overviews as well. i mean, i was i noticed the other day i google searched how bad are the new york giants and google searches. >> i don't know why you had to

google that. we all kind of know. >> but yeah, actually ai overviews gave a nice kind of context. it said, you know, this year they were bad, but they might not be bad in the future. so i think it's actually. >> so now it's predicting for you what it thinks might happen. >> it's a helpful tool. it gives more context. and what google is saying last night is ai overviews are driving more queries. so it's driving more queries, more engagement. and modernization is at par with the core. i think that's a decent recipe going forward, particularly for a stock trading at a valuation that suggests that the market thinks this is a loser in ai. >> which all of which is to say, it sounds like you're flummoxed by the dip and would even be a buyer here. but i would also wonder if the company, like you said, they haven't had to say a lot to investors in the past. it's a pretty straightforward business. it was a great one, one of the greatest that's ever existed. do they need to talk more now about this transition and maybe talk about those margins, whatever might happen in the near term? talk about the investment again with an eye towards okay, maybe 5 or 8 years from now, we can come out in as

solid position as we were once in because, you know, in our house, we're using a ton of other products. i still google things, but i use a lot of other products as well. i do also use gemini and we do pay for that, but i don't know for how long that might be the case. >> yeah. so i think the key there is there's a new cfo she joined this summer, i think in august, and the previous cfo had started this initiative of durably re-engineering the cost base. i think that's what got a lot of investors excited about google last year. on the back of that, google expanded ebit margins by over 400 basis points last year. i think that was the reason google was a pretty good stock last year. >> that was under ruth porat. >> that was under ruth porat. this new cfo came in from eli lilly. great reputation. i think last earnings call three months ago was her first call. and there was a lot of investor excitement that she was going to at least continue the work that ruth started, if not kind of accelerate it. i didn't hear quite i didn't hear a lot incremental from her last night on that front. so i would like to hear more from her about sort of commitment to cost controls.

but again, it's sort of like a miss on margins, a big capex guide, not a lot of comfort coming from the new cfo. i think that's sort of the recipe today. >> one more quickly on this, if i think back to when microsoft reported, interestingly, then they had a miss on the cloud, didn't they? i mean, those shares were down and at the time people were saying, well, they're clearly losing share to google and to other players. now that google's had the same problem, what are we to think? >> i think they're two very separate issues. microsoft is chalking it up to more of an execution issue on the non-ai side of their azure cloud business, and specifically within that in sort of their non enterprise customers, sort of a go to market execution issue. i think that's kind of one off google's cloud miss. i'm a little bit less bothered by it. first of all we don't actually they don't break out google cloud revenues. they break out total cloud which includes workspace. and i think there can be some noise in there quarter to quarter. but i think bottom line, all these cloud businesses are still doing pretty well. we'll see what amazon reports tomorrow. expectations are probably come a little bit lower

for that but not too bothered by google. >> let's get into apple then. before we let you go, bring in steve kovac. first though, the company under some pressure today as china is reportedly considering opening a formal probes into probe into apple and its app store practices, shares are down about 1% right now. steve kovac has a closer look. steve, what do we know? >> yeah, kelly, this is just a pile on on all these bad china news we've been getting out of apple for the last week or so. first up, let's talk about what this new report is. this is coming from bloomberg overnight that china is investigating the apple app store. this is the same kind of stuff that we've heard from regulators, including here in the united states, in the european union, about that 30% fee that apple charges app developers for in-app purchases or just downloading the app straight out. let me just give you one caveat here, because there was a lot of talk that this is a tariff retaliation type of thing. but bloomberg does note this investigation started last year before trump even took office. and also some state media reports criticizing apple for the fees it charges

