Transcripts For CNBC Squawk Alley 20240712

Jay blowing the speakers up im going to fight until i se the sunlight good monday morning, im jon fortt. Were going to start with two massive deals in tech. They have widespread Global Impact and two block buster deals, or are they deals, that are facing or have faced government pressure from over seas we will start first with tiktok as oracle emerges as you can argue, the winner, the trusted Technology Partner hear in the u. S. , what does that mean . What is included in this deal and what is not . Jul Julia Boorstin has more. They confirmed this morning saying the companys proposal for tiktok was received over the week they reviewed the proposal and look to have technical discussions with oracle over the next few days. Bitedance has chosen oracle as what they call a trusted Technology Partner as part of tiktoks corporate restructuring. What is in the works is not all of tiktoks assets rather oracle is taking a sight ni Minority Stake but oracle would be taking responsibility for privacy and Data Security issues that raise concern from the government as the company will be run entirely out of the u. S this will be part of a restructuring that bite dance has been pursuing to comply. They have been working on this long before the president got involved and set a deadline for sales and a deadline that secretary mnuchin declared it points to the companys ties with the administration. This year safra catz has donated to the trump campaign, and Larry Ellison is a friend of the president and hosted a fundraiser for him this year walma walmarts to have interest and is continuing discussions with bitedance about this one hopes that is not how ork oracle secured the deal, that would be skrupt. If this was a bait and switch, this was supposed to be about an acquisition. We said if youre google you cant do that because youre already under antitrust scrutiny but if this is a cloud enterprise deal, where are those players . As jewel yay mentioned does the president s tie to oracle influence this at all . That is a good question twhaun will be discussed in the coming weeks a lot of scrutiny still. This deal in the early hours, i wonder if we will hear from people who have hosted tiktok data those are interesting questions. All the microsoft statement, over the weekend i thought this was interesting. Microsoft said we would have made significant changes to make sure it met the highest standards for security, privacy, safety, and combatting disinformation the former facebook chief Security Officer he has lots of takes on security when it comes to these political issues remember, guys, this was not supposed to be a Technology Partner deal this was supposed to be a outright deal. How does the Government Trust that t will solve all of the problems of computer and disinformation there is still so much to unpact the unpack there and oracle still has to come out and prove they can do those things. Thats a good point we have a lot of questions here. I come back to kevin mayer, he took over as tiktok ceo. Originally when he took that job and i was first hearing about how they were going to deal with the opposition from the u. S. Government to the platform here in the country, which by the way had not yet become an executive order or anything of that nature, but they had a plan to move the operations here to the u. S. , to make it the Global Headquarters for tiktok, and to move things to servers here in the u. S. Keep using the a glgorithm they developed, and i find myself wondering if that is not exactly what was happening here. But maybe that was supposed to happen when kevin mayer, for example, would have stayed on and been the ceo that was the plan. Take it out of bite dances hands. Have ownership in the u. S. Servers in the u. S and that was not what they wanted, right . The president , and i believe the secretary of the treasury, said you cant have it. You cant have the algorithm you have to move it here and make your own. I think it is so important for viewers. I think this is not a political issue. If this is the way it looks now and we want more information, we need more information. This is no way to run a fair capitalist economy when the government steps into this situation, mandate that a sale has to happen by a deadline, and argues that walmart cant leave the sale putting stipulations of who can be in it, a player is very close to the administration, and at the 11th hour switches what the entire thing is about. Low and behold it ends up in the hands of a party that makes the administration look like it may not be above board it is the appearance here, that is a problem before we even know what the other details are yeah, john, you know, it is funny. It reminds me of something you covered closely. Microsoft was the winner of that huge cloud contract for the department of defense over what was supposed to be the favorite. They are continuing to fight that, by the way, in the courts as you know, claiming they were unfairly singled out because the president doesnt like the washington post, which, of course, is owned by jeff besos who is the ceo of amazon but this this one, perhaps, they lost it is just interesting to see. And kind of disturbing when you talk about it that way if in fact these things are true we dont know and we should point that out and amazon is continuing to litigate and we will see david, we have talked a lot about the u. S. Government role in all of this but lets not forget beijing as well that called president trumps bluff here a few weeks ago beijing said any kind of transfer of artifical Ai Technology needed special approval that changed the whole landscape here that is likely that perhaps microsoft dodged a bullet here they were getting that secret sauce. What would they pay 25 billion for. So we get a scaled down deal beijing has had a role here and this may be the start of more tensions in the east and west. And going back to that b bifurcated internet. Lets go to the other big deal of the morning. The planned acquisition, josh leadership ton will catch us up on how we got here john, the most important krip chip acquisition ever. Paying 25 billion in stock. 