Transcripts For CNBC Squawk 20240703

Guidance plus media moves warner bros. Discovery missing airbnb shares are also falling ahead of the opening the company sees robust demand for travel, but its guidance disappoints investors. The ceo will join us in a few minutes. Lets begin with a few momentum names today, including one of the beneficiaries of the a. I. Boom, and thats arm holdings, down sharply as guidance comes in below consensus. But shares of the chip designer still up 90 from the september ipo price of 51 a share revenue up 47 licensing up 60. Yeah, look, i think that rene haas will be able to tell a good story, that there was really one question on the Conference Call by a goldman analyst whos very, very good, which knocked the stock down, which explained the dow is a 70 sequential problem when it comes to the some of the royalty arrangements they were basically saying, david, that it was internet of things and automotive. That is not unusual. That is what everyone has been saying, like on semi has been saying that, Texas Instruments has been saying that they do have this component that is not wizardry. Wizardry was very strong, if you want to know the truth wizardry being a. I wizardry is a. I. Or a part of a. I. I dont know if you would call it the excellent interview jon fortt did with jensen huang, but he loves arm obviously, he tried to buy arm rene haas, the ceo, is from nvidia, but i just think that this was one where people wanted to sell it they were looking for a reason to sell it, and they got a reason and i dont think theres more to it. I really dont i dont think this was that bad. When you see those numbers that you just mentioned, david, people kill for them a sequencetial down im reading a Morgan Stanley note like a lot of others. They say with a weak q1 guys that youre referring to, we think management may have flushed out some of these nearer term concerns. Theyre positive i think that if you had stayed close to the company, you would have gotten that, but the people who didnt stay close to the company werent rigorous and got fooled it had to do with rigor, not rene sometimes i forget and i dont mean this in a negative sense but this is doesnt have that much in revenues i mean, the multiple to revenues for this thing is pretty darn high, jim. Thats a great issue. Whats happened is that blackwell, which we now know is kind of like blackwells like godot for some people. Blackwell includes arm thats the cpu, okay and the gpu is nvidia. And thats going to be the biggest combination thats ever hit that thats the Industrial Revolution combination that jensen huang keeps talking about, so carl, you got this situation where youre thinking about whats going to happen in september, october. You realize that arm is taking share. Theyve got phone. They have pc they have the world. Theyre going to be the cpu company, even though they have a deal with intel. I think theyre overrunning intel. I like their situation very much, because you got to be thinking about next year at this time, and the billions that are being spent on the datacenter when you go into the datacenter, you got to look at whats in it. Vertiv is in there eton is in there grace blackwell is in there, which is nvidia, and arms in there. You want to be in there, or else youre kind of being left behind youre in there if youre not in there, youre in the if youre in there, youre in there. Youre either in warner bros. Discovery tnt or no im just saying to come back to valuation, though, youre talking about a company that did 928 million in total revenue, up 47 year over year where were they ten years ago . Its trading at, what, 25 times . Okay. Thats 12 months. Its far more expensive revenues. Its got that revenuelight model. A lot of it is just going right to the bottom. Yeah. Anyway, look, i dont want to get people excited about a stock thats that expensive. I do want to say that the socalled disappointment had to do with people who didnt want to who wanted to ignore the part of their business thats pedestrian, and well get in t that with rene, but rene did not let people down, lest people think this guy didnt do a good job. Lets keep that in mind. Were going to talk to brian chesky of airbnb in a moment did you feel the same way about the reaction to that guidance . Okay, that one, i dont understand i do think that you have this hole in the second quarter, which i dont believe, you know, this little blip, and then youve got this incredible this is the valley of the shadow of death, dont fear any evil, and its going to fly up in the second half. I happen to think that chesky is one of the ultimate listen, i hope it goes really well, but im not going to bank on it. Hes not overpromising and underdelivering. He just runs scared. If you take a look at the stock, its gone up, up, up, except for right after a quarter, because hes just a guy its almost like hes a superstitious guy, and he doesnt want to say, you know, next quarter is a blowout quarter. I like him very much hes done remarkable things, and were going to love this interview, because this is one of the most exciting times for airbnb ever. Although, more macro, hyat t rev par in the u. S. Was up a smidge planet fitness, what we heard from disney about travel we do have a problem with travel we dont have a problem with International Travel, which is a lot of airbnb, but we do have a problem with travel, and i think hes going to acknowledge theres a bit of a slowdown. Im looking at the trip advisor, but i think if we go back to booking, booking holdings made it clear that International Travel is very strong. I hate this term, Revenge Travel i dont think anybodys saying, ill take revenge and go to iceland and stay in that spa what are you doing, prepping im making gestures to our producers because they can see me, even though our viewers cant. What are you, the Third Base Coach . Dont wave me on here. Its the Carol Burnett ear tug. Im not ready to do wbd yesterday. What i was trying to do is say, im not ready to talk Warner Brothers because i wanted to come back to valuation on airbnb because we just discussed the waairbnb is a momentum stock let me finish my question, please airbnb, 41 trailing the difference is we actually like each other. 41 they did 1. 9 billion in Free Cash Flow this quarter and theyre buying back stock. The multiple to Free Cash Flow is pretty not that high. Okay. Thank you. See when you let me ask my question, you see how happy it makes you youre wearing two suits. Im always wearing two suits. Its very upsetting. It makes him very upset. I have to look at you because hes still signaling things. Airbnb is one of the classic Growth Stocks of our era, and brian chesky, if you remember, i mean, this is a man whos weathered some weathered pandemics. Hes weathered a big downturn in 2008 he always comes on top, why . Because hes one of the most creative ceos in the world, and i think were going to get some of that, and were going to be overlooking this next quarter after we speak to him. Because of the the guide about q3 the things he has in the pipeline look, the rev par there and marriott didnt do the right number, and we know that theres a you know, look, theres a theres a moderate decline in travel, so i understand why this is down but hes more than travel. Hes experiential. Exciting take the stock down. Dont forget, the olympics are coming olympics are loved and you like this new rollout of is it called icons thats my thats what i want to talk about so badly, because im so excited i was on it with my daughter last night, and we were trying to figure out whether to book kevin hart im into the prince house we can fight over it oh my god up. Oh, the whole thing is very exciting when we talk to him, i think people recognize, okay, ive got the socalled negative quarter, i dont have to worry about that now, its been derisked, but this man is just a creative genius. We dont have enough of that in business we may not. Speaking of derisked where are you going warner bros. Discovery has been derisked. Oh. Okay thats all. Real quick, take a look. Of course, the company also reporting earnings this morning. Comcast call just completed as well and the stocks going to be down, though not that big a decline at this point. Sort of more of the same youve got continued declines in the Linear Networks, not a big surprise youve got some growth or adjusted ebitda at the directtoconsumer offering, and max, which is just under 100 million subscribers right now, and theyre raising price. Free cash flow was 390 million. Im looking at the adjustments and what was done there, but Free Cash Flow did come in at 390 million that was up a lot from a year ago, when they had negative Free Cash Flow. Right 631 million, i think it was, Something Like that. And primarily, more disciplined approach to content investment and the timing of production, ongoing working Capital Improvement initiatives, lower cash restructuring costs, and things of that nature. But jim, its nothing you can look at in this report and go, oh, this changes the narrative no. It doesnt. At the same time, comcast, Parent Company of this network, most likely interested in the nba contract, particularly because, by the way, nbas divided among amazon, espn i dont know whether you think were getting the a passage, the b package, or the c, if we do get it, comcast, but it leaves tnt in a questionable zone leaves tnt in a questionable position if comcast is successful in securing the nba rights zaslav didnt have much to say about it simply saying, as we reported, they have matching rights. Its a big decision. Its a big number, and either way, if youre warner bros. Discovery, its sort of a difficult position youre put in spending upwards of potentially as much as 2. 5 billion a year on the nba for a company that is trying to generate as much Free Cash Flow as it can. Thats an issue. At the same time, to your point, if it goes away, what is tnt its shortterm theyll say, listen, when it comes to sports, we still have hockey, baseball, march madness, nascar, but that said, the nba, and certainly let me pause. Ive been watching every night. Let me posit something. I want to ask you, you know how the manning brothers became a company . Yes would barkley be able to become a company does he have a change of control . Theres a lot of chatter about his ability to get a good deal in this round i think hes one of the the great figures in tv, and it may matter hes very compelling to watch. He really is. Good show well see if, in fact, nbc secures that it wouldnt start until the current contract goes through next season, and then it concludes. Its about 11year deals we reported on this last week in some, you know, fairly extensively. Not much to add at this point, other than to your point, it just points overall to how sports is so important to getting anybody to watch some of these general Entertainment Networks, and without them, without it, what are you doing im still staggered by the monday night football numbers, how you had the greatest i mean, this is something that people do watch. The question is, is 2 billion you pay 2. 