going back as far as october. but this is not the end of the china story, really for apple. remember last week that big mess they had on china revenue down 11%. part of that is apple intelligence which is still not approved in the country. i talked to tim cook about this last week asking what progress they've made. and they're still having to talk to regulators out there. so if the chinese do want to put more pressure on american companies like we heard them do with google a couple of days ago, that is another area they can do. they could just never approve apple intelligence. and then you have chinese brands, huawei, xiaomi, all of those eating into apple's market share. i'm showing you a chart right here that shows of all these brands, apple is the only one that lost market share. you have huawei surging, you have xiaomi, you have vivo. all of those are becoming really popular devices and alternatives for the iphone out there. and then the tariff thing, we have the tariffs that went into effect that could impact revenues and earnings for apple. i spoke to a couple of analysts,

including eric woodring, over at morgan stanley this week, who thinks that could put a 3% headwinds on earnings. and then, of course, like we said last week, kelly, the december quarter, china sales down 11%. a number of excuses from apple of why that was, but still a lot to be there. look just like what china's performance here on that chart. >> all right steve. thanks steve kovach john, obviously you're a shareholder at apple. how do you how do you think their position, what more do you need to hear. and is it a china issue for you or. i mean, they are supposed to be the big beneficiaries all of a sudden of this shift, right, where the people who are using the ai more so than the people who are just part of the investment cycle, are the beneficiaries, right? >> so, i mean, there's a lot, lot there. i think that that chart that was just up on the screen of, of apple revenues in china shows kind of what i'm focused on, which is apple's pressure in china has been a multiyear story. now, i think what what if we kind of rewind several years? apple initially took a lot of share in china.

they they kind of really quickly penetrated the high end user base in tier one cities. then in in 2022, when huawei faced a chip ban and had to sort of retrench a bit, apple took a lot of share from them at that point. and since then they've sort of just been bleeding share over time. and so i think that's been a steady story for the last couple of years. yes. this quarter, the 11% year on year decline in china revenues, that was worse than it's been. i think about half of that was due to sort of an inventory channel inventory issue, which is more of an accounting thing. but i do think, yeah, china's been more of a long term source of pressure. >> and yet the stock broadly keeps going to new highs. right. it goes to new highs. even with their revenue not growing in a couple of years. they've done tons of share buy. so is it. what is one of these questions you ask an analyst. are you overweight or underweight. equal weight. like how would you position apple in the portfolio relative to its, you know, share of the nasdaq or the growth market? >> well, i'd rather just kind of frame it like this. i think apple is an interestingly

positioned company when it comes to ai. i think they are like you mentioned, they're not spending to the moon on ai. they're taking more of a sort of kind of a third party approach. let other people build the models spend and will just be a distributor, kind of a neutral third party. and i think apple remains a pretty well positioned company with solid, solid revenue growth, particularly on the services side, so that none of that really changes here. i just i do think china is going to continue to be a bit of an issue, but not much has really changed structurally. >> all right john, appreciate it. thanks for coming in. joining us today john belton with gabelli growth fund. meantime, we're getting new details on elon musk's role and status within the federal government. let's bring in eamon javers. what can you tell us eamon. >> hey there kelly. well, the white house confirmed this week that elon musk is serving as a special governmental employee. now, that's a specific legal category inside the federal government. and it comes with certain requirements and also certain restrictions. a white house official told cnbc on tuesday that musk will comply

with all the rules and regulations that govern these special governmental employees and according to the federal office of government ethics, that means that musk won't be able to serve for more than 130 days during any given year. now, we don't know on what date that clock started for musk's job, but it is ticking, and that does give him a sense of urgency here. if he wants to serve longer than about that six month period. the white house is going to need to find another role for him. a special governmental employees are also required to file public financial disclosure documents within 30 days of assuming their position. given musk's vast holdings, those documents could make for interesting reading. the other rule that could come into play here is that special governmental employees are prohibited under the criminal statute from personally and substantially participating in any particular matter that would have a direct and predictable effect on the employees financial interests. musk's got a lot of those, so given his vast holdings, that could mean

