Transcripts For CNBC Squawk 20240704

Our road map does begin with, well, what else . Big tech, chips, and a. I. , Semiconductor Stocks are coming off what was the second worst week of the year, and of course, mr. Jensen huang is set to deliver what is a very hotly anticipated keynote speech that is later today. Were also keeping an eye on shares of apple and alphabet. Theyre both up ahead of the open, particularly alphabet. The tech giants reported by bloomberg to be in talks to license googles a. I. Engine, gemini. That would be for the iphone. And oracle shares are surging more than 10 in just the last week. Again, why . Well, a. I. Progress. Ceo chuck cisco shares. Cisco shares. S cisco. You know, i dont sometimes, jim, you read it if you put it there, he will read it. And youre right. And oracle had a great week, and shes on the board of disney. Lets go there. Yeah. Thanks, guys. I was, like, what . Hm. Yeah, we got Chuck Robbins coming up. Jim, youll partake in that. Theyre closing the splunk deal so thats coming up a few minutes from now. Lets start with big tech. A. I. , nvidia, youre there. We cant wait for your big interview tomorrow, but what are your expectations for today . Okay, so, today, i think there are a lot of people trying to game this event. This is an event that if people look at it, theres a there is a keynote that jensen gives, and theres actually a countdown clock on the site about when its going to start, that is the first time its been live with real people, obviously, in many years, and ive got to tell you something, david. People like to speculate about what hes going to say. Get out of that game. He wont let you know until it starts. Its all a secret. Thats how he does it. Is he a dramatic guy . When the new yorker piece i told you to read about it, he does not regard himself as a classically great speaker, but today, he delivers, and i think that we will be surprised because he does not let himself be gamed. I think people have to start recognizing that. Okay. So, that being said, and secretive though he may be, you got to tell us at least what some of your expectations may be. Certainly, there are at least questions that many people think are going to be addressed, jim, and im curious as to what you think they are. Okay, so, i think that what will be addressed is not necessarily the total Addressable Market in terms of what number it will be, but it will be about biology, health care. It will be about finance. It will be about auto. It will be about manufacturing, and yes, it will also be about accelerated computing and generative a. I. So, what im saying is its going to go vertical, and if you look at all the different you got some cues. Theres these tremendous breakout sessions. You see where hes going. Hes going toward health care. Hes going toward figuring out things that can do best with accelerated computing, and then, secondarily, hes going towards microsoft a. I. Pilot and going toward what were going to talk about with google, going toward what anthropic is doing. So, i dont think hes going to rule out obviously, he has to talk about what traditional a. I. Is, but i think hes going to talk about what accelerated computing can do to make the world a better place. Because hes a bigger thinker than we are. Hes just bigger. I call him da vinci. Da vinci knew about the helicopter. Youve been talking about the digital twins before anybody had any idea what in the world you were talking about. We were never considered digital twins, you and me. No, were like danny devito and arnold schwarzenegger. I listened to a podcast this weekend, bill, brad do this podcast. Brad talking about how jensen huang now believes the datacenter market will be just over 2 trillion in the next four to five years. Thats the addition of capacity thats needed to power the Large Language Models. Where are you on that . And you know, again, if nvidia maintains any semblance of its current market share, let alone you discount it, its still a very big number. I like to go back to when bob noise and gordon moore and andrew grove were in the formative stage of intel, where they talked about they had a computer that was this size, and its going to power far more than a mainframe, and one of the people in the audience said, wait a second, youre never going to be able to charge 2 million for that. They said, no, were going to charge 200 bucks for it. This is where jensen is. He has a formula to make things that make it so that everything that you currently that is digitized in your world has to be replaced, and it has to be there are going to be some that will be at the edge. You can do Edge Computing on your phone, but most of it is in a datacenter, and what hes saying is, everything that you have is too slow. Everything that you have does not do what my computers can do. So, 2 trillion or 4 trillion, i dont know what it takes to replace everything. But david, everything was replaced by intel. Everything. And everything is going to be replaced by nvidia. And i think the people who dont understand that dont understand how much more a computer can do. This morning, dylan, who works with me, he wanted me to send a memo to him. I had to type in the memo, send the email, i had to attach it. No. Come next year, ill just say, will you please send the march 18 email about what im looking at to dylan. Im not going to type anything. But thats jensen. And to some degree, im going to give lisa su some due here, she also has that. Thats the new world. Are you ever going to sit there and type an email again if you can just say, send that thing to faber right now. It might come back and say, sure. Or it will actually it will be, like, you sure you want to do that . Really you sure . Well, why would we ever want something where we type . What was the typing thing about . I saw a typewriter store in florida the other day. It was obviously closed. Keyboard. That makes a lot of sense. Let me type in letters that send something to david faber. How about i say, send it to faber . Isnt that better . You can have the other way. Im giving you the keyboard. You want the keyboard . Its all yours. I want to move on, but just to finish up, when you say that everything is going to be replaced, what does that mean for the intels of the world, then . Well, its interesting, because if you hit up if you go on microsoft, go to copilot, and you say, whos the best partner, it says intel. Of course, thats completely untrue. I think that what happens with intel is theres still room for cpu, not a gpu, and the and look, arm has their cpu and their partner with jensen. You have cpus for 20 of whats basically the box that jensen not really a chip. Its like a box that jensen has. So, theres room. Theres room for cpus, but in the end, david, there was room for ibm too, you know . Yeah, well, there still is. Yes, there is. Ibm is a very good partner with nvidia, by the way. All right, lets move on. Speaking of potential partners, lets move on to the story this morning, jim, because its an interesting one. Its got both apple shares and even more so alphabet, which hasnt been doing particularly well this year, theyre both up. Its a bloomberg story in which they cite sources saying that apples in talks to build googles gemini a. I. Engine and be a part of the iphone, essentially. Both companies, apparently, having active discussions about apple licensing gemini, and then it being able to power their new features and things of that nature, things were waiting for, of course. We may get some details around come june. Also, by the way, the report says apple recently held discussions as well with openai, may consider using its model. Give me your take. I dont have a lot of additional reporting here. I think we certainly could use some. They have had a long relationship, as we well know. We all know google has paid apple as much as, what, 20 billion a year to be the default Search Engine on the iphone. And we have been waiting for what apple is going to do when it comes to generative a. I. Were still obviously waiting for that. What are your thoughts here on the story . This is huge because a lot of people thought that the next iteration of the phone may not have anything really big a. I. , which therefore makes it so samsung does have an advantage. Samsungs phones are selling very well at best buy right now versus apple. This would change things. It would make it so that without spending a lot of money, because it costs a lot of money to get into a. I. , it would be seamless, and you suddenly would have a great a. I. Engine within your phone, and you would have a reason to upgrade. So, if this is true, and they can get this into the next phone, holy cow, all of the bears on apple are going to have to eat crow. Do bears eat crow . I dont know. No. Theyre vegetarians. But i do think its huge, and i think, obviously, alphabet needed this. You correctly pointed out, alphabet has been, other than tesla, one of the weak sisters during this period, so this is great for both of them. I think that the people who think that apple has no a. I. , they got up this morning, and they said, i hope bloomberg has that story wrong. Please, bloomberg, be wrong. Thats not a really good bet. No. By the way, bears eat anything. Of course. Do they . I didnt mean to i can see people thats right. You cant go camping. The grizzlies love their salmon. But what about alphabet . We talked a lot about the innovators dilemma, about this fascinating story thats going to be unfolding for quite some time, which is, are they, you know, going to get disintermediated from their monopoly on search, and or is the response a proper one, given that perhaps theyll be able to use their engine here as search for apple . I think this was a game changer. I think that i was very worried about search being supplanted entirely by going to the copilot or to claude, thats another one. Like claude raines. This is huge. It says, dont count apple out anymore, because this combination makes both of them more relevant. I know we have to go, david, but whens oracle on . I dont know. Were waiting. Id love to have katz on i tried to get him on for tonight. That was a promote for a show that i was trying to do for tonight. Thats what happened. Maybe thats where the confusion came in. We do have cisco coming up and Chuck Robbins. The company has completed its lha t cion of splunk. 