5 billion, theres a level where maybe its not worth paying may not be. They did also announce, with a press release from disney, that they are going to be bundling max along with disney and hulu, which is something i asked iger about in our last interview in april because i had gotten the sense that was a possibility he didnt is this the leadup to whats called a s. O. T. In our business . Do we have it it was a back and forth. I was sort of pushing him on, is there a possibility for bundling these kind of Entertainment Services this is what he had to say do you ever see a day when there could be a bundle not of, you know, but of competitors, in a sense, but to make it easier for the consumer in the same they that you are bundling sports with warner bros. Discovery and fox . Yes i think there are possibilities there. Sure you do . Uhhuh. Now, that was only a month ago. He had to know this was probably in the offing, but he didnt seem particularly enthused by it in that answer that said, you are now going to have the opportunity, come this summer, to buy this package, and maybe it adds more glue, so to speak, and reduces churn and gives people a better opportunity in terms of pricing. For both those services. Id rather own arm and airbnb i prefer growth to stagnation, but thats just me being newfashioned. Yeah. Networks down 11 studio down 13 look. Go look at tradedesks quarter, which is fantastic, where they say, this is the crossover its literally nonlinear thats the biggest, and thats it trade desk, jeff green, smart guy. Radio. Is it radio . Is it newspapers is it magazines . I know. Which is it cop showman. Which is it, hospital show man i got no answers for you, jim. I didnt think so yeah law order david faber all right, tough guy. When we come back, well check in with Airbnbs Brian Chesky on the heels of that quarter. Lot of names to get to, including doubledigit movers when we return vo what does it mean to be rich . Maybe rich is less about reaching a magic number. And more about discovering magic. [busy hospital background sounds] this Healthcare Network uses crowdstrike to defend against Cyber Attacks and protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. And theyre all coming . Dthose who are stillh ofwith us, yes. S. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. All right, one of my favorites, airbnbs stock is moving lower this morning. Quarter results beating street estimates, but there was a conservative guide, which was, indeed, below consensus. Joining us now is airbnbs ceo, brian chesky brian, can i have a vip house with kevin hart . May i wake up at the mu musee dorsay . I think were burying the lead if we dont talk about icons icons are the coolest experiences on earth, and you can stay in the up house, which weve recreated, the prince purple rain house, and what this, jim, really represents, i think, is the beginning of the next chapter of airbnb, because we have been known for stays, but now, airbnb is starting to move into experiences, and were starting with just, you know, 4,000 people can do these this year, whether you want to stay at the Ferrari Museum or the x mansion, which is completely recreated like youre stepping into a comic, but we want to bring the magic of icons to millions of people around the world. I think theres just a sense of where were going as a company well, i think its really important because there are people, obviously, who want to focus on something that does matter, because you own obviously, you have a company with a stock, and that next quarter does seem you did say things could be a little lighter, and there is a concern, whether it be from if we listen to expedia, hyatt, the rev par, listen to marriott, we get a sense that travel has slowed, and i dont know whether to lump you into that, particularly american travel, or just say, listen, youve got to see through this Little Valley because weve got a brandnew airbnb thats very exciting. As you and i used to talk before we went public, we were basically breakeven when we went public, and the big question was, would we ever be a Profitable Company in three years, we made so much progress focusing on this, and now we have 41 Free Cash Flow margin today, we are now at the beginning of this next step, and the question is, whats next for airbnb the answer is, theres going to be a lot more coming over the next couple years. New products, new services, and im very confident that we can reaccelerate growth. I want to talk about icons again, because one of the things that i now find to be, lets say, incredibly important is before i start my travel trip, i have to go to icons to see if theres something that i might want to do, but i also worry if i go into the up house, whether that costs a fortune or whether these are just all kind of lets say not above what someone might be able to pay the up house is actually free, and all of them are under 100 a night so, these are essentially tickets that you apply for, you fill out your profile. There will be 4,000 lucky winners. The winners get a digital Golden Ticket just like willy wonka, and i think this is a really fun idea one of the reasons we did this is last year, when the barbie movie came out, we created the barbie malibu dream house. It got more press than our ipo, and what icons do is its going to bring a lot of people to airbnb, keep us top of mind. Travel Companies Really have to pay a lot of marketing dollars to get people to come to their app, and we get a lot of organic traffic. Lets talk about some other things im a big fan of the olympics. I just think its going to be one of the most exciting things. This musee d dorsay is one to the great art monuments in the world. This was so inspired i said, maybe i should just throw my hat in the ring you can literally sleep in the clock tower, and the room is designed by the same designer who designed the olympic torch you have the museum all to yourself how do we do this . We have some of the most creative people in the world at our company, and i think thats one of the strengths were not just a technology company. We sit at the intersection of technology and creativity, and im a designer wi ent to design school. I think thats one of the things that makes this company different, but speaking of paris, we have we have 130,000 homes in paris a large percent of the people going to the olympics in paris this year will be staying in an airbnb, and i think what were able to do is keep the costs of staying in an event much lower, because we add a lot of excess capacity now, i do want to point out that you make some really interesting, lets say, projections about what would happen if more people around the world were to list their place obviously, there are the competition hotels just cant hold a candle to what youre offering is it possible that just organic growth could make it so that we could look through this quarter and not be so concerned that were at the beginning of a downturn yeah, i mean, honestly, jim, we are just scratching the surface of our core business we have been focused on reliability and quality, and our customers tell us, for every person who stays in an airbnb, theres 89 people who stay in a hotel. If we can get one of those people to stay in an airbnb, we will double the size of this company. Theres a hugem amount of growt and opportunity ahead of us. Weve made a lot of improvement. Jim, that doesnt even put international. We have very low penetration in asia, latin america, parts of europe if we can get those countries even to half the penetration of the united states, its going to be a much larger opportunity well, brian, jim mentioned the olympics, and we keep watching Dollar Strength whats your take right now on foreign exchange, Dollar Strength as a way to incentivize people to go international i mean, i think that one of the things were seeing is a lot more crossborder trips, and i think this summer, youre going to see, you know, nearly half our business is crossborder, and a really big opportunity are americans traveling overseas, especially to europe i think the olympics is just the start. I think youre going to see a huge amount of travel coming this summer season, so i think airbnb is going to be the place to do that brian, i want to congratulate you. I know its been ten years in the making to do experiential. I urge people to go to the video. What theyll see is not an actual rendering but real pictures, and i found it very exciting with my kids, and i think others will be too congratulations on all the excitement that you generate brian chesky, ceo of airbnb. Great to see you again thank you for having me today. Of course thank you. When we come back, well get cramers mad dash, countdown to the opening bell, one more look at the premarket on a ngonyerurayd thsd dot awhe. Ameritrade is now part of schwab. Bringing you an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. Engineered to minimize noise. And built for adventure. Which can also be your own quiet cabin in the woods. The fully electric q8 etron. An electric vehicle that recharges you. How we get there matters. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. All right, lets get to a mad dash, and then well have an opening bell for you. I just looked over, so i think its going to be costco. Igot a story. I want to bust some gloom here okay. They are the single greatest inflation fighter of our time. Keeping prices down. They actually talked about inflation is over there. They are rolling prices back but most importantly, david, nonfoods increased midsingledigit thats not unusual sundries up, but how about this . For the first time in several years, toys did well now, toys have been an area of really kind of a black hole. Hasbro is making a comeback here might be a good readthrough to hasbro costco bottomed around 717 and its been straight up since then always the possibility of a membership increase, but they are what the fed needs more than anything else in the world, a company that just says that goes to suppliers and says, no, were not taking that price. Youre lowering your price so, i salute costco. Great numbers. And you still feel comfortable with the stock i sure do thats quite a move i know the multiple is very high, but i think they offer such a bargain by the way, this gold thing theyve done, its just brilliant. You can buy gold bars. But what i really most like about it is that they are appreciably lower than anybody else by the way, instacart has to deal with them too, if you want to go that route insta reporting after the bell last night. Little ebitda beat. They do guide q2 above, as i see. They are being very good at new partnerships i mean, by the way, they have a kroger deal. They have a consumer packaged goods deal that is very good they just did that deal with uber that we were talking about earlier in the week. That was very important uber eats. Theyre hustlers theres an upside surprise they are hustlers, and i did not see that they would put together such a great quarter, because i had felt they were a little static that was quite wrong the numbers there are very good. Yesterday was a tough day for the ecommerce etfs, given shop and trip were really now, trip was so disappointing, because they put themselves up for sale, and nobody came, and thats got to be a real bummer i noticed that there was a we got an upgrade for shop. I mean, look, shopify, there was a call now, harley did not when i tried to press him on the 25 gross margin decline, he did not really wasnt, lets say, as definitive where they said its lower margin business thats hurting us, but max, a partner, a firm, once again said, listen, the transaction continues. Jims right shopifys just upgraded. Lets get the opening bell at the big board, its the childrens tumor foundation, and at the nasdaq, Global Infrastructure company ferrovial celebrating its u. S. Listing, jim, as we did put together six straight wins for the dow. Havent done that since december its been so quiet, led by the utilities, which is a strange leader yesterday, the banks, out of nowhere, jpmorgan, up gigantically, you could search and search and find absolutely nothing about why it went up it is a quiet bull market based on different different shades every day, but when the utilities go up, it does take up some things, but it leaves a lot of the stuff behind. This has not been a great moment for technology, just be aware. Roblox, as i regard roblox as a technology company, dave, i mean, he came on the last quarter. Last quarter was a breakout quarter. No but i just find every day theres a drug company or a food company that does well its a mosaic of things, but the utilities have acted like they are the next nvidia. Can i just tell you, if i have one more person come on our air and say, is it nvidia, are you trimming nvidia, what do you think about Nvidia Nvidia is a company, okay . It happens to have very highspeed semis we should be comparing there are Many Companies how about apple . Remember, that was a company yes, b of a today reiterates outperform they look at some global App Store Revenue in april, jim, up nine china up four. Apple david, im willing to say that apple might have been a bit of a bottom okay. It was when it was most hated, of course, thats how bottoms are formed guys, you want to talk about equinix . No. Too bad you have to. I thought youd be excited no, i am. I worked on it we never talk before the show, so i never have an idea what hes working on little preface. Stock was down big last night, and that was the shorts pressing it, and the shorts are hung on this one were talking about equinix, almost 80 billion market cap, datacenter company what those who own it particularly like is its footprint. Its in london its in new york its in madrid its in all these major i see paris, i see france metropolitan areas, so it has what many consider the best real estate, if you will customers are, as you might expect, any number of companies, including the hyperscalers yes, they own a lot of their own facilities, but theyre also leasing and renting. They had a very Strong Quarter as jim mentioned, there was a good short position in the stock in part because of a report from hindenburg that noted Research Outfit that comes out after these companies they do very highquality work they do highquality work it was in march. I dont have the opportunity or time to go through all of their criticisms, but it had to do specifically with what they call adjusted funds from operations and what they called a key accounting trick where there were misclassifying maintenance capex as growth capex, given the appearance the companys cost to maintain is lower than it actually is. In the current report that just came out, and jim referenced this, equinix announced its audit committee, along with independent third Party Professional advisors, has substantially completed a previously announced independent investigation of its accounting, and found that equinixs Financial Reporting has been accurate and the application of its Accounting Practices has resulted in an appropriate representation of its operating performance. So, you couple that with what were very strong numbers, jim. 992 million in adjusted ebitda. That was up 8 and an ebitda margin of 47 , and you get this. A stock up sharply with, as you point out, a very large short position that may be scrambling a bit today. This is one where i look, we dont know what we dont know what hindenburg is going to say. I know a committee, you could argue, maybe they maybe they werent as independent as you thought, but its one of the great growth reads, and anything, datacenters on fire, but it was taken on because of these accounting issues, and i think that the people who are fellow travelers who were shorted, who are now thinking, why am i short this . Those who like the stock would point out that with the a. I. Revolution that we spend so much time talking about, appropriately, you know, this is like a think of a building that the rents keep going up, and the tenants keep turning over well, thats whats happening here youve got, i think, as much as a 20 rollup each year. Theyre going to be paying more. They are going to be paying more more than a Shopping Center reet whats in an equinix reet . All the stuff you just talked about. The groucho marx, the duck comes down, its nvidia. And arm the cpu and the gpu vertiv helping you build it its the oldfashioned people th at eton. I like to speak with utility people theyre actually like they tend to be pretty funloving the guy who used to run American Electric and power is on the rock and roll hall of fame board. Wow thats wrirhere i realized tr was this group eddie vedder, have you heard of him . I have. Unbelievable. But i do say that they are the ones that are on they have theyre under fire they cant provide enough power. Powers going to go up 5 for the next three years, each year, and we have had a grid that hasnt grown in 20 years so, these equinix is part of many changes within the grid, which is to say, you know what were a real power in power, and what do you need heres a good one that we didnt mention that well mention when we speak to rene. Why do people like arm chips so much because they dont use as much power can you put anything past him . When you talk about them, thats what i mean, they talk about the how much megawatts they use so, equinix is preleased an incremental 48 megawatts of capacity across its frankfort 10, okasaka 4 and 5 assets this is the kind of thing they put in press release that has to do with what access to power do we have. To jims point, thats where you start. You cant building these things unless you have access to power, and youre going to need a lot more of it as we generate as we move into the world of blackwell, even though it consumes less power, were going to have a lot more of it, and eventually, obviously, were going to be wanting to power the robots that are going to take over the robots have to burn lighter than they do they burn heavy. They burn too heavy civilization may stay around a bit longer if we can prevent the Power Generation from going up too much maybe we want to limit the electricity. The most boring part of jensen huang is the part that he believes in the most, which is the part that he has to have a smaller footprint because he cares about waste, cares tremendously about the amount of power thats used, and thats one of the reasons why arm is almost always chosen decent morning for industrials. Chevron and caterpillar lead the dow. We got this upgrade of emerson this morning, jim. Emerson is in the datacenter. I misjudged emerson. I was not happy they missed two quarters, and now theyve come on very strong, and they are in the datacenter big time. As for restaurants, we got pizza. Comps down two, jim. Interesting that dominos has reclaimed the throne on pizza comps. Look, dominos, they look, one of the things that has to happen, when you get dominos, you have to have a really powerful guy who runs it, and Russell Weiner is just dramatic. He sold hot dogs, by the way, when he was growing up he did . Baseball. Yankee stadium thats good preparation i sold ice cream. Philadelphia yes ice cream, i got ice cream here, skipper. People calls called me skipper or captain we mentioned a bunch of doubledigit movers premarket. Bumble is in there warby is in there. Now, warby has become a choice tenant for the Real Estate Investment trust. They often mention, and we got warby. I would be remiss if i didnt mention dyne d. I. N. People are trading down at ihop. I didnt think you could trade down at ihop i think you were really down there already, david like, trade down from what, the b blueberry to the plain pancake you cant get real syrup at ihop actually, im not sure i happen to like applebees used to go there with my kids, but then my kids grew up and didnt want to go there. To where, ihop . Ill eat pancakes anywhere any time they have a mezcal margarita thats done by bryan cranston. We havent done hood crypto sales up 230 lets go hood on the one hand, when you listen to vlad, he is just telling you the greatest story on earth, and theyre opening a lot of accounts on the other hand, when you look at what theyre buying, theyre buying crypto, and theyre buying options, and so far, that is sustainable i dont know how long it can be sustainable. That said, vlads taking accounts from everybody. And i think that everyone who is watching who is in the business must be say, what is that guy doing . Hes taking our accounts chlkt t the answer is, hes skating ahead of the puck. People want crypto i think hes doing a good job. Mizuho reiterates a buy today. Vlad tenev was on last call last night. We tried to create a special purpose brokerdealer for the purpose of transacting in crypto assets, and we actually came in good faith to meet with the s. E. C. I think we met with them 16 times. And unfortunately, that was not reciprocated, and it was clear that there didnt seem to be a path lets hope thats benign. When he says special purpose, vlad, has he watched the movie, the jerk . This is all i need. That guy does not like cans. Quick correction from me because i dont want the people at dyne mad at me. They dont use High Fructose Corn Syrup i dont know if its maple syrup. Its more of a message of what has to do with the consumer than it does i happen to like i know you hit it briefly, but roblox, it is down 20plus percent. That was suboptimal average daily users, 77. 