he can't be involved in anything affecting the auto industry that might be related to tesla, anything related to nasa and space x that could be related to space x media or social media related to his x platform, and even infrastructure projects that the boring company might have an interest in. musk. now remember, he's got a history of tangling with or just ignoring government regulators. so enforcing all of this could be tricky. but outside groups can be expected to sue the government to enforce to ensure that he follows those rules. that might set up some battles to come over his status here. kelly. >> i didn't realize those rules. is he definitely an employee? >> he's a special governmental employee. that's what the white house said. and that's this status where they bring in people from outside government who have particular expertise that they want to apply themselves to, to a federal problem. there's never been anybody quite like elon musk in that role, because there's never been anybody quite like quite like elon musk. but it is a fairly common thing in the federal government to do that. and it's always raised some

questions about conflicts of interest for those outside people who come in who continue their business links, even though they're working inside the federal government. >> all right, eamon, thanks very much. eamon javers in washington. my next guest worked in the white house under president george w bush, maybe has some insights into how they'll navigate all of this. joining me now is larry lindsey, the ceo of the lindsey group, former director of the national economic council and a former federal reserve governor. it's great to have you. larry, i don't know if you want to comment about elon musk's position, but i'm curious what you know, how you're thinking about it. >> well, you know, he's a very talented guy. i understand why the president would want him. i think he's going. >> to run. >> into an icarus problem. he's flying way too close to the sun. if i were recommending to him, i would say i would not sign on as a special government employee. i don't see any advantage to him. and eamon has just laid out the disadvantages to him. i am sure he's going to get caught up in some legal conflict. whether

it's a real conflict or not doesn't matter. you know, this is an eye of the beholder kind of thing, and litigation is inevitable. >> is he could he serve as basically some kind of, you know, a platform, a cheerleader in some ways, kind of saying, you know, here's what the administration is doing and being in discussions with them, maybe in discussions with doge, but having no formal role. >> i think that would be much, much better. the guy's got a huge megaphone. honestly, he deserves it. whether you agree with him or not, he's got a few rabbits in his hat. if he can pull out of his hat, one of them would be rescuing those poor astronauts who have been stranded up there by nasa and boeing. and i know that's one of his missions. i mean, he'd be a national hero if he did it. i think that would make it a little bit harder to attack him, but best to not have any formal government ties. you can always have first amendment rights out there in the real world. and, you know, if you want a

president wants to give you a call. president can give you a call, right? there's no law against that. >> take your advice. >> i would do it if i were him. >> interesting. let me pivot from that, larry, and ask you about the events of this week, with us coming close to 25% tariffs on canada and mexico, or maybe not that close. do we really need to be thinking about this as a possibility next month, or is this all just theoretical? >> well, it's not theoretical. anything can happen. and the president is not an easy man to predict. he a lot of this is him playing the art of the deal by instinct. seat of his pants. my view on those two is that he was looking for an easy win. and i think he and president sheinbaum are reasonably close on where they're going to end up. canada technically does not have a government. you know, trudeau

can say this, that and the other thing. but with parliament prorogued, there's not a lot of substantive stuff he can do. but deals are easy in both cases because they're easy. i think it was a natural choice for the president because if he can show wins, then the next guy down the road who he's going to confront is up against a guy with momentum. and that's very powerful deal making. so i would call that a momentum play by the president. >> well, and you know, we're trying to figure out for corporate america, for investors, you know, what to, you know, were they suckers who kind of sold gm on these concerns. and you know, we're kind of shifting money around on these possibilities. i guess we'll find out. the one thing that did happen was china 10% tariffs. and you've got voices like derek scissors who think you know that's not enough. and he's kind of lost his focus on china and addressing this kind of 30 year gap that we've had with them on the manufacturing and so forth. and what is the

takeaway from this escalation of tariffs on china now? >> well, i think you just named the real target. i think one of the possible end games that the president may have in mind is for canada, mexico and the united states to have a common front on tariffs with china. right now, china seeks a lot of goods and not just fentanyl, into the united states via our two neighbors. and if we had a united front, say everyone put a 25% tariff on them, you know, the profitability of doing that wouldn't work. so i do think that cooperation with canada and mexico against china is probably going to be the end game in all this. >> that's fascinating and would certainly turn the events of this week right on their heads as we if we presented a united front. finally, larry, and for investors who care deeply about this, what does it all mean for the fed and for inflation this year and for the economy?