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Get iphone 15 pro on us. cisco announcing it has completed almost a 28 billion deal, recalall cash, to acquire splunk. Joining us is Chuck Robbins and gary steele. Gary is going to be a part of ciscos executive leadership team. Gentlemen, nice to have you. Great to be here. Thanks for having us. All right, its part of the company now, so you have some other products out there in security offerings, for example. I think app dynamics, thousand eyes. How do you sort of address potential overlaps, redundancies . How do you go to market now with your product portfolio, given the ones you previously had and what you now have . First of all, thanks for having us. Its were in a situation where we have very little ref zero overlap in security. We have basically zero. We have slight overlap in whats called observability, which is basically monitoring the infrastructure for application performance and those kinds of things and weve been working really hard over the last six months to address those and build an integration plan. Gary, you may want to talk about it. Were going to move the cisco assets into splunk on that particular part of the business. Im super excited about this. I think the combination of app d plus splunks observability cloud gives us the best multicloud hybrid solution in the industry. While theres some really good work thats going to happen, we think we can do a lot for our customers. What does that mean, really good work . Simply bringing the app d capabilities into splunk, driving that integration, and bringing the capabilities of app d with the observability cloud so customers can monitor their digital footprint and understand their uptime, ensure they dont have outages. I want to get jim in, but just the Bigger Picture here of what it means for the future of cybersecurity, observability, and how splunk fits into the vision overall for cisco. If you look at the combination of their Data Platform with our security portfolio, and particularly with our extended detection and response capabilities, you think about taking the Data Platform that they have for the customer. You apply highend a. I. Based detection and response. What we believe well be able to do is give our customers the ability to identify threats and dynamically react to those threats in realtime, because as the bad actors become better at utilizing a. I. To launch attacks, we think the realtime correlation of disparate events that together might indicate a security problem is a critical capability that our customers are going to need, and between our technologies, their Data Platform, we believe we can actually deliver that to our customers. Our and their. Youre the same now, you know . Thats true. Our and our. Just happened in the last hour, you know . It did. The big wire transfers been completed. Jim, i know youve got a question. Sure. First, congratulations, gentlemen. Successful at putting this together. I think its really important. Gary, im going to go to you first, what is percentage of recurring revenue do you have, and now youre going to be part of the management team, what will your recurring revenue do for the whole mosaic that is cisco and what will it mean for the compound annual growth rate of the combined companies . So, splunk brings basically 4. 2 4. 2 billion of annually reoccurring revenue to cisco. We wrapped up a very good year where aar was growing 15 and while we generated over a billion dollars of cash flow on that arr. Ill let chuck speak to how that comes together in terms of the overall arr for the combined companies. Jim, good to see you. I hope you enjoy being on the west coast. Im sure youre going to have fun this week. Thank you. When you look at the combined arr, i think were approaching 29 billion now, so its a meaningful amount of our business. Its been a journey we have been on since i became ceo. We actually, as you know, achieved 50 of our revenue last quarter came from reoccurring revenue, which is another thing weve been trying to achieve. If you do the math on adding obviously, in the first four quarters, splunk is going to be a Significant Growth driver from a financial perspective, and then even beyond that, growing the fourplus billion dollars, growing in the midteens on our business, layers a point of growth on just by that alone, even in the outbound years and thats without any of the revenue synergies which drove this deal in the first place. Okay, so, chuck, the last time i spoke with you on mad money, you did talk about activation issues. You talked about the idea that you could be limited this quarter just because there was kind of a backup in the system from your customers. Can we make it so thats not the focal point of the discussion now that this deal is closed . Jim, we talked a lot about the fact that on the tail end of this supply chain problem, the customers now are sitting on the inventory we deliver and trying to get that installed, so theyve slowed down their ordering patterns until they get that digested. The reality is that the transition that weve made to arr in software and recurring revenue is not fully appreciated because of that right now. Once we get through that, it will be fully appreciated. Were looking at a company right now that has over 20 billion in software revenue. O over 50 of our revenue is coming from offers and arr. Its going to be very positive, and were looking forward to the future. You have a the luxury now with splunk of the generative a. I. That they have, which is immersive chat experience. Thats now you. Thats one part of the puzzle. I know that jensen huang, obviously, gtc this week, has his own networking capacity, but somehow, youre part of it too, and could you explain how you which i regard as having a competitor product are also nvidias partner . Well, jensen approached us, as ive talked about, and he he basically understands the relationships that we have with our Enterprise Customers and our understanding of how they deploy applications and how they build their infrastructure, and so he felt like we were the right partner for him to actually take his gpus, create integrated stacks, to help facilitate the simple deployment of advance a. I. Workloads for our customers, and thats what youre going to see from us over the next three to six months, but if you look at the splunk acquisition also, we think that same infrastructure now can power some of these Data Platforms that splunk built over the years, and as we as you know, the more data you have, the more powerful your a. I. Capabilities are going to be, and so we think, between their Data Platform and our technologies, we can bring the ability for customers to the Enterprise Customer to actually deplay and gain benefit from a. I. Workloads in a very unique way. Gary, chuck referred to threats, obviously, as a result of a. I. In particular, great advancements. I mean, how quickly are things moving in the threat environment . Im just curious to get your perspective. Yeah, i think were in a pretty difficult time right now. I think the threat actors continue to use advanced technology to design more sophisticated threats, whether theyre phishingrelated threats or other kinds of sophisticated attacks. The good thing is were the defenders. All of us are leveraging a. I. In a very constructive way to better defend enterprise today. And so, while the stakes get higher, i think were doing a great job of continuing to defend. And finally, chuck, let me just end sort of, again, back to sort of cisco overall. It was only on february 14 when you were talking about coming out of the quarter with guidance. You were cautious. Are customers this quarter, you said, saw more caution than the prior quarter, which led your teams to express more caution in the forecast. Is that still the case a month later . Were in the middle of the quarter, but i would say the dynamics havent changed meaningfully. The good news is the economy i talked about this a couple weeks ago. I think the economy is good. Its not great. Its not bad. I think its good. And i think thats whats going to be reflected in our customers ordering over the next several quarters as we look forward. Right. So, unchanged at this point. Yes, i would say that. Guys, thank you both. Chuck robbins, gary steele, both of cisco. We are. And very happy to be part of cisco. Coming up, its a west coast edition of jemims mad dash. Stay with us. Less complicated. 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You want to talk a little hertz is what i have been told. Yep, yep. Steve schurr was a very successful ceo at goldmansachs as we know, then went to hertz a couple years ago, had a vision that maybe what he could be doing is trading cars just like he traded stocks, trading like you trade bonds. It didnt work. The strategy to be able to make it so you take down by the way, he had been the company had put in big orders for ev the evs, maybe he was the first casualty, dave, you tell me the evs depreciated rapidly, which therefore made it so his fl fleet of teslas was worth less than he thought. Hes leaving. Gil west is coming in, former c. O. O. Of delta, terrific guy. But it is, david, frankly, a defeat. It was initially very exciting, but the idea that you could somehow make it so you can trade cars like you can trade stocks and bonds did not work, and it was not fun for steven. That didnt matter. He was hoping to have a great time. His skill set was not correct in the end, saw a slowing in evs, moving on. David, its a shame, because i thought steve was going to do unbelievably well with this strategy. I, too, did not see the decline in value of the teslas that hurt his company so much. Youve talked about it. We have as well. That was a fateful decision to go big in that area and is, to your point, when the values declined in the used car market, that had negative consequences. They have had so many different people run this company over the last ten years, jim. Yeah. Its its just not worked for anybody. Remember, it did go bankrupt, but it stayed the stock continued to trade. David, i think its just a very tough business. Because remember, travel is done well. Weve seen cruise ships do very well. American express, obviously, doing very well. Hotel chains, doing very well. Theres expedias done okay. Bookings did really well. This did not take part in the great travel resurgence after covid, and i think that maybe if he had just focused on that and not trading on cars, might have been fine, but thats not what he went there for. He didnt go there to run a travel company. He went there to do fleet management. That had been a great idea until the fleet depreciated and there was not much of a strategy for him to take advantage