12 billion in cash. It may take about 18 months. So why do they want that arm prp right now it is known as the worlds large est chipmaker a cpu market, too. That is the primary brain in most Computing Devices it is under pinning all sorts of devices. Here is jensen here on cnbc. It has built 180 billion units over its course of its history. There is potential risks for this deal though many customers will be unhappy that another is buying this asset. Working in nvidias favor these are very different models. There are so many different nuances here, certainly there are questions about what this means for the likes about amd that competes with nvidia in graphics and intel that is now competing with arm were get so many cases, david, where the provider is the third parties. Apple and the app store. I defer to you. You question that, you know, he is a very impressive man as we all known. He built an enormous and fast growing company. But i will leave that question out there that you raised as well what is going to happen to the likes of an amd. I dont know the answer. He was very confident when we spoke to him earlier he will get chinese antitrust approval they felt like the regulators were looking at them assessing them based on the fact pattern there. I would step back from friday about more technology and talk about the fact that were seeing it and that were using at least the majority of the consideration here, it is their high flying stock. Softbank once owned and then sold and is now getting it at a far higher price and conceivably holding on to, maybe for some time, but given what is going on at soft bank i know that is not clear either there is a lot going on there. Rumors and reports going private. Yeah, it would be a tough one, scratching our heads this year trying to figure out what the 300 year vision, are that now stands, but there have been a number of asset sales. It wont just be arm, it will be tmobile, alibaba, the unit in japan. That leaves them with more cash than he has had in recent years. Can you imagine can if the company went private what they could do with their baffling investments perhaps less disclosure. What would he get up to . A vision fund two and three . More options bets in the Public Markets . It would certain i will be fascinating. I want to go to arm and nvidia i thought that was a great video you had this morning i think that regulation this time though was particularly in china going to be tougher. Already this morning you have global times they are at risk of the u. S. Control, i think there are plenty of questions there and that leaves aside u. S. And regulation i think there will be a lot of push back there in china i will say this if i have one big criticism for them, i went out, interviewed warren east, they have not been that aggressive as really hard charging and aggressive as they have been. Investing in growth. That is the kind of thing, wow, he has done that in that business arm might get more attention in terms of rnd and growth under nvidia as it had as an independent company if it goes through. That is a great point arm has struggled to turn its successful chip designs into major growth there are so many aspects of this story we will talk about throughout the show. First, take a look at the nasdaq trying to rebound this morning five negative sessions and six coming off of its worse week since early march. Shares up about 2 is it time to trade out of the f. A. A. N. G. And into names you have maybe not heard of . Heath, overall, we have seen an norm rally in technology. That is up 3. 5 this year. Does the pull back give you any pause for concern when it comes to valuation i think less so because of valuation, more so because you know, clearly, there is a lot of momentum behind these stocks i think everyone understands having seen these kind of moves in prior years breaks like this, even blown resets are not common we look at the valuations, these are not particularly extreme valuations particularly for the stocks that are leading this the companies that are benefitting most, missed amazon, alphabet, facebook, those are all company thats are seeing a lot of growth in the underlying fundamentals, the financials, that are keeping up with the valuation side of it. So while certainly the stock prices are out performing, as we see from the amazon boxes showing up every day, the amount of time on facebook and google, the financials there seem to be supporting it. Yeah, but i can come back and say zoom or peloton, reft knew multiples are pretty extraordinary. The rates are strong but those are reminiscent to me, do you agree . Yeah, i think were a long way off from what we saw in the late 90s certainly Something Like peloton, just to use it as a easy example, obviously stock is up a lot the companys profitable generating 100 Million Dollars or more in the last quarter. Generating more than that in Free Cash Flow the revenue is growing over 100 the revenue multiples come down pretty quickly when you just look a year or two out of course the question is how long does this last. And that is, you know, a bigger question for investors but i think when it comes to comparisons to 99, those fall apart pretty quickly that is a difference from the companies now versus the company thats lead a lot of the headlines and the fudraising in 1999 we have been talking a lot about mna today. Maybe you can proden the the appature for us. You have oracle looking to spend, spend, spend for tiktok does that signal something about what these Companies Want or need or expect for growth . I think, you know, both of those are