>> you mean the tariffs? >> yeah. well, i'm not even sure whether to call them the tariffs. the tariffs. we do have the ones we might have and so forth. >> well so let's just expect volatility right. we had a deep sea a deep sea deep sea shock. one weekend we had a tariff shock the next weekend. this is the way it's going to go for this year and probably for four years. so you know market participants should expect volatility in the end. you've got to make your own judgment about whether the president is going to end up on net winning from this america winning from this or not. you know, he's he's a pretty shrewd guy. so you may not like every move he makes, but probably the direction is the right direction. we are going to have a trade conflict with china. bet on it. if you're

a company involved with china, get out. i also would be nervous. >> get out. meaning what if you're apple? what if you're starbucks? >> well, you know the you're a you're a hostage. i don't know how else to say it. and you know, you want to invest in a hostage. go right ahead. i wouldn't you've also got a challenge with with europe ahead. and that's going to get very, very messy. i think europe is somewhere between a canada and mexico who ultimately are going to be cooperative, and europe, which has to really change its way and is falling apart politically. so it's going to be very hard for them to decide exactly how to work with president trump. >> you're the second person in two days to tell us that that issue could end up being more contentious than many realize. larry, clear message for the audience. thanks so much for joining us today. >> always a pleasure, kelly. >> larry lindsay with the lindsay group, as you just

heard, some new details are emerging on deep six, deep rooted connection with the chinese government. a new report shows your user data can be accessed by chinese authorities. we'll speak exclusively with the head of the cybersecurity firm behind this new report. but first, gold hitting another record high. and combined with the dollar strength, one portfolio manager is pounding the table to buy some of the market's unloved names, like this mystery mining company. tweet me if you think you know it. we're back after this. >> this is the exchange on cnbc. >> individually. >> each of us. >> is great. >> but from. here you can. >> see. we're one. >> big team. >> at atlassian, we believe. >> real progress takes all of. >> us working together. >> on new sources of energy. >> cars that drive to the future. >> even pizza deliveries. >> together we. >> can go beyond where we've ever been. >> collaborating from. >> anywhere on everything.

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on us. luxury resale. shop now with code tr 20 for 20% off. terms apply. >> check out gold. we'd be remiss not to mention it's hitting a new record high today, and that's music to my next guest ears, who's been pounding the table on gold and precious metals for years. which brings us to one of his picks and to our mystery chart. freeport-mcmoran, whose shares are down 21% over the past three months. i mean, he's sticking with the underperformers, also buying some energy and materials. michael cuggino is here. he's president and portfolio manager of the permanent portfolio family of funds, michael gold. it was strong. and then it kind of took some gains a little bit. and what's driving this latest move higher. >> yeah good. afternoon kelly. well i think it's a number of factors. and you. know it's a little bit unusual in that you have a strong dollar and gold rising at the same time. generally you don't see that. but i think when you look at global conditions, i think when you look at stickier than expected inflation, higher than longer interest rates, a lot of

uncertainty with respect to fiscal policy here and abroad, global geopolitical uncertainty, strong central bank buying all around the world, and some countries trying to get together to create an alternative global payment system besides the us dollar. i think there's enough risk factors there to make gold. not such a knee jerk reaction to just interest rates per se, but but a more comprehensive view for investors that have some in their portfolio. >> and obviously there's been a lot of central bank buying. that's a huge part of the story. gold is up 41% over the past year. silver is up 46%. and yet an investors you know long time investors know you go into something like freeport-mcmoran. you're more likely to get a migraine than anything. so i'd love to hear the case for some of these miners. now, who you think? why not just own the underlying. >> in the short term? yeah. one one quick comment on gold and silver. you know, you had a period where there was a multiyear consolidation too. and so we're really prices probably underperformed where they should