of. The fleet was not managed the way that he had hoped. No. It wasnt didnt quite work out. We got a minute until we get started with trading and the sound picks up and i can barely , im sure, when that happens, so tell me what you think the key to this market is this morning before we get started with the weeks trading. Im actually going to go with im going to go with alphabet, because i think it was stunning. If its true, the bloomberg story, it makes it so that apple, which many people thought would fall behind in the race to the next 3 trillion, right, because it fell down. Lot of people felt that nvidia could pass it. I think that this says, wait a second, this could be the break that apple needs and suddenly apple is far more relevant than we thought with gemini, which a lot of people thought was a bust. Clearly not a bust. Maybe a resurgence for both. All right. We got to talk more about that. Bell. Lot of stock. Lets take a look at the realtime exchange back at headquarters, of course. Here at the big board, e. L. F. Beauty celebrating the 20th anniversary of its founding. Were going to be talking to the companys ceo. That will be in the next hour. David, david, you got to ask when some short seller went after him, he buried the guy alive. The guys just under a lot of really bad cosmetics. Im not kidding. He buried the guy alive. Thats because hes a great executive. The stock is up tenfold. Well make sure to talk about it. Im sure saras going to have a lot of questions. Over at the nasdaq, shipping company c3is. Thats what im going with. Thats what it says. We have no idea. Where do you want to start now that we got things open, jim . You know what, david . Can i just mention this reddit deal thats coming . We dont know who its going to be placed with. It should come tomorrow. Its very exciting. Theres a whole new cohort of people might come into the stock market, but they are rebels, theyre renegades, they dont like the a lot of them dont like the big monetization advertising push that reddit has made, but you know what, david . I find that if youre going to be a public company, you have to try to make money. Its just something ive discovered in 40 years. Its important. You dont see a lot of charities coming public. I dont know if you know that. But reddit is a company thats in a crossroads where they got to make more money. At the same time, they got to keep the redditors, and that means they have to keep the people who are, lets say, gamestopers. Lets hope that group turns out and owns the stock and doesnt trade it, and then youll have a very successful deal. But its not an unimportant ipo, though. Very i think its very important, because frankly, we keep thinking we were going to have a good ipo market. And we dont. And we dont. Birkenstock turned out to be like mattel, barbie. Yeah, birkenstock and cava, which hung in there. May i comment that my wife, lisa, has a pair of birkenstocks. I think theyre 30 times the price of my crocs, but they look exactly the same. . I so youre not a buyer of birkenstocks. And im not really a buyer of croc. But my crocs hold up better than birkenstock, are cooler than birkenstock, but theres no accounting for taste, david. That is the case. That is often the case. But reddit will be an important test. To your point, we have not seen what we thought in terms of the ipos that especially given how Many Companies have been out there waiting for the window to open, how much more open could it be than this period of time . I dont know. I mean, people should be jumping out of the darn thing. Just in a. I. Alone, the companies that are going to be speaking at the conference, nvidias conference, theres got to be 50 that want to come public. I mean, unless did it change, david . Did people feel like if youre public, i dont know, its not fun . Come on. Dont people want to make money anymore . What happened to that . I know. Listen, i dont know. Given the momentum in the market, given where we came from last year, where the windows seem to be slightly opening. Arm, the most important, perhaps, and certainly a great performer. Weve talked about the fact that there are not many shares up, but nonetheless, a great performer, one would have thought we would have seen more. To your point, maybe its a little early in the gestation for some of these companies that are specific to Large Language Models, generative a. I. , and things of that nature, but there are plenty of other Saas Companies out there, jim, that have been waiting. Right. And thats why birkenstock, arm, weve got to get something going, and im hoping that reddit gets people excited again. Right now, its just, once again, people want that 5 . We didnt mention the fed yet. Okay, the fed, lets go back to nvidia for a second. Nvidias got a lot of you heard Chuck Robbins. Everyone wants the halo of jensen huang. Everyone wants to be associated with it, in part because its b. However, there are already naysayers, david. Im hearing people, including people on our network, who are saying, this marks the peak. Weve got the fed talking tough. Were going to be finished with gtc. Were done with a. I. How can you say it marks the peak if youre talking about a multiyear transition from cpu to gpu . But i know. Shorttermers are saying this is the peak this week. There are, but there are plenty who say that we are just at the very, very beginning. And the amount of compute power that were going to need is staggering. And i talked often, frankly, about one of the gating issues not even being the chips themselves but the power that is going to be needed to actually have these datacenters operating at full capacity. Im so glad you mentioned that. Which is not there. We have the grid had been moribund. Suddenly, were having a 5 increase over last year because of datacenters. Next year forecasted to be 5 . Were going to need solar. Were going to be needing wind. Nuke, i think, you and i both know is terrific but its not going to happen. But we are going to need so much generation that the natural gas business, which right now natural gas is very cheap, is going to go into high gear, which is why i keep saying this for nova is very interesting, this ge spinoff we have in april. I thought it would be a loser, but the need for power, as you correctly point out, is just humongous, and i know that jensen is going to be talking about how much heat these generate. They generate less heat than youd think, but wow, david, this datacenter move is making it so our electric grid is being taxed severely, and no ones talking about it except for you. Yeah, you know, i just had some interesting conversations as i had said with those in the datacenter business, and thats what struck me was that thats the key issue. And again, it doesnt mean were going to be having blackouts or anything of that nature. It simply means if you want to put shovels in the ground for the next datacenter, you have to make sure you have a secure supply of power, and that may really begin to be an issue. Weve discussed it. We will continue to. Thats why you have prologis tonight. A lot of utilities went up, the stock prices went up, as though this is years to come in terms of being able to build the capacity thats needed. Was that a justified move in many of those things . No, not a justified move because these companies have to finance and obviously, rates went up. The stocks are not great buys. I think semper is because its got a lot of very good natural gas, but you know, david, the country isnt ready for it. Eton had a meeting last week, owned by my travel trust. Theyre one of these companies that is done with trying to get the electrification grid going, the federal Government Spending a lot of money on this too, but were not ready for the demand. It is going to be something to see where they put all the datacenters because they got to go where powers cheapest, and right now, theres a hunt. One of the reasons i want to talk to prologis, they have 12,000 acres ready to put new datacenters on. It may be the most important thing. That stock is a horse. Thats all datacenter. Youre looking at a datacenter play. Vertiv, by the way, is the one that you and i know, dave cody, vertiv is the pure play. And dont forget super micro, added to the s p. All of it. I mean, we it all comes back to, of course, nvidia in some ways. Dell is another name, right . Yes. Hearing Different Things about just how profitable. There are servers that go into the datacenter that have the nvidia chips are. It helps, boy. Look at the moves. They had access to the key here, which is those h100s. David, do you hear bubble . Do you hear people talk bubble . Yeah, you hear it. You hear it, jim. But i dont know that the comparisons are appropriate. I dont think they are. To the bubble that you and i both lived through, i reported through it, you invested through it in the late 90s. This is very different. Michael dell, as you know, incredibly serious businessperson, is making a fortune doing the a little bit attenuated part of a. I. Nvidia is able to charge what it can because its basically a monopoly. The total cost of ownership is not that bad. Its like you got to think of it like a car. It performs very well after you buy it, but when you buy it, initially, its expensive. I just think, david, these companies are making fortunes, and thats why their amd is making a fortune. Thats why amds chart if there was no nvidia, you would say amd is the greatest stock in history. We have Many Companies that are making fortunes in this business and are im going to use a word that im just going to use it. Indispensable. These companies are indispensable. Yeah, even though amd is no match for nvidia when it comes to actually powering accelerated computing, essentially. Amd doesnt have the data, doesnt have what you need to learn from, so therefore, it doesnt have the inference where you ask it something and it comes back with an answer. But it is a chip thats incredibly fast. And so, i dont want to say that lisa su doesnt have something in the game. Its just that you need all the data already in before you can start asking it, and nvidias got just tremendous data. They have, you know, the large learning models that are smart. They know things, and theyve combed the web, and you want to plug in your questions. You dont want to wait around. Jim, i want to come back to really what is the we mentioned a number of times, but its the story powering two of the largest market cap companies, and that is this bloomberg story again. Alphabet shares are up almost 7 . Now, remember, theres a decent amount of people who are short this stock, in part because of the story weve been discussing, which is, will they move quickly enough to defend search as it changes from the Google Search to what will become the new search, which is, you just go to a large language model and use that, whether its chatgpt or gemini or copilot or perplexity, which actually allows you to use all of them to. Perplexity is like a google for Large Language Models. It is possible, isnt it, jim, you know, again, its early reporting here from, it would seem, to a certain extent, from bloomberg, and im just guessing, but it is possible that apple could be using all of them, right . Do you have to sign up an exclusive deal . Thats a great question. I dont know. They do need to have something quickly. I think that gemini is good. I guess you can make tedeals wi everybody, but gemini is good. I think the problem with gemini is exactly what you said. Its going to take away ad revenue from search. When you think about google these days, i was just hoping that maybe youtube would take up the vacuum, and google cloud would take up the vacuum. I think search has to go down because of all these new different systems, but this makes their search and their a. I. Supreme again. David, this is huge. My travel trust owns it, and we have just been lamenting alphabet for months. Well, no lammenation today. I would caution early, nothing says this is going to happen. We made the point many times when it comes to apple, they dont have to be first. They got 1. 