7 million that was up 17 year over year i think there was we got something about engagement that perhaps it was down but its headed back higher but david, the last quarter was a socalled breakout quarter, and it was not the breakout quarter, although the stock was down 11 at one point technical issues, apparently, slowed down performance of the game and hurt engagement that, at least, is what the ceo has told i wanted to ask brian chesky about technical issues and technical issues in vrbo, a competitor they had a move over from their app, and i think its going to benefit, but look, hes being honest, saying this quarter may not be that great, but they should benefit from the problems with vrbo. Guidance, guidance, guidance. I mean, the story this week, to a large extent, has been guidance that has not met what the street had hoped for in any number of days, baairbnb, roblo arm, disney from earlier in the week as we pointed out, q1 guidance is classically negative or at least subdued. Right . I am a little hurt, because last night, i did a whole piece about guidance, and i started with the great frank slootman, legendary comment, when i said, your guidance is weak. He goes, jim,the guidance is the guidance and that always kind of thats like going to cincinnati with belichick the guidance might be checkered, but buybacks, jim, big piece in the journal, up 16 year on year you should take a look at that buyback that chesky has its really kind of, you know, typical of whats going on the buyback, you know, salesforce is down badly today, like i know why that is, but they have got a buyback to try to keep it so that the stock it is down badly. You dont know why its down is that what you mean . Some clowns selling it really hard. If you sold it a little less hard were talking salesforce. There it is. Wouldnt be drive ing drivin. You dont sell like that there were some that announced the day they were going to report i guess somebody thinks theyre reporting on the wrong day thats what happens in this market they have to find a buyer, but they dont know how to trade they should threat bids build, and they can sell it for 3, but they obviously with stupid, never been to Trading School im going to have karen cramer come over and sit on their heads. Does anybody go to Trading School anymore i went to Trading School. Do the machines go to Trading School theyre programmed by us unless youre david who says, no, they program themselves. They will be programming themselves very soon thats true. Yeah david, youre saying that, in other words, were all going to be turned into linear tv by the robots thats a very good way to think about it all right linear tv, being when i used to be on radio, they said, dont worry about it, were not going to be like newspapers. And then i went to tv. And they said, dont worry about it, were not going to be like radio. It is were in a remarkable transition. Speaking of some of that, jim, i dont know if youve gotten any of the blowback about apples ipad ad, which has been written about, big piece in the Hollywood Reporter calling it dystopian. Didnt tim cook post it yesterday . And it basically is a giant machine press crushing objects of art into a very thin ipad, almost the inverse of the 1984 ad as some pointed out take a listen. All the things you do give me a reason to build my world around you come and follow rainbows the most powerful i ipad ever is also the thinnest all i ever need is you not much to add on it i dont like that ad. No. Well, its different. I dont like it i had not seen it, and that is my reaction. Unlike our ads. If anybody cares, which im sure they dont. Apparently neither did a lot of other artists. I dont know. We just ran an ad for apple. Maybe thats you know, you could say. Thats not that would not be my ad of choice, but id watch apple plus, by the way, and that is carl, youre a musician you got really . Theyre crushing a piano all right, we got rene haas on jim, a little bit of macro. I dont know if you saw yesterday, atlanta fed is at 4. 2 lot of pieces looking at peak goldilocks either the fed is going to have to adjust, or thats going to number is going to come off. Theres this look, were sitting here listening with one of the great Business People of the time, which is brian chesky, and he knows that next quarter is not that good roblox, the next quarter is not that good. I know we could say its the guidance no if they had order books that were strong, i think they would say, this is no slowdown i think that there is a slowdown and the slowdown started april 14 when that timorous interview with chair powell. Business kind of turned down since then that was the beginning of the utility average rally. I know, but since then, we have had a jobs number miss. The biggest increase in claims today since june of last year. We have slowdown, and i think that one of the things that has to happen, i know that the fed chief is not going to, david, just say, you know what, thats one month, because he did that last time. No. Cant do that true. So, were heading to a slowdown even cybersecurity is slowing. David, the bad guys arent slowing. No, they never slow down. Sadly. No, they dont. Jim, let me end on my front with one more piece of news. Norfolk southern im not going anywhere were going to probably take a break because we have arm holdings coming up thats after 10 00 i thought it would be up. Quora gets three board seats, right . There it is. Three board seats. This was a hotly contested proxy fight, but the ceo lives on for now. Any thoughts well, look, i think that theres a great conundrum here because, you know, you dont really get to make the change with those people. I happen to think that allen is doing a decent job he did have the palestine problem in ohio, and thats bad, but theyre not doing that badly that they have to, you know, abandon ship that was just not enough to make a difference it reminds me of macys. Not enough to make a difference im saying they cant throw allen out. Ancora saying it highlights their opinion that allen shaw essentially received a voeft no confidence with barely 50 of the outstanding shares supporting him this is not, like, a british parliamentary thing. Its like an american company. Yeah. He may got no confidence, but hes going to be in. Hes still in should the stock be down . I happen to think that at the really, one of the crux of the problems here, referencing what youre talking about, carl, is that the these railroads are not seeing a pickup in traffic that i would have expected at this time, and thats worrisome. Well watch it, obviously light day. Light week for data, which is forcing us to grope a little bit ahead of ppi on monday take a look at the bond market as we go to break. Get a 30year note auction today. We mentioned claims already, of course, in the boe, Holding Steady bailey suggests that inflation might come close to target in the next few months. There you go. Take a listen you know whats brilliant . Boring. Think about it. Boring is the unsung catalyst for bold. What straps bold to a rocket and hurtles it into space . Boring does. Boring makes vacations happen, early retirements possible, and startups start up. 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The heat map there later on this morning, by the way, Goldman Sachs professional Investment Forum, well sit down with the companys president and coo john waldron well talk macro environment ceo confidence pimaets and more we will get stop trading with jim in a moment. A slow network is no network for business. Thats why more choose comcast business. And now, were introducing ultimate speed for business our fastest plans yet. Were up to 12 times faster than verizon, at t, and tmobile. And existing customers could even get up to triple the speeds. At no additional cost. Its ultimate speed for ultimate business. Dont miss out on our fastest speed plans yet switch to comcast business and get started for 49. 99 a month. Plus, ask how to get up to an 800 prepaid card. Call today lets get to jim and stop trading. One stock that captures all the zeitgeist weve talked about this hour, duo lingo two thesis people are propounding. One is that maybe people arent traveling as much and you dont need duolingo and then second, this samsung phone, you dont need to speak the Foreign Language you speak into it, and it speaks the language for you some of the questions, why do i need duo lingo when i have samsung or maybe apple. Do they still have translators at the u. N. . They do. Human translation, real time . I dont know. I dont know my guess is yes, because they seem to be a bit behind the times. I dont expect theyre necessarily on top of the latest my wife took two years of italian and she cant speak anything theres hard languages out there. I go to countries that they speak english and dont have to worry. You will get to a point where you will be able to converse. This is it. Some sort of device or your phone. I love david faber. Lets see what it says. Can we say that in put it in mandarin. I dont know. What lang. Japanese. English. Greek. Greek yes. Greek. Youre going to stick around . I dont feel like going anywhere. Why not doesnt want to leave. Like an airbnb. Im going to represent it the next hour. Well talk to arms chief rene haas about earnings, chips and ai after a break so this is pickleball . Pickle ah, these guys are intense. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Do you have a Life Insurance policy you no longer need . Now you can sell your policy even a term policy for an immediate cash payment. Call Coventry Direct to learn more. We thought we had planned carefully for our retirement. But we quickly realized we needed a way to supplement our income. Our friend sold their policy to help pay their medical bills, and that got me thinking. Maybe selling our policy could help with our retirement. Im skeptical, so i did some research and called Coventry Direct. 