have been due to other factors. and so there's been a little bit of a catch up situation in gold and silver as well. but when you look at it longer term, there are reasons, reasonable reasons to expect over the long term that it's going to go higher. and investors should, you know, decide if they want to have that in their portfolio. with respect to freeport specifically, yes, we own it. it is a beaten down stock. it's a longer term. i think you have to be patient with it. but we believe that global growth will eventually grow. we believe the demand for copper is very is going to be and probably is very strong. right. freeport is very efficient producer and they pay a very good dividend. they're great with shareholder returns. we expect revenues and profits to go up over the long term. >> i'm just going to pick on them for one more second. maybe the team in the back can show me like a 20 year price chart. but here's what i remember writing about freeport almost 20 years ago, michael. and making. you can make all the same arguments for why you should hold them or

why not. the shares then were around 50 and today they're around 37. >> yeah. and i think, you know, this is a very commoditized name obviously. so commodities are cyclical. they trade in a more cyclical nature than say a, you know, up and to the right growth stock. and so i think what you tend to do is you want to get them when they're cheaper and then ride them and then decide how much of that you want in your, in your portfolio. we have dedicated exposure to real estate and natural resources, but there's no question that the valuation is cyclical. the way they trade is cyclical. and so you have to you know, really it's an argument for diversification, why you combine some of those kinds of companies with other types of companies in a portfolio. >> right. and you've got nvidia and broadcom digital realty trust. so it's not like this is a, you know, an obsession taking away from from the other parts of the market. doing well michael we'll check back in soon. appreciate your time today. >> thanks, kelly. >> take care gino. permanent portfolio. coming up disney warning of another drop in subs this quarter. our investors

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>> welcome back to the exchange. i'm christina partsinevelos with your cnbc news update at this hour. fbi agents who, quote, simply followed orders while investigating the january 6th riot at the capitol are not at risk of being fired. that's according to a memo to fbi employees obtained by the associated press. the memo comes in the wake of the justice department's demand on friday for the names of agents who participated in the investigations. daniel pennie, the marine veteran who was acquitted in december after choking to death a mentally ill subway passenger, has been hired by andreessen horowitz, one of silicon valley's top venture capital firms, according to its website. pennie will work with a team to support americans interests that include the defense and aerospace industries. and nearly a year after the deadly collapse of baltimore's francis scott key bridge, maryland officials

unveiled tuesday the design for its replacement, which they say will be taller and better protected from collisions with ships. construction of the new bridge could be finished in 2028 at a cost of up to $1.7 billion. >> wow. >> kelly. >> christina, thanks very much. kristina partsinevelos. still to come, researchers uncovering deep, hidden connections to a chinese state owned telco that's banned from doing business in the u.s. we have the new details and the risks to american users next. >> opportunities can. >> be hard to find. >> like catching lightning in a. >> bottle. >> in uncertain times, it's tempting to retreat or. >> simply wait and see. >> at cme. >> group, we. >> empower those. >> who act. >> we deliver. tools to help manage. risk and capture opportunities in every market climate, across every major asset class. to seize each possibility at precisely the right moment. cme group