2 billion people with in their system, you know . They oftentimes are not necessarily. Its just they dont like to be first. They have a better User Experience than anybody else, and that typically wins the day, at least certainly when you have 1. 2 billion installed base. It can win the day. Touching two billion people. You got this Great Service revenue stream. Tim cook has always said, look, we are a tech Company First with a consumer that loves us and is very satisfied. You dont get that satisfaction, which is almost 100 satisfaction, by offering an inferior product, but again, i keep going back to that best buy Conference Call where they just shocked me and said, look, the Samsung Phone is the hottest phone, and the Samsung Phone has a lot of a. I. Yeah. I know you mentioned it any number of times. Oh, did i bore you with it . What the hell . I was the only person on the call. I dont have one. I was on the disk call. You want to talk about that . That great move at under armour to take the hotelier and bring back a shoe guy . I mean, i can talk about a lot of companies. What would you like to talk about . I dont know. You want to talk a little disney so we can do a pointcounterpoint on that too . Well, sure. I mean, jim stewart with a very big piece in the New York Times that i think concludes, if you get to the end, that maybe nelson would be valuable. David, kind of a not that positive article in the wall street journal about nelson. No. Competing articles over the weekend, very interesting in the timing. As you say, one quite positive, i would argue, overall in terms of nelson peltz and then the journal focusing more on the internal goingson at trian itself. I was surprised the times did not have any mention of ed garden, who helped run that firm for many years. Certainly the author of or at least behind many of the white papers. No mention at all in the New York Times story, but the journal spent a good amount of time on it. The news this morning, jim, is that these proxy Advisory Firms often do play an Important Role here. They advise many of the passive investors, namely the index funds, at least on how they should vote their shares. We do have one in so far that im aware of, which is glass lewis. That goes for disney. Ive got it here, i think, in terms of their recommendation. And you know, they will iss, havent seen yet. Still to come. Both sides have been busy in meetings, as i pointed out last week. Of course, bob iger making the rounds in boston and baltimore and wherever the big institutions are. Making their case in terms of why peltz and rasulo should not be on the board. Look, i do think that on the one hand, youve got a stock that has gone down substantially. Just been miserable, of which some of that was iger. On the other hand, you got a stock thats been redhot, and maybe thats peltz. Maybe thats the competition. But if nelson is going to be defeated, hell be defeated by the stock price being up so much, because people just say, hey, listen, its fine. Maybe theyve gotten more focused. And i come back, david, and do say that the white paper that nelson peltz put out is really about how the board is dysfunctional, not how the company is dysfunctional. The board seems to have has so many powerful, fantastic people, it is a little surprising that they were really bad at secession. It is surprising that they were bad at guidance of the ceo, and i think theres a this misperception that if youre on the board, youre supposed to run the company. Nelson doesnt run the company. He wants the board to be more focused on cost and on what they produce, but you know, david, you look at that board, its like, how could they have so many great people and not be more thoughtful . Well, theres arguments to be made. Obviously, they are in the midst of a seminal transition until the industry of which theyre a part. Weve talked about it many times. Its easy enough to say you could have done this or that, but it has not thats a good point. When you do compare them to some of their competitors who have been similarly involved in that transition, they dont they look better by comparison. Youre right. Obviously, they have the parks to help fuel it. But not when it comes to succession, theres no argument to be made there. They screwed it up. I know. Period. Jimmy pitaro, the guy who runs espn, one of the smartest guys ive ever met, terrific guy, david, espn, they lost so many subscribers. Its a little bit like the dutch boy with the dyke, and yet theyre very thoughtful about what they do. Pitaro has a really good piece about it. But the industry is a tough industry right now, youre absolutely right, and thank heavens for theme parks. Espn still generates 2. 8 billion in operating profit. Obviously, its a cable network, and there are far fewer people out there available to watch. Those that are watch us, of course. Of course. Theres fewer. They watch us on reddit. No, reddit is no, they dont. Theyre not on reddit. I dont know. All right. Well figure out reddit. While we do that, lets give you a quick look at the bond market this morning. We call it the bond report. Its when we check out how treasurys are faring and what the yields are. You can see right now we are up across the board with that tenyear at 4. 316 . The twoyear note yielding 4. 73 . Were right back. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart 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. Lockheed martins 6 billion helicopter business is at a critical juncture. Coming up, a rare look inside the maker of the blackhawk. Literally. Were going to take t sestoheki in the next hour of squawk on the street. Stay right there. [ragtime piano plays] the adversaries are back [gasps] ugh. Sheriff, i got this. Protecting your business from Cyber Attacks can be unrelenting. Todays adversaries move fast. Crowdstrike moves faster. Crowdstrike. We stop breaches. All right. Lets get to it. Things have quieted a bit here, jim. Pepsico is a name you want to talk about. Yeah. Up almost 3 . On an upgrade by more than one darrell on wall street, darrell mosenian who covers this consumer package. Morgan stanley. Its a coagain upgrade. This is a man who said this company is slowing down and going to miss its targets. Ray doesnt miss targets. Hes the ceo. He did. And now daryl comes back and says its bottoming and about to inflict. The only reservation i have is that he doesnt address the glp1. We havent talked about lilly at all or novo. Hes saying, you know, hes basically saying look this is so cheap and going to come back. I like the call, but i also want to keep one eye always on what people are doing with the ozempic and mounjaro and the zepbound. Yeah. All right. What does that tell you of late . Anything new on the old glp1 front . We havent talked about eli lilly or novo nordisk this morning . People are saying lets see how big the numbers are. Were getting to this backlash, Small Companies that are picking away at some of what these Companies Might or may not be able to accomplish. I say use any weakness to buy eli lilly. I think it goes much higher. You do . I think hypertension and heart attacks, theyre a big preventable ills if. You didnt mention alzheimers. I was disappointed lilly didnt get the alzheimers review. Its going to be a full board review. Lets see what thats going to be a big drug, but people are concerned how much its going to cost the system, and, but i thought they were ready. Anticipate not going to change my mind. Thats not great. Its not as though it was cast aside. Its going to take longer. Right. Its just that there was a lot of talk it would be done by this quarter and the work i do with the american brain foundation, everybody i talked to thought this was a gimme and not lillys fault. Lilly was never promotional. Lets watch. As we not going to sidetrack it. Its going to happen. What do you got on the big show from one market our headquarters in San Francisco . First i have pro lodgist prologis they have been focused on data center. How much power they use. Crowdstrike is now the king of cyber security. We heard what Chuck Robbins was talking about with gary steele, the guys doing the best. 30 Revenue Growth for as far as the eye can see. On semi, a company stumbled because its related to auto, but its got a solar business that im interested in because it converts solar energy into regular energy for electricity. I think your focus of whats going to happen to the grid and 5 increase in the amount of power we need, were not ready for it in this sdmoounts yeah. A story well continue to discuss. Ji jim, have a great rest of the day. Thank you. Ill see you tomorrow morning. Coming up right here in the next half hour, darren woods is live. More squawk on the street straight ahead. Help make trading feel effortless. And its customizable scans with social sentiment help you find and unlock opportunities in the market. E trade from morgan stanley. With powerful, easytouse tools, power e trade makes complex trading easier. React to fastmoving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you wont miss an opportunity. E trade from morgan stanley. You founded your Kayak Company because you love the ocean not spreadsheets. 