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More than 30 of the fortune 500 use upwork because this is how we work now. Good thursday morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla with david faber, leslie picker, jim cramer is around for the 10 00 live at post nine at the New York Stock Exchange a huge interview you dont want to miss, arms chief rene haas in a few minutes in the meantime, dow shooting for seventh day of gains here and the s p still flirting with 5200 10year 4 1 2 on the news as jobless claims tick up. Were 30 minutes into the trading session. Three movers were watching this morning. Airbnb one of the biggest drags on the s p forecasting weaker q2 revenue due in part to currency headwinds and the timing of easter the company did report Strong Demand with revenue up 18 year over year but shares down 6. 5 right now. Warner brothers discovery also in the red missing on the top and bottom lines well break down the numbers an look at whats next for this stock later this hour. Actually, shares have rebounded a bit. Theyre now up 2 . However roblox is plunging, the Gaming Platform beat earnings estimates but guided below the street forecast for the Current Quarter and full year. More on the roblox quarter ahead on the show. Meantime a host of report cards to get to from newly listed names Digital Marketing company clavio after a guidance raise, instacart under pressure despite beating and piper calls it their top delivery pick. Arm, its annual forecast not impressing the street too much we talked about this and what has been a choppy season for guidance. Arm has been all over the lot. They brought the deal what i thought was a reasonable price rene haas, the ceo, very involved, handsome guy, stock almost doubled and come back down hard to figure out price discovery. I want to point out something i mentioned the previous hour, salesforce hit hard. This is a theory that google and hub spot will merge. Hub spot is a kind of a junior salesforce talks have heated up i defer to david when i hear the talks have heated up because i dont have sources like that i dont have on this one im going to disappoint you because i dont have a lot to share. Its been covered by other news organizations. The headlines are they are making progress somehow on a potential deal its been out there for some time shares of hubspot, but its helpful to understand why salesforce is down in part because i guess the idea of the combination itself would be more of a competitor for let me put this to you, salesforce has had a fantastic relationship with google does that even matter when the bankers get together with google listen, we know you like this guy, but were going to have a move against him doing it at the behest of the client itself. Right. You would assume google has made whatever decisions its made, visavis its relationship as it stands with salesforce if it moves forward, yeah. Pore rather to go after marc benioff. If they want Customer Relations management, i guess so that has not been their forte, but since we have jon fortt, i went with fort. You made the point a few days ago, having a little room to breathe without a flood of data would be helpful to the market and has been, but next week is ppi, cpi and retail earnings. It was the cpi, we talk about the preferred index, the cpi at 3. 8 when powell lowered the boom on april 16th, the beginning of this slowdown. It does matter tremendously. He needs to see three really declining cpi numbers before he starts talking about lighting these up people feel this is the beginning of a slow down, ive been saying the chute thing, or does powell want to get ahead of it or i dont want to seat slowdown, im reluctant to start cutting before i see something. What does that mean for story stocks as well when youve got the macro situation it seems to be feeding into some of the story names, the ai boom, the thematics and momentum. Great point what happens is people at home are thinking, did somebody Say Something negative about nvidia . Why is that or super micron the answer is no thats the shrinkage you get of the multiple, and it becomes something that is very selffulfilling. People say somebody must know something. I have to get in ahead of the seller you see the declines. Meantime, its foreign Central Banks talking more dove ish than our own yardeni, why youre seeing ftse alltime highs. Quietly theyve been doing some really terrific things. Theyve got a government on the ropes there. The London Central bank in uk the central bank youve always been a fan. Oh, yes i have covered it very closely. Yeah. Well, see, sara is not here so i just kind of one more down that track. Let me toss that over to your point. Look, leslie, one of the things thats happened is that as important as we would like to think we are, europe has been fabulous and i look at bank of santander, thats the largest bank of europe and youve had a lot of good things come out of europe and it would be a shame to see everybody roll over at once dont want that. Yeah. Speaking of, you know, kind of the banking sector, too, were going to talk about ipos and we talked about recent ipos, the september crop one thing ive been kind of talking with Capital Markets bankers were at the Inflection Point of ipo activity where the deals have done well and blown through the multiples or the ones that a lot of bankers were expecting to be the best case scenario, what does that portend for future activity . Weve seen really good deals in the last few weeks or so but the pl pipeline is chugging along. The stupid thing sell in may. We were like ogden, some poet, but the fact is you have to get your deals done in may everyone is going to be going to where they like to go away from home, but i think we have to get our deals done or there there will not that be critical mass. Theres buy side interest they generated alpha from the recent deals and what else do you have more on the issuer side to say actually, weve been kind of sitting on the sidelines and now is the time to debut it feels like the market environment is good for that just the willingness. Youre right. Look, we have buybacks we want some deals we want biotech. Those would be exciting. If theres any industrial out there, please come public right now. Theres not. Right weve been talking the last few days about geopolitical risk its been all over the place given the president s comments about rafah and whether or not the delegations are still in cairo. You see oil inching today. Its going to be a pretty good week for crude. Yes i think that somehow when that weekend where iran and israel traded missiles and Nothing Happened theres relief that nothing is going to happen and then if the president im always uncomfortable talking about those, people that know this far better than i do, if the president says you cant have certain bombs, theres a belief, perhaps, that things will not be as unnerving, but i find it, you think anything is not unnerving in the middle east you could surprise yourself. Having an impact on all kinds of American Brands mcdonalds, kate rodgers has a news alert good morning, kate. Hey, carl, good morning mcdonalds making changes to how it spends on advertising leading into digital ads and, quote, rethinking its legacy approach print and tv commercials according to a memo viewed by cnbc the company says, quote, our goal is to know our customers better than anyone else leveraging data to deliver the right message, at the right time, to the right customer supporting repeat visits it adds that in the u. S. It has 34 million digital customers who have been active in the last 90 days and 58 million reachable customers. Overall. For context, starbucks had 33 million rewards members this quarter and chipotle 40 million. Chipotle only has about one third of the footprint of mcdonalds in the u. S. Brands are competing fiercely for loyalty engagement as the customers tend to visit more and spend more they can be targeted with certain offers, menu items specifically available on the digital app and more now beginning in 2025, the company will introduce a new Digital Marketing fund for its top five markets the total contribution here from franchisees in the u. S. Wont change the memo suggests, existing marketing funds for traditional advertising may be redirected towards Digital Marketing. The memo says in the next few years it will invest hundreds of millions of dollars in new ordering channels, personalization and loyalty points this is just really a key theme that weve seen over and over again this quarter in particular with value being such a focus, really important that brands are focusing here so that they can engage with customers and again get them in their doors, spending more frequently and targeting them really importantly with certain offers and deals the last few days, kate thank you. Kate rodgers you heard gachinski and starbucks talk about how we have to deliver another message to consumers and thats going to take marketing swing. If youre a linear tv person you start saying you have to give me more sports because mcdonalds likes to advertise on sports look, you want to advertise where you can find people who want to go that has been facebook, spent a lot of money and google. Reddit as place to be able to find your customer and i do think that the money is going there and the loyalty programs, i had on last night, 66 of the customers from the loyalty programs, a company at 10 comps. Dutch bros. Im aware thank you. As ive said watch out when they come to your neighborhood, get off the streets when the Dutch Brothers are in town. I love when you say that. Whats their drink . The annihilator. They have a protein annihilator. I drank the annihilator on friday to be up all weekend with my daughter. It worked. A little pop here opening highs. Dow up 100 as we said going for seven straig ws. En we come back, arm holdings and rene haas. Dont go away. And i also have a. But no matter what business im in. My network and my tech need to keep up. Thank you verizon business. kevin now our businesses get fast and reliable internet from the same network that powers our phones. waitress all with the security features we need. aaron because my businesses are my life. Man, the fish tacos are blowing up so whatevers next. Were cooking with fire. Lets make it happen vo switch to the partner businesses rely on. Trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the awardwinning trading platforms. Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. Shares of arm holdings are trying to work themselves out of an abyss going up since the market opened despite crushing earnings expectations, the companys forecast for the year came in lower than expected, although really have to kind of break this down. It may not be as clearly lower as people think. Thats why im glad to have rene haas, ceo of arm, with us. Rene, it is terrific that youre on here for squawk on the street. Thank you, jim. Very good to see you. Rene, its one of those things people have to understand you have two Revenue Streams both Revenue Streams are on fire one you had to guide down a shade down a bit because of something called industrial the iot, which is the internet of things and also automotive can you walk through the mosaic so people understand the one little bit is not what should control the narrative of the story . Well, again, jim, thanks for having me on this morning to talk about our company we could not be more thrilled about the results that we talked about yesterday. Record revenue for the quarter and we finished our year also with record revenue. We guided next quarter to yet another quarter of record revenue and were guiding for the year yet record revenue again, about 20 growth last year well do north of that this year and Going Forward, we think even in 26 and 27 well do better than that. Sequentially youll see things at times that will track the industry but broadly our revenue is up and going up and were completely thrilled about the results. Lets talk 2626, thats going to elude many people today and later on, youre going to be the partner we actually heard it again with jensen huang from nvidia, youre going to be the partner of these data centers, the cpu to go with the gpu i think youre going to dominate cell phones and possible you may dominate pcs is there an area you wont be dominating by 26 27 i have to be careful using the word dominant. Were in an incredibly strong position Going Forward if you look at the fundamentals in terms of whats driving the growth in our industry its really all about compute capacity, ai adding that need, and because arm is the largest installed base in the planet, across the tiniest of sensors to devices that you mentioned, arm is everywhere and Going Forward to do more and more ai you have to run it on arm theres really no other alternative Going Forward. And then when you layer on top of that things were good at with power efficiency, that is so critical when you think about the growth of the Ai Data Centers which require an increasingly amount of power to deliver the magic outcomes were all expecting. I want people to understand, david and i were talking about gross margins, what kind of model you have its important for people to understand licensing and then royalty. Licensing you make a lot of money. I want people to understand that this is not like another kind of semiconductor company, maybe qualcomm, but people must know the difference between the two streams in order to be able to feel most comfortable with the common stock so if you could explain that, i think it would go a long way for you. Thank you it is a company that a lot of people have a hard time understanding probably because theres candidly no one like us. We are a platform company. And the way to think about that is, every digital device requires some compute, some brain, to run that piece of electronics. That is arm. And arm is everywhere. Our Business Model is quite simple we take a licensing fee for people who want to do new designs and collect a royalty when the products shift. The way you think about licensing, a proxy for r d dollars go up more investment in arm and in licensing weve seen record revenues for the last number of quarters a proxy for people are investing more and more when you think about royalty, that gets paid to us when any unit ships, grace blackwell ships, tesla ships, apple ships, google ships, they pay to us so we have a high recurring revenue stream around royalties, highly predictable, we have great visibility because of our market share and because of licensing being a proxy for r d and people are investing in more new designs across those areas, thats why were going t rate we are and i should say, very confident in that growth, and fantastic visibility in terms of the long term. Lets dig into that visibility, rene, because that licensing revenue increased 60 in the quarter, which is eye popping there and as you describe, its a proxy for r d and confidence in investment how would you characterize that confidence moving forward . Especially as, you know, weve seen so much enthusiasm in the last year or so, do you think that continues and even accelerates from here . I do. And its really because if you think about everything going on with ai, the innovation thats taking place is so rapid, so advanced, were seeing things like chatgpt 4, things around llama, innovation that we just have never seen before at this rate, the hardware cant keep up with the software. The software is adapting much faster than hardware can keep up chip designers are having to invest more and more to advance the chip, take advantage of the ai algorithms. Thats why were seeing more need for compute, more advanced compute, more sophisticated compute which drives are licensing growth. Rene, its david. From a macro perspective here, especially given your long history in the industry then and speaking of the data center when grace blackwell starts to proliferate along with, as youve, obviously, and jim has explained as well the cpu you offer, allowing them i guess higher access to memory which you say on the call is one of the limited factors for training applications, what does it mean . What will it mean in terms of the power of thecompute and wha might see in new applications and tools once the blackwells and your cpus are in that data center one of the things that we like to talk about and explain to people in terms of how these advanced Ai Data Centers work is, theres a sophisticated level of compute thats taking place. That needs an accelerator and, of course, it needs a cpu, but having a very, very tightly coupled access to memory, feed that engine, because these training inference models, lots of data spread across lots of accelerators and they need to be fed. The fastest way to feed them is to come up with a custom design or implementation able to connect the cpu and gpu in an innovative way thats what grace blackwell has done and the kind of capability when you look down the road in terms of microsoft cobalt, google axion, graviton, not only at the chip level but when you start getting into the design of the blade, the rack, the entire system, theres a level of innovation that can be created around arm, that cant be done with any other architecture. What are the implications of that, i guess, when we look longer term here in terms of what thats going to allow for, given where we are right now you mentioned chatgpt 4 as one way for us to keep track what does 5, 6, 7 look like, not to mention llama 4, 5, 6 it seems like the sky is the limit relative to just how sophisticated these models can get and how quickly they can train and how they can infer so when you start thinking about whats going to limit my ability to advance that quicker, the faster you can train the models, memory bandwidth, custom cpu helps, mort power efficient i can be, power is not free, power is not unlimited, thats better, and if you can get to more Custom Data Centers in blades and racks that helps we are going to speed innovation in this area in a way that only arm can because of all those things that i mentioned. Now rene, i think i would be remiss if i didnt go back over the part of the decline, the 7 you were saying your partners too. I dont want people to think this is Old Fashioned metal bending youre involved in can you talk about the automotive and the internet of things because they are not business as usual. No reason to think theres going to be in cyclical decline. They can be in secular growth mode coming next quarter. What we talked about on the call was some decline in industrial iot and actually networking the automotive business is actually pretty healthy. Were seeing a lot of growth there across 8 s, fsd, power train. Every major platform is built upon arm and were also the leading market share in terms of adas our automotive business is strong i think were talking about a declining quarter on quarter sequentially around networking and industrials which tracks with what the industry is doing. Broadly, were actually doing better than the industry and thats largely because even as units go down, we have converted from version 8 to version 9, which really helps because the royalty rates are better in version 9. When units go down our royalties have been going up which is why the performance has been strong. One last question, i know that we spent a lot on nvidia, you worked at nvidia, and nvidia wanted to buy you, two or three years from now, its safe to say there will be an Industrial Revolution, but i feel sometimes very alone with that because it sounds like hype so to speak do you believe in the new Industrial Revolution that you will be a part of along with nvidia i believe that ai is absolutely not a high cycle. I think high pype cycle. One of the areas im most excited about is around health research, biomedical when you think about what it takes to simulate a drug or protein how difficult that is today, advanced solutions Going Forward will enable that arm will be right at the heart of it. Unquestionably theres no way to run any of those kind of workloads that i mentioned without arm, so when that Industrial Revolution happens, which it will, it will run ob arm. So glad you came on the show. Breath of fresh air. Its not just nvidia involved. There are other companies, rene haas, the ceo of arm holdings. Terrific company good to see you. Thank you so much. Thank you. Jim, reflections on that and tonight . I think that this is you know, there is an ecosystem and you have to have all these parts to be able to work with this blackwell. I know blackwell at this point people say its almost like this mythical product that may or may not [ inaudible ] it exists and going to make it so that you will really not have a hard time trying to figure out how come everything that you can do it can do i know that sounds almost dystopia with everyone, but if you can walk and throw a ball and if you can shoot a basket and youre the new york knicks, look out, no pressure. Thats