really unique situations i do think more broadly these are companies, you know, and Large Tech Companies in general that have a lot of cash on the balance sheet. Growth in this market comes at a premium. If you can buy growth in places there is motivation for management teams to do that. And you know, given the capital out there. Cash on Balance Sheets are equitable. It is hard to find a reason for a team to not want to do something that makes strategic sense if is surprising that we have not seen more of this particularly in some of the tech areas like internet, where at least to this point we have not seen a lot of mna. You say were a long ways from the late 90s, but what do you see when you look at the ipo market i dont know if you saw the snowflakes updated s1 this morning. A higher multiple than zoom and it has not even hit markets yet. Is this considered frothy . I think there are points, parts of the market that are frothy i think if you look at the Venture Capital, areas of Venture Capital where dollars are going most aggressively. Theyre examples to come up with that look like prior bubbles what we dont have is anywhere near the breadth of what we had in 99. It is hard to find the number of examples and the widespread grow frothiness to create Something Like we saw in 99. We have companies that are fulfilled on those promises. Were talking about high value indications valuations in technology we have been looking for the last one, talking about high valuations and where there is frothiness and there are, you know, there seem to be more companies that fulfilled on the promise of those valuations than there have been companies that missed certainly we have not seen anything like the wide spread frothiness of 99 that were going public and entering into the markets. You know even the earliest Stage Companies we saw going into the markets are substantially further along than anything we saw going public back then those are all good points, thanks for taking some time this morning. Happy to be here. As we go to break, take a look at these dow components mcdonalds at itself highest level in a year. Well keep an eye on those squawk alle wl rht squawk alle wl rht ckyilbeig they made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper,. Then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. It is not just the size of these ipo eesz that have interests piqued it is the way some of them are choosing to go public if is all about options and if we were having road shows in person this year, there would be a few less for us to stake out. That is definitely true there is innovation among the innovators as you know for more than three decades the ipo process has been shared there have been some exceptions over the year. Google and net suite had dutch auctions and spotify and slack had direct listings, but more companies are going to revamp and experience with this take unity, for example, the maker of software used by Game Developers is expected to raise about a billion dollars this week that exact price will be determined by a new online bidding system traditionally pricing was determined by a shrew of inputs from large investors, underwriters, and the companies, but it is expected to be far more data driver almost akin to an auction of sorts. Also special purpose acquisition vehicles they have been especially popular. It allows private companies to get absorbed into a publicly traded Shell Company im told by sources there could be at least two announcements this week of private Companies Seeking this route to go public. Including, potentially, opendoors acquisition. Now there is also two more companies that are expected to try their hands at direct listings rather than a traditional Book Building method experts say a big reason for all of the experimentation is mixed reception to last years ipos. One of facebooks cofounders, the ceo and founder there, looking forward to that here is your cn brks krrbc u. The macys thanksgiving day parade will be virtual this year a. M. Son saying theyre going to continue to hire more people to keep up with demand. You can go to cnbc. Com for more on the story and yoshihda suda is likely to be the new leader and some humpback whales have swam into a shark infested river and theyre trying to get them back to safety. A deal submitted under deadline pressure and still lots of questions about oracles deal well have a look into it next stay with us lets go back to tiktok deal an agreement that they will likely not be structured microsoft throwing shade at the outcome via a blog post. Neil, i dont really want to talk about the political side of this as much as how they have affected what the outcome looks to be. It seems to me that if what you really wanted was a policy where data has to stay on soil, than just make a rule why do you get point by point involved in a particular deal, put your finger on china, and stipulate who can be involved. I just want to be clear if this proposal is the outcome that is approved, then this process is outrageous. And anyone that cares about free markets or open markets, they should be outraged what is the conservative economic dogma for years the government should not pick winners or losers. And the Trump Administration walked into this fight, they plus tered a lot they may not get the sale. And a trump donor, Larry Ellison one walks away with that contract to me that all feels outrageous and doesnt necessarily address the National Security concerns are very real. Is there any precedent here amendment september that there is no precedent . It doesnt seem like there is a new rule here. Is that what the technology interest should lobby and push for at this point . Tell us what the rules are so it doesnt happen again i think every Big Tech Company right now wants to know what the rules are what have we seen over and over and over again from big tech leaders. They all