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. Good monday morning. Welcome to another hour of squawk on the street. Im sara eisen with david faber, live as always from post nine of the New York Stock Exchange. Carl has the morning off. Take a look at stocks hooirgds in the early session, almost a full percent on the s p 500. For the nasdaq up 1. 3 . The only groups under performing today, everybody is up but utilities and industrials at the bottom of the pack. Communication services and Information Technology are leading the charge. Alphabet part of the story up more than 6 . Some of the media names are rallying as well. Take a look at treasuries to kick off the week. Its been a story of higher yields lately and the market has brushed that off. 2year yield ahead of the fed 4. 732 . Selling bonds, yields higher. 30 minutes into the trading session three movers were watching. Shares of alphabet rallying on these reports its in talks with nra to have its gemini Artificial Intelligence engine in apples iphones. Much more on that big story coming up. Super micro keep pushing higher joining the s p 500 index today. The stock has been riding the ai boom soaring more than 10 fold over the last 12 months. Staying with the ai theme, nvidia shares moving higher as well. The company kicking off the Developers Conference, the stock up more than 80 this year going into ceo Jensen Huangs keynote speech today. Well head live to the big event later this hour. Cant wait for that. First, fresh clues about the health of the housing market. Diana olick has that for us. Hoesh sentiment in march rose on the National Association of Home Builders index. Thats a beat and the fourth consecutive monthly gain and highest since last july and the first time sentiment has been in positive territory. 50 the line between positive and negative. The builders report demand is, quote, brisk. Of the indexs three components Sales Conditions rose to 56, expectations of sales in the next six months rose 2 point and buyer traffic increased 2 points. Regionally on a threemonth moving average sentiment rose in the midwest and in the west. The report also says more builders are cutting back on lowering home prices to attract more buyers. In march 24 of builders reported cutting home prices down from 36 in december of last year and the lowest since july of last year but the average price cut remains around 6 . They are however still using sales incentives like buying down Mortgage Rates. Sara . Is housing picking back up again . Yeah. I mean it appears to be picking back up, despite the fact that Mortgage Rates have been hovering around 7 for the last two months and the builders are, obviously, benefitting from the fact that the existing home market has so little for sale and we are seeing more inventory come on the market because its spring and we do but demand is still there. I think people are starting to get used to the 7 rate if they can afford it. Got it. Diana olick, thank you very much. Kicking off what is going to be a very busy week ahead for the markets. A lot of catalyst, the three, the fed, bank of japan and nvidia, i think are the biggest impacts of the market. Heres the calendar. We got your boj. You were telling us about it on friday. Its tonight. Tuesday is the boj meeting. Tuesday. Yeah. And for me on thursday nike and lululemon both report. I dont think theyve reported on the same day. Theyre competitors. Its earnings. Its bank of japan. This is a really big deal. Bank of japan is set to raise Interest Rates tonight. That would be the first time in 17 years and they would take it from negative 0. 1 to 0 . The last man standing on negative Interest Rates. Heres the wage jump in japan and part of the reason why. They have the negotiations with the largest trade unionson friday, i believe, and you can see whats happened. Wages shot up. A big increase. Thats on top of the fact that their core what they call when they strip out food and energy has been above 2 for the last year or so. Its on top of the fact that nikkei, their japanese stock market, is at a record high. The japanese yen at a 30year low. Very easy financial conditions there and higher inflation to raise Interest Rates. It will be interesting because it is a big fundamental change in the bond market. A lot of people say its priced in already. Weve seen treasuries sell off in anticipation to this. One of the biggest Central Banks and one of the buyers of bonds. A very long period of time. Way before it became fashionable they were negative. They were buying etfs and buying everything ballooning their Balance Sheets before it became a great experiment. Trying to generate inflation that they finally have. They finally have it. And so i think, you know, theyve got a Dovish Central Bank governor in way da and i dont think theyre going to be in any rush and easier than the fed and ecb and Central Banks when they raise Interest Rates but thats one dynamic. Okay. The other the fed and the views are changing a little bit on what to expect. Will fed chair powell sound a little more hawkish than the last time we heard from him publicly the Humphrey Hawkins testimony in congress because it was the cpi and the ppi reports for february showed some firmness there. Stickier inflation prices. I dont remember headlines coming out of either day. Nothing. Because he didnt change the script. He basically said were patient, were in data, watching mode, and we like the inflation progress. Will he sound a little bit more like weve seen a few readings that make us wonder how quickly we can cut Interest Rates, for example. The odds are changing. Jpmorgan went from just over the weekend they were expecting as much as 125 basis points in cuts this year now at 75. They caught up to where the fed predicted it would be in september and then thats going to be the big question on the dot plot which gives you the projections of where each fed official sees rates going this year. The median estimate was three cuts in september. Theyre going to update that forecast. Will they take it to two cuts and signal to the market, which is totally caught up with the fed, that were going to take it even slower and will the market care about it . Looking at the odds this morning, fed funds future, this tells you where the market expects the fed to be at the end of the year. 4. 6. Were at 5. 25 to 5. 5 on the target rate. Theyre expecting around three cuts. You know, potentially by the end of the year. Will that change . Will it drive treasury yields higher and equities be able to hang in there still . The stock market has been pretty resilient in the face of these rising bond yields and Inflation Expectations and the tips market moving up as well. Yeah. It has been a resilient market with the s p up 8. 3 at this very moment. We have ai. We have google. We have nvidia. We have like this is whats dominating the equity market and counter acting some of the potential trepidation that you might see in firmer inflation and higher treasury yields. The only other chart i wanted to show is whats happened with commodities, quiet rally. We havent talked about very much, but in the last few weeks or so, you know oil prices are up. Yep. Gasoline prices, cattle prices, orange juice prices, cocoa is another can of worms. Copper. Theyve come off the lows that be saw sort of toward the end of the last year. Its not a crazy surge but worth watching because this feeds into the real economy and into inflation. Speaking of ai, we have a big story the markets digesting. Shares of alphabet up almost 6 . This follows reports the company is in talks with apple that would have its gemini ai engine, alphabets, nin apples iphones. Steve joins us now to give us context on the story that everybody is trying to grapple with so far. This is a surprising one. The report saying that apple is in talks to license googles gemini ai to power features in the iphone according to a bloomberg report that broke overnight. Now this comes ahead of an ai announcement from apple later this year which ceo tim cook has teased would be a breakthrough for the company. Now apple reportedly going to expand the deal it already has with google and search in which google pays as much as 19 billion a year to be the default Search Engine on apple devices. Its unclear if apple will be paying google for the licensing or if google would pay apple to gemini can deploy devices. Its a vote of confidence for gemini which weve been reporting have had a few highprofile blunders since anountsed forcing google to remove geminis image generation feature. The report says apple explored partnering with openai, the same Technology Microsoft uses for its copilot project and an admission that apple hasnt been able to make it owns ai model thats up to par with what google and others have. And, of course, theres this natural antitrust concern going on as well. Google andapple the only two mobile operating system platforms and a Partnership Like this, fresh concerns over at the department of justice which by the way, is expected to file its antitrust lawsuit against apple any day now, guys. Important to point out here, of course, this is all at this points still being negotiated according to bloomberg. Things can change. I wonder is it possible apples negotiating early with some of the other large language model operators so to speak, if they could be sort of a platform in the way that perplexity kind of offers you access to all of them. That is the perfect example. Perplexity the Search Engine funded startup by jeff bezos, uses all of them, openai, anthropic, another startup thats a rival to openai, so yes, you could also see a future in which they stitch together all the language models. This is really going to come down to what they can show at their Developers Conference in june which is when were expecting to see the details of this ai announcement. Apple has been teasing and theyre going to have to show that they can do more with this ai Gemini Technology than google has done in its own phones. It could do stuff like erase parts of a photo, do some like live translation between languages and things like that, but its nothing, a breakthrough like what tim cook has been teasing. I wonder. Was it your expectation and perhaps still is, that apple was going to have its own product so to speak, own large language model. They have the ability to fund whatever is needed to do that. Right. Not just the ownibility. They hired a man named john from google several years ago in order to run ai, so its really interesting that if they do have this by the way, they do have their own large language model theyve been putting out Research Models on that, but if they dont feel confident it can be out there publicly interesting theyre going with a partnership instead of doing something inhouse. A story that bears close watching. Appreciate your context on it and insight. Thank you, steve. Sure thing. Well stay on it, both of those stocks, apple shares up almost 2. 