great. I thought gratuitous message to you. Rene said it more nicely. Didnt get to that part of crushing you. Hes a vegas raider fan if the stock is going to be down, thats the reason. All right well, speaking of, still ahead, Warner Brothers discovery is one of the biggest laggard. Jayshree ullal. Thats tonight on your show. We talked about arista yesterday. Into the data center. Yes. Got it. Look out. Well, his foot might defeat the knicks before that Warner Brothers discovery, though, one of the biggest laggards on the s p this year. More on the quarter. Why david zaslav is calling this a generational disruption in that industry. The biggest laggards on the nasdaq airbnb post results, of course you also see a number of chip related names as well led by nvidia all down. Were back in two minutes. At, old school hard work meets bold new thinking. laughter at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. Old school grit. New world ideas. Morgan stanley. Welcome back carl, i know youve got to run for big interviews on money movers with me in the 11. Were going to talk to john waldron president and coo of Goldman Sachs. David talked to David Solomon at milken on monday theyre having an Investor Forum where they bring ceo of Investment Advisory firms and talk Wealth Management and Capital Markets for our conversation and macro and the debt dollar. Nice chance to catch up with walter looking forward to it. Me too. He travels internationally a lot and a good perspective of whats going on across the globe from a macro standpoint, political standpoint, geopolitical standpoint as well still ahead, real estate the only s p sector in the red this year is it time to start buying the group . We will discuss next dont go away. Im bertha coombs. Adult film actress Stormy Daniels is back on the stand this morning in Donald Trumps new york hush money trial. Shes facing more crossexamination by Defense Attorneys about her now sworn allegation she had a sexual encounter with trump which he later paid her hush money to keep quiet about trump has denied the charges in the criminal case, as well as the affair israeli tanks are rounding up on the outskirts of the southern border city of rafah. It comes after President Biden vowed to withhold weapons from israel if it launches a major invasion in the city where more than a million palestinians are sheltering israel says hamas militants are sheltering in rafah as well. And houstons mayor says he has replaced the citys police chief following intense scrutiny into hundreds of thousands of dropped cases over the past eight years. They included more than 4,000 Sexual Assault allegations the police chief retired amid the scandal, saying the cases were abandoned due to staffing issues david, back over to you. Bertha, thank you. Lets take a look at shares of Warner Brothers discovery they were down early on and then recovered and now lets call it more or less flat on the day despite reporting First Quarter earnings miss, streaming revenues roughly flat. Late yesterday the Company Announced it would be teaming up with disney to create a new streaming bundle that would basically combine the max service, of course, of Warner Brothers discovery with the disney plus and Hulu Streaming Service already in place or at least the bundle you can get there. Ceo david zaslav on the Conference Call discussed this and the shift that were seeing across the industry. This is a generational disruption i went through a disruption not quite as big as this, but, you know, when my career started when the cable business was getting started, that was a real disruption as we look at what happens ahead, there likely will be, you know, a restructuring of how people view content and theres a lot of irrationality in the market thats getting shaken ou in terms of the amount of money spent. Its not how much, its had how good thats what were were focusing on the business will look different in two to three years. Its going to require a lot of cost to come out of that business as well as for some of the numbers investors care about, they did have Free Cash Flow of 390 million versus negative free cash of 630 million a year ago. As we said, global direct to consumer subscribers right at about 100 million, a bit under that, up 2 million subs. Theyre only looking more to now be in profitable subs. When it comes to Linear Networks that is part of the disruption that zaslav is referring to. Network revenue down 8 , and Network Adjusted ebitda down some 8 . Leslie, weve detailed the challenges many, many times over the course of what is years now and the hopes and dreams that are attached to the direct to consumer offerings for so many of these companies but its just a difficult road nothing particularly bad in this report that was unexpected, but then again, nothing thats making investors go oh, theyre on that road already to true recovery and or growth. Just feels like the decline in linear is not being made up by the other growth initiative, whether its streaming or other areas of the business. How important is nba rights and sports in general. Many will tell you to the extent the bundle is holding together, which it isnt at all f it is its due the glue would be sports, news as well, and those rights become even more important, and particularly for a Warner Brothers discovery its nba contract, ends next year, 11year deal weve reported already amazon is getting a streaming portion. Espn is maintained its lock on the nba with an 11year deal as well who is going to end up with the third package because its going from two to three, and theres a competition right now between our Parent Company comcast which has bid as much as 2. 5 billion and Warner Brothers discovery which if they get it theyre spending an awful lot of money for a company that is being judged on Free Cash Flow and thats going to be tough for them to a certain extent if they dont, what does that mean for general Entertainment Networks such as tnt to rely a large amount on sports to aggregate some viewers. Seems the synergies and benefits from that peaked in 23 from a cash flow standpoint not necessarily in the best position to be in a major bidding war perhaps . Exactly any number of challenges continue but they are very much focused on the metrics hes judged by in part his compensation are on Free Cash Flow and continuing to what amounts to cutting costs and figuring out ways to pay less for content and deliver more as he says, hes seen this movie before, just in different forms. Well see if, you know, what this looks like. The cable ecosystem when created is what created, you know, here we are. More fun to be the creator than its a great business when you have 100 million subscribers but only 2 million of them watch. 98 million, the other 98 million, still paying. Thats whats gone away. Thats right. As Interest Rates tick higher Broader Markets are losing momentum, the top s p sector laggard for the real, real estate falling nearly 6 in the first half, although its the best performer today up 1. 9 our next guest thinks the sector is oversold and investors should buy the dip. Joining us venmo capital strategist brian belski, thanks for being here so wonderful to see you, thank you. Can we talk about Communication Services because. Sure. Do we have time to actually do a post credit screen scene with batman and dead pool at the end of the dead pool 3 movie. If they do a combination screening side of things you have Warner Brothers and disney together, think about that. I feel like ai could make that happen. That would be amazing. Ai could make that happen very quickly. In terms of real estate, you know, you have this note out basically saying that conditions were oversold and investors should be buying on the dip. What are the cases that you have to make that would suggest that the market has basically mispriced the sector so weve built a career about zigging when everyone is zagging and we have a process in how we look at things from the market to sector to industries to stocks and its looking at valuation, earnings, operating performance and performance. If you take a look at the percentage of stocks in the s p 500 with respect to reits its at an alltime low if you look at the reaction with respect to this higher for longer Interest Rates its been an overreaction. Our Analysis Shows that reits outperform in a higher Interest Rate environment vemo has learned Interest Rates are going back to zero so we have to kind of be in this range here, we think, between 3. 5 to 4. 5 on the treasury we think thats a very good sign with respect to fundamentals, Free Cash Flow, which we talked about with respect to the Communication Services industry and Warner Brothers discovery in particular, Free Cash Flow yield for reits continue to go up with debt going down and by the way, payouts are going up as well lastly from a contrarian basis if you take a look at the amount of hold rated companies and all the s p 500 companies in terms of reits, theyre going up where the buy ratings are going down so by the time that analysts are starting to turn real negative and dropping their earnings, we think its time to get back into the sector this isnt a glaring jump up and down buy reits and double exposure this is that we think theyre oversold, theres an opportunity and we think the theme there is that this is a contrarian buy when everybody hates the sector. Real estate is not monolith. No. And youve got areas like commercial real estate where theres, perhaps, too much supply, too little demand, areas like residential that are starting to maybe see some cracks, but very constrained supply so how are you kind of navigating within the real estate sector . So if you take a look at reits its no different in terms of location, location. If youre in new york city, like ive been this week and you try to travel around midtown between 3 00 and 7 00 p. M. Cant get around everyone is working. Were coming back to work again. I think the death of commercial real estate is way, way precluded. I think people predicted that way too early, number one. Number two, were starting to see reimaging of mer shall properties into Residential Properties like the reimaging of Retail Properties into apartments and consumer properties, following the great recession. So i think this is a trend that is beginning to happen again lastly, i think still, from Data Warehousing to industrial reits to Health Care Reits technology reit, i think people are kind of missing the boat there and focused on commercial real estate in the notion of bad loans and the like which is your beat in