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a reality. >> welcome back. a new report is raising serious data protection concerns about deep sea cybersecurity firm ferut has found that deep sea user accounts appear to be registered in china, and that both website and app sign ups are processed through its state owned mobile authentication system, which means that china has direct visibility into the identities of deep sea users, including search queries and interactions that could pose a, quote, significant privacy risk. joining us now, the author behind the report, ivan cerini, is the ceo of ferut. ivan, it's great to see you again. welcome. >> thank you for having me. >> i'll start with you. what matters to me here. so i downloaded the app briefly. i tried to sign up, of course, rather idiotically. it prompted, you know, i am sick of these

sign ups. so i was going to sign in with google, and i think i did, and it didn't work because i think this was as they were trying to shut down new users. now i'm concerned, why would i sign in with my google profile to this chinese anyway? tell me, what do i need to know and can i undo what i've done? i've deleted the app. >> yeah. >> i think that's. >> a very. >> important question. >> so here's the. >> first thing. >> here's what we found. >> is when users. >> are logging. >> in. >> into the deep sea website. >> and registering. >> the deep sea websites, load software or and that code. has built. >> in capabilities. >> to transfer. information to china mobile servers call. it a service called sea passport. com which we have never seen before. and that raises a lot of alarms as this. those servers are directly linked to china mobile, which is owned by the government of china. and to the second part of your question, what can you undo? i my i'm personally not using deep sea and nobody at our company is using deep sea, with

the exception of taking a look at what happens when users are actually signing up and using the deep sea website. >> i guess. could you compare and contrast then what deep sea is doing or can do with what tiktok is doing or has done? >> yeah, that's a very important question. and that we also looked at and we also looked at contrast, not just between tiktok and bytedance and deep sea, but we also looked at what happens when you use an american tool such as chatgpt and gemini. so first comparison when you're signing up and what we see when users are signing up or using deep sea information is some information is definitely being sent directly to china to and specifically to, for example, pixels that are operated by baidu, which is somewhat a very similar organization to tiktok when it comes to pixels and trackers. and when we look at chatgpt, for example, all of the user information is staying in

the american border, so no information is leaving the american server. so which was a big contrast between the two products. >> right. for sure. ivan a stick around. let's bring deirdre bosa into this conversation. she's actually got a lot of different ways that all of these users and developers are still using deep sea. deirdre, what can you tell us and how do you think they're going to react to these threats? well. >> kelly, there. >> are some. >> key nuances here. what ivan's been talking about is very real. >> and. it's very. >> important for users to understand. and i would say it makes concerns. >> around tiktok look like a. >> sideshow, an ai model. >> with unchecked. >> influence over. >> knowledge and decision making. like deep sea. that is a far. >> bigger risk. >> but it. is also. >> critical to understand the key. difference between deep sea, the app and deep. seek. the model. using the app means submitting data to chinese servers with censorship and potential surveillance. using the model outside of china allows for security and freedom. it is open source, meaning

anyone can host and modify it independently, keeping data private and removing censorship. the risk isn't deep sea the model itself, it's who controls it. and by the way, the list of u.s. companies hosting the model includes amazon, microsoft, google, all three hyperscalers, plus nvidia plus perplexity for non-developers. that last one, leading president trump's ai star david sacks, who's very worried about security, to point out this distinction and say that users can go ahead and access deep sea through a third party while avoiding the risks tied to its chinese hosted counterpart. so the issue, kelly, is that this still isn't well understood and deep seek the app is free, and so maybe that's what makes it a trojan horse that's free. the chinese ai lab behind deep sea. it's going for glory less return on investment. and that's key here. but kelly, you deleted the app. if you still want to use it, you can go through a platform like perplexity without sending your data back to china. >> ivan. i mean, that is true, right? there's no way if all

that perplexity i've seen. even dell offers this for the enterprise. if they're just kind of downloading the script and saying, okay, we'll run this on our technology, is there any risk that anything you do would, would somehow make its way back to china? i can't imagine there would be. >> yeah. this is actually a very important distinction between the open source model from deep sea and the app and the website that deep tech also services, because the open source model doesn't have doesn't come with all of these concerns that we're talking about. while the mobile app and the website does come with with all of those issues and talking, you know, covering and connecting it to the. david sacks i kind of leadership agenda. what is really important is to prevent, in this case, a collection of real time information from americans that are using the website or the mobile app from dixie, because once it leaves our borders and our hands and goes into the chinese or, you know, hands, it can be used to train ai even further and advance their