5 as well. Moving on here, proxy firm glass lewis backing disneys board of directors in a report out this morning. Sara, its, obviously, something weve been following closely. Im sure you read both the New York Times story about nelson peltz and the wall street journal about his firm trian, interesting timing from both. We have been waiting and will continue to get the proxy Advisory Firms. These are the firms that essentially recommend and oftentimes can be influential in terms of how a vote should go, and in this case when it comes to glass lewis, they side with bob iger and the management team. I think we may have an excerpt here that we put together. They say we believe there exists adequate cause to suggest that mr. Igers return to the role has been accompanied by an appropriately sober assessment of disneys recent failings, and a correlated series of programs intended to remediate the companys less favorable footing. Under these conditions we believe investors would best be served supporting all of disneys nominees. Very complicated explanation but iss will be interesting because they usually back peltz in his fight. They have in the past. Institutional Shareholder Services seen as the most influential of the proxy Advisory Firms, yeah. Well see. Both those guys meeting with investors making their cases over the last couple weeks. I wonder how influential, you said theyre still pretty influential. Disney in the 30 ownership of retail. It has a High Percentage of retail ownership not unlike p g which was another close contact for penalties, and he prevailed and ended up on that board. He did. Those votes it came down to they both claimed victory in cincinnati that day. I remember it. And mr. Peltz will use his time on the p g board as a reason he should be on the disney board. Hard for us to get a sense of how its going, right . Listen, people close to disney their advisors seem confident that ir going to win. Thats what you would expect them to say. So does peltz probably. I havent talked to nelson. Maybe you have. Our road map for the hour. Energy rallying this morning. The best sector for march. Exxonmobil ceo darren woods will join us first on cnbc interview and talk about the oil and the company. And it is a red hot stock thats up almost 40 so far this year. Up 175 in the past one year. The companys ceo joins us with his profit picture. And nvidia is front and center today. The chip giant kicks off its ai developer conference. Jensen huangs keynote speech. Well head there live. A big show ahead. Dont go anywhere. Welcome back to squawk on the street. The worlds top energy ceo so to speak, companies in that sector gathering in houston called sara week. Our Brian Sullivan is there and an interview with darren woods. Brian . Yes. David thank you very much. A man that you know well and david has a lot of questions about guyana as well. Well kind of tag team this. Welcome. Good to see you again. Thank you. I want to start with oil. Oil at 80 bucks. We always focus on supply, supply, supply, how much is opec pumping, exxon pumping, the u. S. Pumping. Are we underestimating demand . The other day the iea, which had been more bearish raised its Oil Demand Estimates for this year and next year. How do you see demand . The amazing thing even with the challenges were seeing around the world with global economies, the demand for petroleum products, gasoline and diesel, last year gasoline was at alltime record highs, crude was at alltime record highs. The demand is still very, very healthy. The margins were seeing in our refining business are much higher than the they have been because of the been. I put that in the context of an economy thats not its doing okay, but not blowing and going. If economies around the world start to pick up were going to see a very tight supplydemand balance. Demand is an important part of the equation and one of the most difficult things to predict in our business. Supply is easier to get your hands around. Demand more challenging. Can you help us understand demand more . We have record ev sales in the United States, maybe not as strong as some had thought but theyre going up and no sign theyre going to fall soon and yet u. S. Gasoline demand continues to rise as well. How do you square that . People want to be out and driving, frankly, and if you look at, as opportunities, you know, to get out and see things and drive around the country, that starts to grow, miles traveled starts to grow and while evs are taking a place in that dynamic, that doesnt in itself cap the overall transportation industry. Then as you step away from the u. S. And look more broadly, the growth in developing nations around the world is picking up and were seeing really high demand in places like india and china has healthy demand. You have to break away from the u. S. Centric perspective and think globally. Whether you start thinking about these economies still coming up the economic ladder and peoples prosperity are growing and you see more travel and more demand for traditional fuel. Do you think there is a fundamental misunderstanding, even at fairly high levels, about how the Energy Transition will play out visavis fossil fuels, in a sense that as the transition occurs toward more electrification, some predict a dropoff in usage but ive seen other models that suggest like in norway, record ev penetration, oil and gas use has not gone down, that we misunderstand where we might be in 10, 15 years on that curve . The policy to date and the narrative focused on the supply side of the equation. The impact that price has on demand. So i think as prices come off, demand tends to go up. Its very elastic on the edge there. At the same time the cost of converting and moving to a lower carbon society, if that cost is too high for consumers to bear, they wont pay it. Weve seen that play in europe with some of the farm protests, the yellow vest protests a year or so ago. I think the piece of the evac equation is cost, price, and impact on peoples standard of living. How do we balance that out in the states . Europe, for example, we want a cleaner world lower carbon emissions, reduce ozone and make sure Global Temperatures dont rise, but to your point, at the ground level people have to heat their home. They have to turn on the light. They need to have it work or not go bankrupt from that. Are we going to start to see a little bit of a pushback here in the United States and europe to your point theyre pushing back. Price in the uk have doubled. 4 million in energy poverty. Whats the right balance here in the United States managing climate goals with making sure families can afford it . Youre starting to see an evolution if you go back in time we were focused on a narrow set solutions, solar, wind and electric vehicles thats all people talked about, how we solve the problem. With the ira and focus on Carbon Intensity and the different sectors youre starting to engage the market more broadly. I think the answer is going to be how to strike that balance, get to a focus on reducing emissions intensity and incentivizing businesses in the market to produce products that have lower Carbon Intensity and that engages all the players and opens up the aperture for as Many Solutions as people can come up with. It helps drive technology in the right places to start bringing down the emissions and doing it in the costeffective way. Engaging markets i think is ultimately going to be a solution that were going to have to i have not been to guyana but my friend and colleague david faber has been. I know theres a lot something going on around guyana with you and chevron. Want to jump in. You know the situation for the deal side and actually the guyana side better than i do. Well sure, brian. Thank you. And darren, good to see you. On guyana, listen, off joint operating agreement with hess in the operations outside on the shores of that country and youre asserting a right of first refusal. Why are you doing this and given we havent seen the language why are you confident when you go to arbitration as you are right now, that you will prevail . Well, i think you make a point about the joint operating agreement. We have a contract that defines the parameters in which that partnership operates. This area and the change of control and the rights that the existing partners have with respect to that change and control are spelled out in that document. We wrote the document along with shell in 2008. Hess joined that venture in 2014 and signed into that document. Were familiar with the intense and the objectives and the language of that document. Remember david, thats, as you know, guyana is one of the most successful deep water developments in the history of the industry. Weve played a major role in that as 5 shareholder in the operator, we want to make sure that rights afforded us in the joa are recognized and conformed with. Thats what this is about, making sure that, one, we have a rights secured, two we understand within the chevronhess transaction, guyana is a piece of it and we understand what the value that transaction is putting on the guyana assets and gives us the opportunity to evaluate that on behalf of the company and our shareholders to make sure that were making a decision thats in the best interest of the company and our shareholders. Chevron has made it clear if you were to prevail in this arbitration and actually have right of first refusal they say they do not believe you have theyll pull out of the deal. Its not like theres an opportunity for you to buy hes ownership stake in guyana. What would be the reason to pursue this to its conclusion . Is it the potential value down the road for exxonmobil . Is there option value perhaps that one day you might want to buy hess . So i would tell you that the horizon that were evaluating and the opportunities that were evaluating isnt limited to just the hesschevron deal. That is a specific transaction that was developed between hess and chevron that frankly circumvents our rights and deprives us of value opportunity. If not this deal than some deal in the future. We didnt construct the chevronhess deal. Were responding to it. The question more appropriately what happens down the road in the future, what does hess decide to do . We want to preserve the options so no matter however the future plays out we preserve the option and can do whats in the best interest of exxon shareholders. Its tough to hear, nicely done, by the way, on that. I couldnt hear anything. Bluefin, a New Discovery in guyana. Just 1. 