spend a lot of time cozying up to donald trump ellis son will come away as a winner that should not be how deals are done of this magnitude, or privacy legislation, National Security legislation, that seems to be what this deal is the cull min nation of. If you have a personal relationship with this administration you may have a winner that is just pure policy you can articulate a lot of concerns about tiktok. They did not articulate those concerns they are suing for that order. The government didnt do a rational or rigorous process here it appears they incested on a sale they said we dont want to sell the algorithm, and we ended up right back where we started with a data provider in the United States i think it is really important to ask trusted by who trusted by tiktok . By bitedance or the government. I think saying they trust them has a host of privacy concerns we know they use social media data we know they buy location data outside of the fourth amendment. We should have a lot of kprns about that, too. So there is more questions and answers here and i think there is a lot of very, very outrageous policy concerns that someone will have to deal with we have been trying to make those points as well it looks like byte dance was in such a difficult position being forced to sell the asset were still waitings to see what oracle is paying for this hosting deal, if anything. Not to mention other investors that might be rolling in in some fashion. My question to you is that it appears if youre a tiktok user in this country you get to keep using the platform, and the algorithm is unchanged i think were about to find out. Was the was definitely the key to growth. It is an important part of their story. If it doesnt come over, and they get 10 or 20 worse, i think there might be enough of a user base that they wont really nose at first and it can be recreated. I think were about to have a pretty Good National experiment to see if it is the recommendation here. Or whether or not that is the true asset it has not really been tested before, but my prediction is that the user base is more important than the improvement on the algorithm in more than one way or another youtube, facebook, et cetera, as this deal stuff goes on have things gotten more difficult for the u. S. Based tiktok . Is it still running away with it just minutes before we came on air, you tube announced you tube shorts. They have the base of creator economy. They can make is slightly easier for them to make it with different formats. And, tiktok notably lost their ceo. So from just a pure execution standpoint, but they have a user base they have seen it in turmoil from that user base. Meanwhile, twitter shut down vine thank you. Thanks for having me. Were going to have more to come on nvidias 40 billion purchase it is up 6 . The stock also got a upgrade at jeffreys they have a price target of 680. Saying the case could be as high as 1,000 well watch that well return in two. The vision is this, we want to build a cpungomti company for the age of ai. Before money, people traded goods. Tools, cattle, grain, even shells represented value. Then currency came along. They made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. Find a stock basedtech. On your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. This was the theater i came to quite often. The support weve had over the last few months has been amazing. Its not just a work environment. Everyone here is family. If you are ready to open your heart and your home, check us out. We thought for sure that we were done. And this town said not today. Up next, bill gates and e n elonmusk on twitter. Elon musk on twitter. The big events are back. Xfinity is your home for the return of live sports. We have a few headlines to break down on the vaccine front this morning s a tlets get to meg tirrell wo follows these and more for us. Astrazeneca getting the green light in the u. K. Only so far. It would pause as they investigated an unexplained illness for one of the parti participants in the trial. They got confirmation that it is okay to continue they will be guided as to when other Clinical Trials can resume, but we dont know the conditions around which they are able to restart that trial they are expanding the size of their trail to 44,000 from 30,000 they are almost at that 30,000 mark already they enrolled 29,000 people that will be including people as young as 16 from 18 in the trial and people with chronic and stable hiv, hepatitis c and b, and to try to increase the diversity in the trial they expect to have data on the vaccine. A lot of folks wondering about october 22nd they have vaccines on that day many expecting that data would need to be available by then here is what the phizer ceo said about it i think is unlikely from the time that we start the result, we need time to prepare. So still by the end of october, but perhaps not by the key date of the review process mega, while we have you a deal that we have yet to mention on squawk alley this morning is that gilead won and they sold stock last may saying out at 88 per share to gilead. An enormous premium. What does it mean for gilead in your opinion it is interesting, they have been trying for several years to create a major cancer fran kiez. Thats a big deal. 12 billion for kite, for example. And they have not really succeeded in becoming a power house. So he took over as ceo in march of 2019 and he is doing deal after deal in cancer but they worked on those as well and theyre hoping that this will be the corner stone of a major franchise. So this is for triple negative breast cancer. He thought it could be brought in as many more cancers and used earlier treatment. Things have to go well to make the valuation make sense, but it is a bet that things will go well thank you, meg tirrell. Our next guest spoke to the ceos of nvidia and arm why he is calling it the most important chip acquisition ever in the sector. Stay with us were back in two at u. S. Money reserve weve helped hundreds of thousands choose the best Precious Metals for their retirement portfolios and many are in profit positions today because of those choices. So dont wait until the next crisis. Get started securing your financial future today. One of the criticisms of traditional ira accounts is theyre typically tied to paper assets that are often unprotected from inflation or even a market crash. Recently, Congress Passed a bill that created a better solution. Its a new type of ira that allows you many of the same tax benefits of a traditional ira, but without the same types of exposure to market volatility. Its like somebody finally came up with a better mousetrap, but for the ira. So whats this better mouse trap called . Its called a Self Directed ira. 