research even further. >> you've been very, i think, sort of illuminating on this point, ivan, that, you know, if we are using phones that have these apps on them, then our real time activity is the most valuable thing for, you know, better results on a chinese ai model. say, you know, real time information is worth a lot. so for people who have downloaded it, should they make sure that they go ahead and delete it off their device, off of their computer, even if they're not actively using it? it's presence is the problem, right? >> that is correct. well, we live in the free world, so everyone has their choice. me personally, i'm staying away from it and i would recommend personally to not use the website or the mobile app. >> well, kelly, and let me just add on to that. i mean, there's a reason people want to use deep sea and we need to be talking about that. the experience is very different than a chatgpt. the r1 model shows the step by step reasoning, which is why i find it so interesting. you can actually see and read how the ai

is thinking, which is something you cannot do with openai's latest gpt model. and so i mean, that's key. ivan, what do you do about that? this is what consumers want. and, you know, there's a generation of users who don't care about giving up their data privacy. if they get a better experience. what do we need? is it possible that an american entity could create an american deep sea? who would do that for free? >> yeah, well, that's a very deep question. absolutely. so there's one track which is innovation. and that is really important to preserve and advance the ai innovation, while like, for example, an open source model doesn't come with all of the same issues that the raised privacy and national security and all kinds of other concerns. so i'm really, really supportive of the open source approach here, where we do need to really balance from what kind of information from us, from every american is going into the hands and into the servers back in china and how it can be used potentially against us. >> yeah. ivan, appreciate you joining us and putting this

report out today. it's good to see you, deirdre. thanks as well. ivan cerini of fruit and our own deirdre bosa. and still to come, we're sifting through the streaming headlines with disney reporting a decline in subscribers in their first quarter. and they see another modest drop ahead. while fox is planning to get into the streaming game by year end, at least in terms of the paid one. and wolf research has a suggestion for comcast, it says could unlock up to 60% upside for shareholders. we'll dig into all of that with b of a's jessica reif ehrlich next. >> techcheck is sponsored by comcast business. powering possibilities. >> 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 flag replacement program got started by a good friend of mine, a navy vet, saw a flag at the office that needed to be replaced and said wouldn't this be great if this could be something that we did for anyone? comcast has always been a community driven company. this is one of those great examples of the way we're getting out there. >> when breaking news or market volatility affects your portfolio, we are there for you. >> what i. >> learned from jim is that. >> you know, to. >> stay calm. >> not react to. any singlee

to do you first time consignors get $100 extra terms apply. >> welcome back. disney reporting a slight drop a drop in streaming subscribers before the bell today. they had warned about that in their last earnings report and say they

expect another modest decline in q2. it's got the stock down 1.5%, but bob iger himself said he's happy with where the subscriber count stands. >> we actually. >> are very. >> pleased with where. we are. >> sub wise for disney plus and hulu. as you know, we took prices up significantly fairly recently and expected the churn would be significantly greater. and it turned out we delivered numbers that were better than we had expected. >> our next guest is also optimistic, saying the company is laying the groundwork for a good year, and she's got $140 price target. let's bring in jessica reif ehrlich, managing director at b of a covering the media space. jessica, it's good to see you. and is look, disney and comcast are the only players other than netflix with any kind of scale in terms of market cap here. so is that where we should expect, you know, people to put up the biggest fight? >> i'm not clear about the. >> biggest fight. >> but yeah, i. >> mean disney. >> had netflix had an amazing quarter of course. and disney had disney had a really solid

quarter. >> yeah. so i think we look at this and say, okay, 124 million subscribers for total paid disney plus. netflix is over 300 million. and you know who's next after that? >> i mean, they're. >> subscale players. >> peacock. >> paramount plus, max. max is still growing and rolling out internationally, but there's a lot going on at disney as well. you know, they're going to roll out espn flagship in the fall. they are starting to bundle all of their services. >> so they. >> actually you know, fubo. is coming online and will be part of their service as well. they will be in all the skinny sports bundles that are coming out. so disney has scaled, netflix has scale. and you know a couple of the tech companies do as well. right. and then everybody else is in a different category. >> you know the december nielsen report, it had youtube highest sort of share of viewing time, 11%. i think it was maybe amazon. no youtube next, then