2 Million Barrels day by 2027. Is that a conservative estimate if you can get to 1. 2 . Listen, were developing it as expeditiously and efficiently as we can, an one of the outcomes or one of the consequences of that expeditious development, one a guy in the government benefits from that sooner, which is good for the people of guyana, but at the same time a lot of work that were doing in parallel trying to understand what how big is the opportunity . I would say our understanding of that resource continues to grow. Discoveries will continue to come. Well evolve our thinking on that. Were just basically giving our best estimate at the time and update that as we learn more and develop it further. All right. Wrap it up with this. You might have heard about this pause that we have on u. S. Lng products. Massive product in texas. Is that full steam ahead even with yes. The pause will not impact your project . The pause will not impact the project, thats right. Thats a nice clean answer. Darrenwoods kicking off our coverage. Thank you very much. Good seeing you. Brian, thank you. Looking forward to more oil talk from you this week. Brian sullivan and darren woods. Up next check out this mystery chart a consumer related name up 40 this year and 175 in the past 12 months. Were going to talk to the companys ceo and why investors are piling into the red hot name. Plus, a closer look at the u. S. Militarys latest defense product. Our Morgan Brennan joins us live in the sky with a look at what is still ahead on the show. I think this is a first, morgan. Hey, sara. A uh60, this is a black hawke builtly Lockheed Martin sikorsky. The most advanced black hawke in the world. Its fully autonomous. Were back to take to the skies and going to control the entire flight on this tab tablet. Well do a deep dive on the 6 billion sikorsky business, and im going to push this button and execute right now and we have takeoff. See you on the other side of this break. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart the future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. The all new godaddy airo. Put your Business Online in minutes with the power of ai. Theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com 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. Because its smart, dependable, and steady. All words you want from your bank. For nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled. Which is pretty unboring if you think about it. Welcome back to squawk on the street. Im Contessa Brewer with your news update. A United Nations backed report warns famine is imminent in gaza. A new report suggests almost half of gazas population of 2. 2 Million People are facing catastrophic levels of hunger as israel continues to wage war with hamas and the enclave. The most affected area is northern gaza which largely has been cut off from aid deliveries. The report found almost twothirds of the households there have gone at least ten days without eating in the last 30. The Supreme Court will consider today whether the biden administrations attempts to combat social media misinformation violated the first amendment. The administrations accused of coercing platforms to remove problematic posts on issues like covid19 and the president ial election. And uber reached a 178 million settlement with australian taxi drivers. Thousands of drivers launched Class Action Lawsuit against the Ride Share Company accusing it of breaking the countrys taxi licensing rules when it started operating there in 2012. The settlement is the fifth largest in australias history. Sara . Contessa brewer. We slowed you that red lot policestry chart before the break. It is elf beauty ringing the opening bell at the New York Stock Exchange celebrating 20 years. The stock has rallied over 2,000 over the past five years. Chairman and ceo joins us now. You have presided over this company over the last ten years of the 20year public life. Why has it been such a moonshot kind of performance in the stock price . Well, i think it reflects our exceptional category leading growth. We just finished our 20th consecutive quarter of Net Sales Growth Third Quarter up 85 , more than doubled our market share and i think investors are rewarding us. Is the growth driven by you entering new stores like a walmart . Youve been in target for a while. And new channels . Or Something Else . Were seeing growth across the board. Our number one driver of growth is productivity and the customers were in. Our Digital Business up over 100 and International Business up over 100 . Were seeing growth across the board driven by three things, our exceptional value proposition, our powerhouse innovation and marketing engine working together to continue to propel our growth. It costs 40 to buy ysl or dior lipstick and youre selling it under 10. Our lip oil is 8 versus prestige at 40. Consumers recognize the quality and as soon as we launch we never make a direct comparison, but the products take off because everyone cant believe they can get that. Like on social media. All throughout social media and tiktok and the platform were on, twitch, were pretty broadbased in the social channels. Your au probably not rooting for tiktok to get banned in the u. S. Which is unconsideration in the senate. We live wherever our community lives. If something happens to tiktok well go where the community is were growing among millennials and genx. This unique engagement model of how we engage our communities. Would it be a hit to the business in the short term . I dont believe so. Were broad if you look at our strength on instagram, facebook, reels. Our platform is broad. Were not a brand thats dependent on any one platform. Are you growing customers or is it mostly repeats . Were growing customers. Look at our brand in the last few years weve doubled our awareness of 13 to 26 . If you look at where that growth is coming from, our strength in genz, but also picking up genx millennials and gen alpha. We know that the category has been strong. Its been an outlier for other goods at target that always call out grocery and beauty. What happens to your products in this inflationary period weve had over the last two years or so . Well, i think one of the things that comes through is our exceptional value proposition. We have this incredible value every day. I think thats benefitted us. Consumers realize they can get a high level of quality at great prices and, you know, you mentioned target is our longest Standing National retail customers. Were their number one brand in the last four weeks. We had almost a 23 share of their entire category which really talks of strength of elf. The next highest brand was 13 . We feel that bodes well. Arehave your prices gone up. Weve only taken two in history, one in 2019 in response to tariffs on china goods and one in 2022 when everyone was facing inflationary pressures. A number of our competitors took price increases. Arent your price inputs going up . Not necessarily. We have strong top line growth that allows us to have leverage in our nonmarketing sgna which allows us to offer you do a lot of information china. Have you gamed out what would happen in another Trump Administration where he has threatened to increase tariffs . We have. Basically, you know, were already carrying 25 tariffs on our goods so some of those scenarios 60 tariffs we would use a combination of pricing and our diversification of the supply chain. We have been diversifying with suppliers in the u. S. , thailand and europe and use a combination to deal with that if that happens. Do you want to move all the manufacturing out of china . I wouldnt say necessarily. I would say we have a great advantage in terms of cost, quality and speed but well be prepared. Weve been around 20 years and gearing up for the next 20 years. I could you know, we had alex was on bashing the short sellers and you have had short sellers in your stock. You managed to smoke them all out with this performance but what has been the biggest doubt that you have had to address as the stock has soared . I think, you know, usually you have people who feel like did i miss the party, the stock is up so much over the last few years but ive been ceo for ten years and heard that all ten years and we keeping it going. Part of the reason why is, we have incredible white space and can double our market share in cosmetics. Warp just Getting Started internationally. We have plenty of space to continue to pursue. Look at that chart. Thank you for joining us. Thank you. At the nyse. From elf. After the break the latest in u. S. Military and autonomous technology. Morgan brennan is live from a chopper with a look at what is still ahead. Morgan. Guys, were talking about geopolitical risks as the world has become more dangerous. More demand for more defense. The battlefield is changes as more software and ai more autonomy comes to the battlefield. Right now im inside a blackhawk helicopter that is autonomously flying. We are doing that off of this tablet. Were going to do a deep dive into lockheeds 6 billion sikorsky business and what capabilities like this will mean to the future of growth. Stay with us. Hello, mia. Are you ready to meet your demise . Man, we really need to upgrade your trash talk. Nice shot. Shot. Taker. Who programmed you . ill see you tomorrow. The future isnt scary, not investing in it is. 100 innovative companies, one etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges expenses and more in prospectus at invesco. Com. Wall street forecasts over 100 billion in sales for antiobesity drugs known as glp 1. But these treatments are largely administrated through cumbersome injections. Enter Lexaria Bioscience with their patented oral delivery technology. Early studies were glp1 suggest reduced side effects and better blood sugar control with reduced spikes. Lexaria bioscience. Transforming the future of glp1 drug delivery. For conflict around the world has led for greater demand for Defense