terms of financials, right. I think everyone is too negative on financials. Whats coming up here, equestion next up on earnings, but its a reit and data centers, pluck ublic real estat storage and towers and cell phones plenty within the reit universe that are not commercial real estate related i would say our momentum picks where fundamentals are greatest is Simon Properties the cube because of the new york city market and the storage side of things we love prologis because everybody hates it on the warehousing side from the commercial real estate side of things, Boston Properties those names we own them in the portfolios we have the good fortune for running for bmo Wealth Management. Now is the time to look at those things you dont want to be contrarian to be different. If the analysis backs up to think differently it is in this case. What about a slowing economy overall . What if we are slowing and start to see almost a recession, lets call it . Theyre not going to perform particularly well . They do not, however, with respect to where the economy is, i think were still several quarters, if not several years away from doing it, and thats what fed is telling you and thats what Interest Rates and by the way the Employment Situation is telling you i think the whole notion with respect to the fed, investors have it wrong. We cannot be waiting around for the fed to cut i think that has been the wrong call all along weve reared a generation of investors that think stocks only go up if Interest Rates go down. What were beginning to learn is stocks can go up if Interest Rates flatten out. I think thats very positive were kind of back into the mid80s, mid90s type environment. Youre also hitting this refinancing while over the next 18 months too. Well see how all of this plays into that. Brian belski, thanks for being here appreciate it. Still to come chip stocks rallying recently and outperforming big on the year. Can the gains continue nvidias ceo says we are in a renaissance and well discuss it next dont go away. [busy hospital background sounds] this Healthcare Network uses crowdstrike to defend against Cyber Attacks and protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. Oh, charades okay love it umm. First word. Tonsillitis nostril uhuh. Bill uhhuh. Hiphop limping mmhmm medical bills uhhuh pancakes cash who pays you cash when you have medical bills . Grrr no idea. [tapping] gap the gap left by Health Insurance . Who pays cash to help close that gap . Aflac oh, aflac get help with expenses Health Insurance doesnt cover at aflac. Com pictionary . ella fashion moves fast. jen so we partner with verizon doesnt cover at aflac. Com to take our operations to the next level. marquis with a custom private 5g network. ella we get more control of production, efficiencies, and greater agility. jen thats enterprise intelligence. vo its your vision, its your verizon. And theyre all coming . Those who are still with us, yes. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. Ai is, of course, and you mentioned earlier, also, that were moving from the world of producing software to producing intelligence, Digital Intelligence and this industry is going through its renaissance, moving from producing software, creating tools that people use, to now intelligence that people that engage people. That was the man himself, nvidia Ceo Jensen Huang talking about how ai is creating an i. T. Renaissance. The smh, thats the etf, up 4 just last week 25 year to date our next guest says the broadening rally is an encouraging sign and strength in auto and industrial semis is a notable trend. Vivek aria joins us now. I would love to get your take on the one Earnings Report we got this morning which is arm. I think you do you cover the company. The stock is down about 4. 5 or so what do you think . Yes, good morning, david. Interesting cross currents in semis, stocks that are related to the data center and ai, the demand is very hot, but the stocks can get crowded from time to time, whereas the stocks exposed to automotive and industrial markets, demand is a little luke warm but starting to trough but we do think that that can help to broaden the rally in those stocks over the next few quarters specific to arm, we really like it for the reason that it is one of the most unique ways to get exposure to the adoption of ai and the edge of the network. You know, usually when we think of ai, we think about whats happening in Cloud Computing we think of nvidia, we think of broadcom but usually now you will start to see ai and intelligence spread to the edge of the network and we think arm is one of the most unique ways to access that. That means every pc, every smartphone, every Consumer Device is going to have that small bit of distributed intelligence and the blueprint of that, i think, comes from arm, the adoption of the v 9 architecture is in the first 20 of its rollout, doubles, top line growth. You heard from management themselves earlier today today, 20 top line growth. The stock does trade at a premium multiple a small float so the stock does get vol is tooed we shouldnt confuse volatility for the Company Fundamentals which are very strong. From the industry we did have rene haas join us not long ago, a few moments ago. You know, they continue to talk about significant momentum in the data center and its all we seem to hear, all of the hope and hype around blackwell and what thats going to mean for the overall industry not to mention so many of these data centers continue to be built. Al is it going to come to fore over the next two or three years in terps of the demand picture . Yeah, i would make two points there, david first, set aside what the Chip Companies are saying they have a vested interested. Look at what their customers are saying and look at what importantly theyre doing. Look at the capital expense raised, the capex raised from the top cloud companies. What google is doing, microsoft is doing, apple, meta. We thought capex would grow 20 this year. Before this earnings we raised it to 26 and now were looking at 40 capex growth this year with continued capex growth next year these top customers realize deploying this a. I. Infrastructure is a massive productivity boost both for their own internal services, but also as setting these services and providing the infrastructure for enterprise. We heard that from service now yesterday. So, think of a. I. As this massive productivity enhancement tool and then companies such as nvidia and arm and broadcom and marvel are providing solutions to do so these stocks can sometimes get crowded but when it comes to the adoption of a. I. , i think were in year one or two of what could be a multiyear investment cycle. Again, it is a productivity enhancement tool and i think the change of these networks from the traditional way over to an accelerated manner, i think it is massively beneficial to semiconductor companies. Yeah. A good way to end it right there. We have to keep it a bit short today. Thank you. Thank you. As we head to break, look at shares of roblox this is no gain, down 22 , taking it on the chip this morning. Well tell you why after this break. A quick programming note a big day for fed speak tomorrow cnbc issed to golden valley, minnesota, for a huge interview with two fed president s, neel kashkarind a Austan Goolsbee your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire and theyre all coming . Matchthose who are stillption. With us, yes. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. Welcome back check out this mover, roblox shares plummeting down nearly 22 . Steve kovach has been tracking the action and joins us with the numbers and whats really got investors spooked today. This morning its really all about the guidance the guidance for the Current Quarter and full year is pretty rough. Company says it saw a lot of weakness in engagement and turns out the problem is more technical than anything else, according to the company i actually caught up with the coo. He told me at the end of last year the Company Launched a bunch of new features in the game that caused a few technical hic hiccups. Most roblox players use an troid. He even called performance of the game one of the key factors. Some other things to watch, though, for ad business, its rolling out slowly this month they launched video ads within the game. Heres another important thing going on at roblox no big layoffs like weve been seeing at other Gaming Companies like sony, taketwo interactive and this week at microsoft so, a little bit of a different story there to tell, guys. How does the competitive picture look for roblox, steve you know, how does that compare with some of their peers that have seen layoffs . Yeah, thats exactly it what weve been seeing in the big gaming studios, microsoft and so forth, theyre cutting down and focusing on the big titles that are guaranteed hits, guaranteed to gain a lot of money for their sporting game. Roblox is a big platform, a little different its kind of a social network on top of a game, leslie. Thank you appreciate it. Lets give you a look at the Broader Market before we wrap up this hour. Weve got the s p and nasdaq both in positive territory generally positive tone to the overall market, including even some names we saw down earlier making up making up for that. Arm, for example, you may have seen down not nearly as much as it was in the early going. Warner bros. Discovery in positive territory and some of your bigger names as well, including apple, meta, amazon and microsoft all up weve got a lot more live market coverage for you straight ahead. At pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. fun music mom, can i help . Camping was fun, but it looks we brought the woods back with us. If youre a mom, then you really need weathertech for mothers day. Its the ultimate way to kid proof your vehicle. From lasermeasured floorliners for the front and rear. To cargoliner. Seat protector. And seat back protectors. Weve got moms covered. Your turn. hose spraying and laughter find all these American Made gifts, perfect for mothers day, at wt. Com switch to shopify so you can build it better, scale it faster and sell more. Much more. Take your business to the next stage when you switch to shopify. Quk quk at Goldman Sachs headquarters as the firm hold Investment Forum leslie picker at post 9 of the New York Stock Exchange. Today john waldron well get his outlook for the fed, Capital Markets and parts of his own business that could drive growth. Goldmans Lindsay Rosner to warner bros. Discovery, one of the companys largest