amazon. so you know, disney is doing well but it's also up against $2 trillion market cap companies. >> the totally true. but their content cycle i mean they are really focused on content. they've got some really big movies coming onto the platform in the spring. moana two and mufasa. and that always drives subscribers. they are working on their consumer interface. that's an area of spending. and they noted on the call today they need to make that more dynamic, which is definitely true. you see that on netflix's homepage. so there are things that they are doing to ramp up, but it's pretty clear, like the numbers today were actually very good. the streaming numbers were better than expected. and our view is that they will significantly beat guidance in that area and probably some others as well. >> you think they're going to get to 140 as a standalone company? i mean, should they consider any kind of consolidation if some of those, as you called them, subscale players are, you know, just going to struggle in this fight?

>> right. >> well. >> this year should be the year of m&a. hopefully with the republican sweep, the you know, will be an environment that's a little more friendly to these kinds of things. and most of the companies in media will have to change their asset mix. disney is in a different category, as is netflix, but netflix actually could scale up in ip as well. disney has all of the content they need. they have a really good range of assets, so they are less in need of acquisitions. not that they couldn't do a tuck in, but they've made acquisitions throughout the last decade or more and are in actually a really good place now. it's all about execution. they've had a pretty tough hand with the strikes. the writers strike, the actors strike. obviously covid hit everybody, but now that they're coming out of it, they're operating, you know, in a from a better position. and in our view, for disney specifically, numbers are are going up and probably well above the guidance the company gave today. >> so if disney is doing well with its current portfolio, it's got again, the biggest, maybe

$200 billion market cap of the rest of these players. but it's not necessarily looking to be acquisitive. then what happens to the rest of the industry? you know, comcast is saying that spinco is going to be the acquisitive asset, but comcast itself is the one that has the balance sheet and the heft. i don't know if you saw wolf research's note this week where they say comcast should keep going, they should spin off nbc. you should they should spin off peacock. it should be three companies, not just two. again, i'm just trying to envision who has the capacity to kind of roll up the rest of the industry. >> but that view on comcast is not new at all. we've been writing about it for quite a while. we our view and in writing is that there will be a cable network roll up. the big surprise when comcast announced spinco was that, you know, warner brothers discovery didn't didn't announce it first. but given comcast balance sheet, it makes perfect sense that they are the roll up vehicle because they're operating with that strong balance sheet and can afford to make acquisitions. so spinco will happen or comcast spinco will happen later this year. and that will, you know,

get the ball rolling. warner brothers discovery announced a prelude to a restructuring. and so there's likely to be a split there as well. if there's a standalone warner brothers studio film and tv with max, that would be a highly attractive candidate for tons of companies. we've we've written about this, and nbcu might be an acquirer, but there are others who could be interested as well. and as far as cable, again, something that we've highlighted, john malone said on cnbc several months ago, that there's no reason why charter and comcast shouldn't combine. there is there are benefits to scale, and the whole cable industry has gotten smaller, but also they're competing with bigger. not only telcos, national telcos, but international platforms like amazon and google. >> the old fashioned reasons not to do it seem just that old fashioned. jessica, thanks so much for joining. us today. appreciate it. jessica reif ehrlich with b of a. and that's it for the exchange. thank you

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[inner monologue] this is going to sound crazy. but i know these attack vectors. oh, had a little upgrade have we? ♪♪ okay, so that's how you want to play. ♪♪ >> and welcome to. >> power lunch alongside. >> kelly evans i'm brian sullivan. your money hopefully moving higher again today as the big rotation rolls on. >> small caps. >> looming large. and oh boy do we have ay