Products an weapons systems. A changing battlefield means some of the expensive military hardware is reconsidered and reimagined. Morgan brennan is taking to the skies and she has the story. Thats right. Im sitting inside a uh60 alpha blackhawk helicopter not just any blackhawk this is fully autonomous. Which means that pilot, theres two of them in the front of this aircraft, they can sit back and basically the computer can fly this leapt. Thats whats happening right here on the tablet, unmanned. First a little bit of background. Sikorsky is a 6 million business for Lockheed Martin. Its rotary and mission sales, top line contributors to sales growth for lockheed overall. Sikorsky makes helicopters. Its ramping productions on the marines heavy helicopter. What its phone noknown for is e blackhawk. The blackhawk has been in service 45 years. More than 5,000 delivered. Three dozen countries as customers. The largest operator is the u. S. Army. Thats where investors have been focused lately after the army scrapped plans for a highprofile big ticket competition for a new attack helicopter called fera. Sikorsky competed as a needed win after the company lost an Army Competition in 2022 called flura which is to supplement the blackhawk. The army is repurposing the blackhawk into blackhawk and focusing efforts on a changing battlefield and what that will mean for the military of the future. Autonomy is a part of that which is why were here and joining me to discuss all of it is the president of sikorsky, paul lemmo. Great to be speaking with you while were in the air. Doing a great job piloting. Yes. Ive been pressing buttons with expert help here. Why was it necessary . This capability has been in the works for six years for this specific type of aircraft. Why was it necessary to develop it . When you think about 21st centurywarfare you think about autonomy, underpins a lot of the capabilities that will be on the battlefield in the 21st century. Weve been working this over a decade as you said, and we built a system thats platform agnostic that can be put on any aircraft. Fixed wing aircraft, helicopters, and its a capability to allow the aircraft to fly without anybody on it and the military might use that in logistic situations where they dont want to put people in harms way but they have to deliver critical supplies to the troops. It can be used as a safety feature, a capability to allow the pilots to land and visual environments something that has caused a lot of accidents for helicopters. Do you already have customers for the technology and is it a need to have in does it open up avenues of growth . We think its a need to have for the future and yes, were working with a number of customers experimenting on how this can fulfill their capability needs. In light of that how does it speak to where the general growth comes from. We mentioned a business for lockheed, changes at the army, not involved in what is called future vertical lift but money going back to blackhawk. Yeah. Were fortunate to have a very strong backlog at sikorsky. We have three to five years of backlog on the 53k blackhawks and the army said with the cancellation of the program, theyre going to another multiyear contract for blackhawk production so that will take us out through 2032. Perhaps most importantly theyre committing to modernizing the blackhawk to ensure that its ready for 21st century battlefield being able to interoperate with everything thats going to be out there. Then longer term, we think things like autonomy and hybrid electric aircraft are going to be critical to our future. Hybrid electric is certainly something thats coming to aircraft and aviation just as it did for automobiles, and were going to be at the forefront of that technology to continue to innovate as we have for the last 100 years at sikorsky. Youre getting into the ev or at least the hybrid game . We are. Were going to stick to what were good at, typically the heavy or medium lift long range type of missions. Both for civil government and also for military. Paul lemmo thanks for joining me here and taking me up in this blackhawk. Appreciate it. Thank you. The president of sikorsky. More on closing bell overtime as we dive into the portfolio. Very cool to listen to and watch. Morgan, thank you so much. Morgan brennan from the sky above connecticut. Up next shares of nvidia 80 this year. The tech giant kicks off its Developers Conference today with a keynote from jensen huang. Well head live to the big event and what is at stake here and what investors are expecting to hear. Stay with us. Moving forward with nodepositive Breast Cancer is overwhelming. But i never just found my way; i made it. And did all i could to prevent recurrence. Verzenio reduces the risk of recurrence of hrpositive, her2negative, nodepositive, early Breast Cancer with a high chance of returning as determined by your doctor when added to hormone therapy. Diarrhea is common, may be severe, or cause dehydration or infection. At the first sign, call your doctor, start an antidiarrheal , and drink fluids. Before taking verzenio, tell your doctor about any fever, chills, or other signs of infection. Verzenio may cause low white blood cell counts, which may cause serious infection that can lead to death. Lifethreatening lung inflammation can occur. Tell your doctor about any new or worsening trouble breathing, cough, or chest pain. Serious liver problems can happen. Symptoms include fatigue, appetite loss, stomach pain, and bleeding or bruising. Blood clots that can lead to death have occurred. Tell your doctor if you have pain or swelling in your arms or legs, shortness of breath, chest pain, and rapid breathing or heart rate, or if you are nursing, pregnant, or plan to be. Im making my own way forward. Talk to your doctor about reducing your risk. Nvidia kicking off annual conference, set to unveil latest a. I. Technology. Kristina partsinevelos live from san jose, california. Good morning. With a look at what we can expect here. Im in a parking lot because it is quite early. Were expecting 11,000 people at this big arena behind me. Thats how many people they are expecting for a twohour keynote from jensen weong. The stocks have been moving 2 out of eight out of the last ten trading sessions, on no particular news. So which begs the question, what else can they say . The first is unupdate and new announcements, the specs of the new gpu, how does it compare with amds latest chip and details on the price point. Is it going to be 30 more than the h100, more than 40,000 and 50,000 . The second is partnerships and collaborations. Micron alluded to a collaboration with nvidia, same with broadcom, oracle, and taiwan semi. You can see a sea of green, but sizeable moves, should nvidia have them on stage. Lastly, demand sustainability and visibility. Will inferencing be the next driver for growth since many Large Language Models are trained . How will that expand into sectors like finance, health care, sovereign wealth funds and keep up the pace of growth and potentially change nvidias total Addressable Market which they have previously said is 1 trillion. You had a big event, a. I. Palooza, all of this terminology, but nvidia is one of the three largest stocks on the s p 500. So, any move or any sharp move in the stock will have an outsized impact on the nasdaq and the s p 500. Guys . Its hard to imagine theres so much that the biggest event has become a semiconductor Developers Conference. I remember when it was apple. Does semiconductors usually do these . He does. Weve never covered them before. This is the first one in five years in person. Previously, no, there was never this amount of attendees, 11,000 here, 16,000 over the course of two days. Theres no hotels for miles. Everyone is Walking Around with a green lanyard. Theres signage everywhere. I just, based off the few years ive been covering, its definitely nothing ive seen before. Amd was hosted in the same city but had a much smaller presence. Yeah. Well, listen, its not to be unexpected, though, given the importance of nvidia and the current economy we have right now. Just think about how we talk about it endlessly for any number of obvious reasons, right . Yeah, exactly. And i guess the biggest point is the impact on the markets right now. If youre an investor watching, i dont care. I dont follow semiconductors. You have to care because its probably in some type of index fund youre holding or will have an impact on the s p 500. Its the Third Largest point impact for nasdaq and s p. So, it affects everyone right now. Those that are invested in the market. Thank you. A reminder tomorrow on squawk on the street, there he is, exclusive nvidia ceo jensen hu huang, with jim cramer followed by a twopart interview later on mad money. Its going to be good. Yeah. Leather jacket and all. Check out shares of hertz on the move. Theyve been hammered. Down around 8 . The ceo announcing he is stepping down after just two years. The company says gms former cruise coo gill west will be taking over. The change goes into effect on april 1st. Theres a lot about this being written, being discussed about, the failed ev strategy. Thats certainly part of it here. But from what ive learned, Stephen Scherr announced he wanted to resign, it was his own decision. He went to the board and they wanted to keep him. He doesnt own the ev strategy. This company four months before their ipo back in 2021 actually decided to go all in buying teslas and made a lot of promises about that. He did preside over what happened since and leaned in and embraced the strategy but ultimately put a stop to buying teslas in 2022. And then had to take a big financial hit when prices dropped and it weighed on hertz. From what i hear, he just decided this isnt kind of the growth story. Its going to take someone who knows operations to just turn it around from here and fix it and deal with some restructuring. Yeah. A long line of leadership at hertz, yet still havent figured it out. Our live market coverage where are we . Continues right after this. grunting at morgan stanley, 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. Rylee from rylees realty hi this listing sounds incredible. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. good morning again. Welcome to money movers. Im sara eisen with david faber on the floor of the New York Stock Exchange. Economist David Rosenberg why the market isnt pricing in enough rate cuts ahead of the big fed meeting. Alphabet helping to boost the market on a report its planning to team up with