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Its full of everything that you need to know about Getting Started on your selfdirected ira today. Youll be glad you did. The aqcuisition announcement of armed holdings from soft bank. Patrick moorehead who spoke with both ceos says its the most important daily in semis hes seen hey, pat how you doing im doing pretty well i got to say, this one, arm is kind of this ultimate platform, neutral company. Getting together with nvidia, if jensen can figure this out, its powerful i dont buy his argument theres no conflict here what if arm wants to take license here when its already competing head to head with nvidia in graphics theres all kinds of potential problems there are a will the of problems i do think that many of Nvidia Direct competitors will say they have issues with this and will try to derail this at the regulatory level the way hes organizing the company as an independent avenue reporting as a subsidiary into him and by coming out strong saying he wants to run it independent makes me feel a little bit better. The way that i think its going to shake out is nvidia will have to abide by a certain set of rules. This comes with every acquisition that ive seen i do see this passing scrutiny i dont think that jensen wants to ruin his 40 billion dollar investment here. I think he wants to grow it and in a very similar way that we saw dell and vm ware operate who does vm ware put on stage . Theyre running it nor independently. There are some history on this pat, if im the uk here then im concerned about is nvidia going to continue to investin growing here if im a competitor, im worried about is there going to be a firewall information wise on nvidia not getting a jump on the information about what arm is working on is it possible, do you think, in a maybe even specific legal way for nvidia to address all those things i do think so very similarly you have qualcomm who is an intellectual property provider who has to firewall its design of its chips and vice versa from each other. It is very possible. I know it seems difficult but we have seen companies do this. I think kwaqualcomm is probablye best example. I think its a risky move the main reason with arm under nvidias hood youll have three major process sors. Youre going to have the net worker processer unit going the net work and onnecting having those under one hood you can meet and address the next wave of computing. With artificial intelligence, the main issue is heterogeneous workloads that youll have to process. This is a very transformative deal i was skeptical but in true nature i think jenson long is benefits of this deal. Hes a convincing guy, pat. I expect that especially when it comes to data center, when it comes to service, we have been waiting for a long time for arm to make a big impact there something tells me under jensen thats what i would do thats exactly right. Cpu revenue is zero right now. The cpu market is so much bigger than the gpu market. I know that the gpus get a lot of the time in news but the cpu market is so much larger i can imagine combinations of cpu, gpu, npu, ai put together in terms of an entire platform that puts nvidia as literally one two two companies who can do this out there all right thank you. Well see how long this deal takes to go through if it indeed does theres a little twitter beef between two of the five richest people in the world. Asked about an august blog post by bill gate, elon musk tweeted he has no clue after gates said he didnt believe evs could function as long haul transportation this isnt the first time elon musk has take an shot at bill gates. He said conversations with bill were underwhelming i can imagine if its smack talk, that might be kind of underwhelming for bill gates or child naming i think elon is much more exciting in those categories he isnt shy about expressing his opinion nor making people aware of how smart he is ive heard of Conference Calls hes had with advisers and asked them a question about Aerospace Technology and if you cant answer it, you have to get off the call. That was a game like that as kids where you take away a chair when the music stops i guess theres an aero swspace Technology Way of doing that as well we are watching shares of oracle up more than 5 today, david quick final word we raised a lot of key questions and waiting to see the details. They will say they have now transferred the National Security risk or taking care of it or is there going to be a lot more to this it does not appear to be what many of us anticipated and what you and i both pointed out which is on outright sale of the tiktok usa business. Lets get to scott wapner and the half thanks so much. Welcome to the halftime repo. Report. The correction and the comeback after the worst week for stocks since june and the big beat down in tech. Why some well known market watchers say your money is primed for a push higher we debate that with our Investment Committee today we debate that today lets begin by check